Airline Alliances – Why all the fuss?

Continental Airlines is leaving SkyTeam and joining Star Alliance. Virgin Atlantic is considering joining Star Alliance after resisting joining any alliance all these years. Russia’s S7 airlines is joining OneWorld. Airlines seem to make a big fuss of Airline Alliances. Should you care? If you want to maximize your earning of miles and attaining Elite status and maximize your ability of redeem your miles for awards, alliances are something you need to understand and leverage.

Airlines enter in partnerships with other airlines thru two means. The first is a bilateral agreement between two individual airlines. This is know as a ‘Partnership’. The other medium is thru joining a large group of airlines that have formed a multilateral relationship. This is called an ‘Alliance’.

There are three global Airline Alliances: Star Alliance, OneWorld and SkyTeam. Each has multiple members. Star Alliance is the largest with 21 members (going to be 22 with Continental joining it in Oct. 2009). OneWorld has 10 members and SkyTeam 9 (going to 8 with the Continental defection). SkyTeam’s count of members had already gone down by one when Delta purchased fellow alliance member NorthWest. I shall discuss the individual alliances in future posts.

Alliances bring several benefits that traditional partner relationships do not bring:

• Award Mileage credit: You earn miles on any alliance member when flying on any other. This is different from a bilateral partner relationship where the mileage earning is only limited to earning miles on the two airlines in the partnership. That too may be limited to specific routes as the airlines in the partnership may choose to exclude earning of miles on certain routes where they compete. For example, United Airlines and Jet Airways (of India) are partners, but they have excluded earning of miles on each others programs on trans-Pacific routes. Alliances typically have no such exclusions.

• Status Miles: As I have discussed in my previous article, Status Miles or EQM are the pathway to Elite status. The key differentiator between an Alliance and a bilateral partnership is that you can fly any alliance member and earn EQM on another member’s program. Bilateral partners very rarely give EQM on each other programs. For example, US Airways and Virgin Atlantic are partners. You can earn award miles on one when flying the other, but no Status miles.
• Lounge Access: As an Elite on any Airline, you get Lounge Access on any other Alliance Partners’ Lounge when flying internationally. This privilege is not given between partners. In fact, partners do not recognize each others Elite status at all.
• Priority Boarding and Priority Baggage Handling: Alliance partners give these privileges to Elite status holder of any Alliance member airline. Not there for partners.
• Award Travel: This is probably the most important benefit of Alliances. You can redeem your miles from any airline in the alliance to get award tickets that may include any combination of Alliance member airlines. For example, I have redeemed miles I have on United Airlines for travel to India. United does not fly there, but I have been able to redeem miles to get an award ticket that involved United, Lufthansa and Swiss Air, to get me from the US to India and back!
• Upgrades: Alliance members also allow using miles from one alliance member to upgrade on another. Usually the ability to use this privilege is so restrictive that it has limited use.

So, my recommendations for leveraging Alliances are:

1. Pick one Alliance to focus on. This will be determined by where you live and where you typically fly or want to fly. Some airports are dominated (ruled!) by one alliance. Dallas/Ft. Worth is an example – it is American Airlines country. Frankfurt, for obvious reasons, is Lufthansa dominated.
2. Become a member of the frequent flyer program of one airline in the Alliance and then accumulate your award miles and status miles on that airline’s frequent flyer program for all flights on any alliance member. That way you can maximize you miles earned and reach Elite Status faster.
3. Stick to the Alliance. Avoid flying airlines that are members of other alliances or are non-alliance partners. The loyalty will pay you handsomely.
4. Redeem miles with the Alliance members, earn Elite status, enjoy your trips…

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