Are Alliances fading ?

Off late I see many airlines entering into bi-lateral agreements to code-share or add value to their air network. In many cases one of the carrier is a member of an alliance and other is not. IEmirates-Qantas, Delta-Virgin etc. Then we see reduction in earned miles on Alliance partner airlines. Air France, KLM, Korean Air, all announcing fares that earn either no miles or fraction of the actual miles flown.

So the question in one's mind is -  Is there any value proposition left to a passenger on choosing partner airlines over any other ? Are Alliances fading ? 

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  • YES! The value remains in two key areas (as far as I'm concerned). 

    First, is convenience: When flying on non-alliance partners, you are talking about a two-way agreement. Meaning, if you're looking for connecting flights or interlined baggage - that means you check your bag at the origin and it goes, on the partner airline, all the way to the final destination - or any other form of "connected convenience," you likely won't get it. Think about Delta and Virgin. That partnership is focused on giving European-based Virgin-flyers a convenient North-American route-map. Virgin can't, and won't fly non-stop to more than 5, 10, 15 or 20 US cities. But with partnerships like the one they have with Delta, they can now offer their flyers one-stop service to just about anywhere in the States. Alliance on the other hand are global, multi-airline partnerships which are the epitome of convenience. Checking in at BTR and headed to ULN? No problem! Thanks to global alliances, you can probably get there with only two stops (or maybe three). Sure, partnerships are great for finite regions, but alliances are a necessity for connecting the entire globe. 

    Second, is miles: I think this goes without saying, but the three major alliances are what bring such great value to the miles of many of their individual airlines. For example, I collect miles in United's MileagePlus program (in addition to many others). That said, I almost NEVER fly on United Airlines because I love their Asian and European partners! Why would I fly on a sub-par American carrier from New York to Germany, if I could fly Lufthansa! Why, if flying into Korea would I NOT fly on Asiana or Korean Air (depending on the alliance)?! You're right, in that it's becoming slightly more difficult to earn miles on partners; my examples above however, are for redemptions. Redeeming miles for a "standard" cost (per region or by distance flown) is unlikely to change and it is what give me huge beneiits in my miles/points collections. 

    • The game has changed. Two of the three majors have made sure that one has to pay to get miles. As of 2015, Delta and United have reverted to revenue based mileage accrual, and revenue based status. The more you pay the carrier; not partners, not alliances, the more you miles you get. You could earn more miles flying LGA-ORD, than say flying from JFK-NRT. One has to wait for the AA-US to follow suit. 

  • While I agree about the co-branded credit cards, I think one has to evaluate the credit cards in its entire totality - i.e annual fees, % charges for foreign transactions, billing easy and customer service. 

  • Anil, I recently read a report (not sure where; could have been on Tripatini, could have been somewhere else) saying that the real problem is that every year the airlines get "better" at preventing frequent flyers from cashing in their miles. If that is the case, then for everyone except people at the very highest categories of frequent flyers -- and you may be one of them -- the accumulated miles are almost worthless, alliance or no alliance.  

    • Miles are not the only thing we FF care about. Treat it like fidelity :) In exchange for sticking to alliance, and codeshares, the minimum the frequent flyers expect are a) priority boarding b) upgrades against unfilled J seats c) One-to-one miles. 

      Now that miles have been monetized and devalued, airlines indeed have put burden on redeeming miles. Even though people might have millions of miles, it is the qualifying miles/points that frequentflyers chase. Say a middle-tier status flyer goes from New York to Singapore and back (he/she accumulates over 20,000+ qualifier miles, and with double bonus 40K redeemable miles) on work, now potentially might get next to nothing. 

      Airlines make money when miles are sold to retailers who give miles as incentives (from flowers to car service companies) They have just become greedy now ! :(

    • Anil, you make a lot of smart observations that should cause anyone to think twice before paying good money for a frequent flyer credit card.

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