Star Alliance Welcomes 20th Member

Star Alliance welcomes 20th member

Thursday, April 03, 2008

ALL but 20 per cent of the world's airlines are now members of ether the Star Alliance, Skyteam or oneworld, according to Star chief executive Jaan Albrecht. However, Albrecht has angrily dismissed suggestions that the rise of alliances is creating aviation cartels and opportunities for price fixing by alliance-linked carriers.

Speaking at an Istanbul welcoming ceremony for Turkish Airlines, which this week became the 20th Star group member, Albrecht said strong competition existed between Star members.

'I think I heard the word 'cartel' - this is an alliance,' said Albrecht, responding to reporters' questions. 'There is competition between our members and competition in our industry.'

He said before the advent of alliances a decade ago 300 IATA airlines competed individually against one another. Today, he said, there was new type of competition with the three alliances and a fourth group of 'so-called low cost carriers' increasingly in competition with rival groups.

'We compete internally, at is about competition, healthy competition, and we believe we are very well prepared to continue into the future competing against alliances and competing against each other and offering the best product to our customers,' Albrecht said.

Asked whether the 20 Star members were positioning to buy jet fuel collectively and hedge their fuel prices, Albrecht said: 'Star Alliance does not hedge fuel on behalf of its members. This is up to the individual polices of members.'

Alliances have proved popular with business travellers who appreciate being able to transfer between flights freely. They also like frequent flyer programs that permit them to earn and use air-miles on several carriers. Still, critics argue the benefits of alliance accrue manly to airlines, not their passengers. They clam alliances limit competition between carriers and, as a result, business-class airfares around the globe are rising faster than they would have in a free-for-all aviation marketplace.

Peter

Note: The underlining is mine. The question to you is: Alliance or Cartel. The fact is 80% of the world's airlines are now tied up in one of 3 alliances. Is this right?