Oneworld's aim is air supremacy

News Analysis: Virgin may protest, but British Airways' global alliance with four major airlines creates a pounds 25bn world network

RICHARD BRANSON rarely fails to get his message across. Yesterday was no exception. Outside the venue chosen by the five partners in "oneworld" to launch their global airline alliance was a 38-tonne truck with the defiant slogan "No Way BA-AA" painted on its side in the familiar red and white livery of Virgin Atlantic.

Inside, the chief executives of British Airways, American Airlines, Cathay Pacific, Canadian Airlines and Qantas were introducing their vision of a "seamless travel experience".

Mr Branson criticised the partners, claiming they were more intent on creating "one company" than "oneworld", but he is flying in the face of a global trend.

The airline market is increasingly dominated by a handful of huge alliances. Oneworld will be right up there. With a fleet of 1,524 aircraft serving 632 destinations in 138 countries, combined revenues of $43bn (pounds 25bn) and 174 million passengers, oneworld ranks alongside the other big global airline grouping, the Star Alliance, which is headed by United Airlines and Lufthansa.

In keeping with the location for the oneworld launch - the former LWT television studios in central London - there was plenty of hype in evidence yesterday and a certain showbiz feel to the event. Taking the stage Bob Ayling, BA's chief executive, modestly predicted that oneworld would change airline travel in a way that would have made the Wright brothers proud.

In reality, it is largely a giant code-sharing exercise and a chance for the partners to share each other's frequent flyer programmes and airport lounges. American Airlines already has separate marketing links with the four other partners and BA has commercial links with three of them. American owns 33 per cent of Canadian Airlines, while BA has a 25 per cent stake in Qantas.

But behind the hype there is a deadly serious game, and the prize is domination of the world's airways. The creation of oneworld fills an important gap in BA's global strategy. Cathay Pacific gives it the presence in the Far East it has lacked until now. Cathay has been the one leading airline to hold out against an alliance. Its chief executive, David Turnbull, said: "When you finally get married you want to make sure you have made the right choice because getting unmarried can be quite difficult."

Oneworld, however, plans to be a serial polygamist. Iberia of Spain has been formally invited to join, while Finnair, Dragonair of Hong Kong, LOT Polish and Malev of Hungary are also being lined up as future brides.

Star Alliance is similar: membership is formally limited to six carriers - Lufthansa, United, Thai, SAS, Air Canada and Varig of Brazil - but Singapore Airlines, Ansett of Australia, Air New Zealand and All Nippon Airways are affiliated and may become full members.

With Delta, Swissair, Sabena and Austrian Airlines joined in the North Atlantic Excellence alliance and KLM, NorthWest, Alitalia and Japan Air Systems in another pact, the only major players still to select partners are Air France, Continental and South African Airways.

Don Carty, the chief executive of American, says there will be cost savings to be wrung from the alliance, but the real benefits for the five partners will be felt on revenues. "The ability to fit together the networks of the five partners to provide incremental income will be our focus."

Mr Carty is coy about how big those revenues will be. But when United and Lufthansa linked two years ago they estimated that the alliance was worth an additional jet load of passengers flying from Frankfurt to New York each day.

The rule of thumb with airlines is that once break-even has been reached, 80 to 85 per cent of all extra revenues flow straight through to profit.

At a time when storm clouds are gathering over the world economy and the air travel market is on the downward slope of the cycle, the partners in oneworld hope their alliance will afford them some extra protection against the buffeting.

For BA and American, it comes just as the two carriers hope finally to receive the green light on both sides of the Atlantic for their bilateral alliance after a wait of two years.

Chris Tarry, aviation analyst with Dresdner Kleinwort Benson, says: "The formation of oneworld is sensible and logical and everyone hoped that Cathay would come to the party. If it doesn't make economic sense to do the BA-AA deal, the two can continue with what they have, which makes oneworld a win-win situation."

Mr Branson suspects baser motives. The oneworld partners say they will retain their separate identities and continue to compete where they operate on the same route. There will be no pooled timetable and no shared revenues.

But the Virgin boss thinks it cannot but be anti-competitive in the long run. Mr Branson has experimented with partnerships - Virgin had a transatlantic link with Delta, later ditched for Continental. But he has resisted a big alliance, preferring to fly solo. If oneworld works, that will become a cold and lonely place.

Outlook, page 19

Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Recruitment Genius: Finance Director

    £65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

    Recruitment Genius: Medico-Legal Assistant

    £15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...

    Ashdown Group: (PHP / Python) - Global Media firm

    £50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...

    The Jenrick Group: Quality Inspector

    £27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas