A few days ago I wrote about Air Italy revealing their rapid expansion plans. The airline was formerly known as Meridiana, and Qatar Airways now owns a 49% stake. While Meridiana used to be a small leisure airline, Qatar Airways has huge plans for Air Italy, as they plan on getting the airline 20 Boeing 737 MAX and 30 Boeing 787 aircraft over the coming years (which is quite a ratio of longhaul to short-haul airlines).
With Alitalia struggling, the goal is to basically become Italy’s national airline, at least on the longhaul front (given how much slack ultra low cost carriers will likely pick up within Europe). I’m really excited to see if they’re able to build a more sustainable business model than Alitalia had, given that they were also invested in by a Gulf carrier.
With Air Italy being largely controlled by Qatar Airways, this raises an interesting question — will Air Italy join the oneworld alliance?
During a press conference a few days ago, a reporter asked Qatar Airways’ CEO, Akbar Al Baker, exactly this (at the 25min35sec mark):
https://www.youtube.com/watch?v=TywhfgXxEeA
Al Baker’s answer was as follows (for anyone who doesn’t want to watch the video):
We are very keen for any airline that we invest is part of oneworld. As you know that we are a major investor in IAG which is part of oneworld, we are a major investor in LATAM which is part of oneworld, we are an investor in Cathay Pacific which is oneworld. So it’s obvious we would like Air Italy to be part of oneworld. But to get to the membership of oneworld you have several milestones that you need to achieve and we will make sure with Qatar Airways’ involvement with Air Italy that we will comply with these requirements sooner than any other airline would have been able to achieve. And at the end of the day, it’s not only what we want but it is also what the oneworld members would want but I am sure that there will be a very big excitement because this is a country which is not properly covered by oneworld members so it is obvious that we will be an exciting candidate for them to be part of oneworld. This will again bring a lot of benefits to both our employees which are really, our employees are our asset. In an airline the asset is not only an aeroplane, it is our employees. And this is why we want our employees to be part of the business. Which you already see, we made an announcement that we will distribute 20% of our net profit to our employees. We want to be part of this. And with the employees’ support we will be able to achieve what we want to be a candidate for the oneworld membership.
So Qatar Airways wants Air Italy to be part of oneworld, though it probably won’t happen overnight, or even anytime soon.
When I thought about this, the first thing that came to mind was Aer Lingus. IAG (the parent company of British Airways) invested in Aer Lingus. Initially they said that they wanted Aer Lingus to join oneworld, but now they’ve decided against it. There are membership dues and other ongoing costs associated with being part of oneworld, and on the short-haul front Aer Lingus seems to want to operate as low cost of a model as possible, and an alliance membership doesn’t help with that.
However, we all know that Qatar Airways isn’t quite as stingy as IAG/British Airways, so I’m sure they’d be much more likely to be willing to pay.
Logically I think it makes a lot of sense for Air Italy to join oneworld. With airberlin having recently gone out of business, oneworld is really quite weak in Europe. You have British Airways, Iberia, Finnair, and S7 Airlines based in Europe. That leaves a huge gap in Central and Southern Europe, which Meridiana could nicely help fill.
In oneworld, American, British Airways, Cathay Pacific, and Qantas, have veto powers when it comes to new airlines joining. British Airways already partners with Meridiana, so I think the only airline here that would potentially veto Air Italy’s membership would be American. Is Air Italy joining oneworld in the best interest of the alliance as a whole? I absolutely think so.
But is it in American’s best interest? I think probably not, at least the way American sees it:
- Air Italy is launching flights from Milan to both Miami and New York, both of which are routes that American already flies
- Air Italy is owned by Qatar Airways, so American could deny them entry as a way to “stick it” to Qatar Airways, which they love to do
Conversely, American could benefit from increased connectivity in Milan for their own passengers, and could potentially benefit by transporting Air Italy passengers beyond Miami.
What do you think — will Air Italy join oneworld, and/or will American veto it?
One world is extraordinarily weak in Europe - BA/Iberia (basically a low cost carrier equivalent within Europe) and Finnair are the only choices - S7 are good for Russia only so this would help them as they lost Air Berlin and Malev in recent years. As for the MXP to MIA/JFK routes that shouldn't be a deal breaker - frankly AA should shift one of the these to ORD or CLT to get better connections...
One world is extraordinarily weak in Europe - BA/Iberia (basically a low cost carrier equivalent within Europe) and Finnair are the only choices - S7 are good for Russia only so this would help them as they lost Air Berlin and Malev in recent years. As for the MXP to MIA/JFK routes that shouldn't be a deal breaker - frankly AA should shift one of the these to ORD or CLT to get better connections through the USA as both are the 2 worst ports of entry for regular travelers - immigration and customs at both being a nightmare and JFK has more weather related delays and cancellations than anywhere.
As far as I know Meridiana doesn't have lie flat seats, which is one of the requirement of Oneworld.
Also, there is not such a thing as "weto" power to join OW... Each carrier gets a vote based on its capacity share...
@ Airways and Travel -- Do you work for oneworld, have you seen their contracts, or how do you know? I ask because CAPA suggests that there are veto rights for founding members, and they're usually pretty spot on.
https://centreforaviation.com/insights/analysis/cathay-pacific-wont-leave-oneworld-to-join-the-star-alliance-china-southern-cant-join-oneworld-391596
@Sean M - You make interesting points, but I I wouldn't be surprised to see Air Italy join the JV across the Atlantic given the limited reach AA/BA have in Eastern and Central Europe (Milan is perfectly positioned to connect traffic to/from the region, just like VIE is).
@Lucky - It is not true EI will not join OW. They are prioritizing entrance into the AA/BA JV, but after that they'll write a business case...
@Sean M - You make interesting points, but I I wouldn't be surprised to see Air Italy join the JV across the Atlantic given the limited reach AA/BA have in Eastern and Central Europe (Milan is perfectly positioned to connect traffic to/from the region, just like VIE is).
@Lucky - It is not true EI will not join OW. They are prioritizing entrance into the AA/BA JV, but after that they'll write a business case to join OW. In the end, OW is nothing but a major marketing tool, and EI would have little incentives in not joining.
Lucky, how could you overlook Vanilla Alliance, U-FLY Alliance, and Value Alliance? ;)
As things stand now, Star Alliance has 10 airlines in Europe, SkyTeam has 7, and Oneworld has 4 (as Lucky mentioned).
@ scott - Cathay fearing about LH JV and thus vetoing QR who part own CX? Right-o..
Cathay might veto owing to their JV with Lufthansa- any non-BA/Iberia codeshares in Europe have to be approved by Luftshansa.
@Jackie~ Where does your information come from that Alaska will join Star Alliance?
They appear to be doing well enough with their eclectic group of partners.
@crosscourt
Sri Lanka Air is already part of OneWorld
For sure air Italy should be part of one world and the alliance needs to look for an airline in India. Kingfisher was supposed to join but they're defunct and Sri Lanka airlines is not enough for India itself.
@Ed: Indeed, I fully agree. AB for instance was a member of Oneworld but never made it into the JV. At some stage, well before their bankruptcy, AA even withdrew from the codeshare agreement. I'm not saying this was the reason for AB going out of business, but they had to offer lower fares to compete against the two JVs (there's also a *A JV) for sure and this certainly didn't help them stay afloat ...
I think the more important question is whether air Italy with join the AA/IB/BA/AY immunised transatlantic joint venture. This has more economic significance than joining Oneworld.
American Airlines has historically not made any partnership decisions, even at SPA level, on the basis of inbound connectivity to their hubs. Do they see Air Italy as an onward connectivity partner beyond Milan? Unlikely. Do they have the political capital within the alliance to block their entry presuming IAG is in favour? Also unlikely. Would they be interested in Air Italy joining a transatlantic JV? Even more unlikely.
Interesting times ahead, but I think...
American Airlines has historically not made any partnership decisions, even at SPA level, on the basis of inbound connectivity to their hubs. Do they see Air Italy as an onward connectivity partner beyond Milan? Unlikely. Do they have the political capital within the alliance to block their entry presuming IAG is in favour? Also unlikely. Would they be interested in Air Italy joining a transatlantic JV? Even more unlikely.
Interesting times ahead, but I think there is a long way to go before Air Italy is even at a stage where alliance entry is a realistic possibility. A lot can happen between now and then.
@ Bobby J
“ the absolute dominance of Star Alliance carriers among European customers in the market for full-service air travel.”
There is no comprehensive full-service air travel option across all the European market. Certainly not Lufthansa, if that’s what you’re hinting at. There are a couple of 5th freedom flights that offer long haul standards, but otherwise your best bet in terms of full service is usually to travel via an ME hub.
...@ Bobby J
“ the absolute dominance of Star Alliance carriers among European customers in the market for full-service air travel.”
There is no comprehensive full-service air travel option across all the European market. Certainly not Lufthansa, if that’s what you’re hinting at. There are a couple of 5th freedom flights that offer long haul standards, but otherwise your best bet in terms of full service is usually to travel via an ME hub.
But it’s absolutely right that different alliances have different geographical strengths. I fly for work from Western Europe to North and South America, and to Asia. oneworld has Latin America pretty much stitched-up - the other alliances are extraordinarily weak there - and their coverage elsewhere works brilliantly for me. It’s rare that I have no oneworld option (which doesn’t mean I don’t sometimes take the alternative).
YMMV of course. Actually, within Europe I normally fly from a tiny English regional airport to connect at Schipol. I buy extra legroom Eco class seats on KLM which have much more legroom than their hideous J class, at a fraction of the cost. So, bizarrely, I also accumulate Flying Blue points. Which seem to me even more pointless than Avios.
The Big 3 global alliances are becoming less and less relevant every year while airlines pursue bespoke more meaningful partnerships/codeshares/JVs. I'd be surprised if AA cared that much about Air Italy joining Oneworld. When you consider that RJ and S7 are STILL members yet add very little you realise these alliances aren't that important.
2018 is the year for One world expansion. China southern, Air Italy and Alaska air will all join One World
Call me crazy, but I almost feel that of the major alliances, oneworld is the one in the weakest position, and probably the one that will collapse soonest, or at the very least, devolve into irrelevance. American and Qatar are at loggerheads, Cathay Pacific may bolt for Star Alliance, airberlin fell apart, and several of the smaller members are struggling. The network isn't particularly robust outside of the Americas and Australia, and joint ventures with...
Call me crazy, but I almost feel that of the major alliances, oneworld is the one in the weakest position, and probably the one that will collapse soonest, or at the very least, devolve into irrelevance. American and Qatar are at loggerheads, Cathay Pacific may bolt for Star Alliance, airberlin fell apart, and several of the smaller members are struggling. The network isn't particularly robust outside of the Americas and Australia, and joint ventures with non-members appear more lucrative (looking at you Qantas).
Given this, I have a hard time seeing any sense in Air Italy joining, especially given American's almost certain veto, the relative lack of domestic demand for onward travel (RyanAir really does own Italy's airspace), and the absolute dominance of Star Alliance carriers among European customers in the market for full-service air travel.
Then again, maybe Qatar will have better luck than Etihad and they'll be able to build out an airline that matters. If they're able to plug oneworld's holes in their continental Europe route network, maybe the case will be more compelling.
I see no reason for American to veto Air Italy's entry to OneWorld. They didnt veto Qatar's entry to OneWorld so why would they veto Air Italy?
@ Maria -- When Qatar joined oneworld in 2013, the Gulf 3 vs. US 3 debate wasn't nearly as contentious. If Qatar were to join now, I suspect they'd veto on principle (even though it's not in their best interest). Keep in mind that American is even cutting codesharing ties with Qatar Airways as of next month.
I usually only expect that amount of rambling and ellipsis from the president.