Topic of the Week: Who is Joining oneworld on Monday?

Oneworld

There’s a big press conference scheduled for New York on Monday where oneworld will announce a “significant membership development.” This is such a big deal that I received an invitation to go out to New York and oneworld would even arrange for flights. (I’m not going since I can cover this just as well from home.) The favorite right now is Qatar Airways, but we’ve heard mixed signals from them. What’s your bet?

56 comments on “Topic of the Week: Who is Joining oneworld on Monday?

  1. So many possibilities. Qatar seems to have the inside track in the rumor mills. B6 and/or TAM are very possible. IAG is going to be represented as well so that could lead to speculation of an IAG backed US Airways takeover of AMR with US joining oneworld. Might be more than one new member. There’s also a rumor that DL/AS are about to unveil something in Seattle on Monday as well so 10/08/2012 could be a significant day in alliance history, or it could all be much ado about nothing.

    1. Isn’t TAM as good as in oneWorld already? I don’t think it’d be this big a deal for TAM, because it’s going to happen at some point tin the LATAM merger. I’d bet on Qatar or maybe something Chinese.

      1. re: TAM – There’s also been some scuttlebutt going around that TAM will ditch Star (they have to) and become alliance-neutral. LATAM could benefit from the arrangement by having their Brazilian component in an AS-type position: aligning with those carriers that best serve their service strategy. So oneworld entry by TAM is by no means certain, actually getting TAM in at this point is still a bit of a coup.

    2. I also thought US Airways would be joining oneworld al la Continental’s switch to Star before their merger with United, but I’m skeptical its that. I’d figure Parker et al would want to hold the announcement in Phoenix or Dallas given that NYC isn’t either airlines focus anymore..

      That being said AA’s bankruptcy case is being heard in NYC, and by having the announcement in NYC there is no handtipping. Although its rough timing for AA, the public’s perception of them is probably near an all time low. IMHO, airlines have has planes crash and still have had higher public perceptions than AA has right now.

  2. Qatar would not surprise me. In my eyes, al Baker has a history of bluffing. That said, I don’t know how much Qatar or any of the Middle Eastern carriers need an alliance.

    My dark horse is US Airways. though I don’t think that a merger announcement is imminent, I think they might be switching alliances to either win favor for their merger prospects within Oneworld, or as part of a deal to get some financial backing from IAG or others.

    I don’t think that the announcement will involve announcing a date for a previously announced entrant, nor do I think that it will involve Jet Blue. I don’t think they see a need to join an alliance at this time.

  3. It would be quite interesting if it is QR. That leaves a very interesting problem however, which is that with major OneWorld Member QANTAS in bed with QATAR’s main competitor, EK, that makes code shares and other arrangements with QF complicated to put it mildly. At least with many of the previous carriers that joined OneWorld, there were often existing Code Shares with existing OneWorld carriers. This also cannot be good for Royal Jordanian (RJ), who is admittedly a minor player.

    Time will tell.

  4. I think the smart money is on US Air. This is a similar dance to Continental hoping over to Star before they announced their merger with United although the Delta/Northwest merger certainly pushed them out as well. If it is US Air, smart move by Doug Parker in order to curry favor with the IAG folks in moving the merger along.

    1. I don’t think US will have to join oneworld at this point to curry favor from IAG. It wouldn’t surprise me if TPG and IAG are already in the mix to provide capital for a potential merger. It’s also possible that I’m wrong since I have no insider information.

  5. A clue should be where it’s being held, New York and not Dallas. It could mean a new member who flys to the NY area but not Texas. AA is loosing ground in JFK and the NY area as a whole, so was NY picked to try and pump up Wall Street with the news or will it’s new member help AA to increase it’s NY market share?

    1. totally agree … Kingfisher is an ideal candidate … great business plan and incredible brand loyalty and great ontime and dispatch reliability history

  6. I say US Air, and I won’t like it! US Air keeps posting highly discounted F seats that are on United metal (I’m a United guy). Love getting that up front seat at a relatively low cost and earn the 50% bonus EQMs! (Well, guess they’re called PQMs now…)

  7. Its going to be Us Airways I mean they should of left Star a while ago they don’t help Star much while they will be able to help One World More

  8. Can we rule out multiple airlines making a decision? After all, there are several viable candidates, and some of them are ready to take things forward.

    My thughts on some airlines:
    US: the focus would be less on oneworld and more on an AA/US partnership. I’d doubt it.
    TAM: decent chance of joining, although I’d do it Santiago or Sao Paulo.
    Qatar: maybe? Al Baker is harder to predict than the weather.

    Some random dark horses:
    Ethiad: They’ve codeshared w/AA for a while. A little more stable than Qatar.
    Volaris: Replacing Mexicana?
    RAM: They’d be a decent fit, but there’s no rhyme or reason behind that one.

    Anyway, just my two cents.

    1. Steve – It could be multiple airlines. Good point. If it’s RAM, that’s not a very big announcement. And I would be shocked if Volaris did it. No good reason.

  9. I’ll throw out the guess of WS/Westjet. They’ve been coming closer and closer to various oneworld airlines, going as far as complete code-share and mileage earning on AA.

  10. My money on US Air,, they are extremely close to a merger deal with
    American… and now there is a reliable rumor
    that Jet Blue might be taking some AA action….
    anyway we’re stuck with whatever comes along..

  11. Lots of interesting guesses here, but I think clearly John is right. It’s Cayman Airways. Here are my thoughts on some of these.

    *Qatar – Certainly the favorite right now and wouldn’t be a surprise. I’m with Ben that al Baker wouldn’t hesitate to bluff here even though he’s strongly saying it’s not happening. Qatar is looking for a good way to compete and this would be one.

    *US Airways – I simply cannot see this but would love to be proven wrong. If it happens, it means that merger talks are very far along. And we all know that Tom Horton doesn’t want to merge, so this to me seems impossible. Like I said, I hope I’m wrong. This is completely unlike Continental/United where they were cooperating willingly. Until now, American has shown no interest in cooperating with US Airways. Also, US Airways gets tremendous benefit from Star Alliance. It would be a costly move to oneworld that would require a network rework. This isn’t happening unless a merger is imminent.

    *TAM – That actually does make a ton of sense. TAM cannot remain in Star Alliance now that Avianca/TACA has joined. With LAN a strong anchor for oneworld, there’s no reason to leave. So I would think TAM will join oneworld eventually unless it plays the independent card as suggested by ChuckMO.

    *JetBlue – No, no, no. JetBlue makes a great living by working with everyone. An alliance is a complete waste.

    *WestJet – I think WestJet has learned that the JetBlue strategy of working with a bunch of airlines is the way to go. No need to go to an alliance because Air Canada is already locked up in Star. If anyone else wants Canada, WestJet is there.

  12. Qatar is a good bet but did you hear about Etihad demanding from Air Berlin that they leave oneworld and do a joint venture with Air France?

    1. Well…they didn’t say for AB to leave oneworld, they said oneworld is “secondary”. I’m inclined to think Etihad – AFKL will happen. Alitalia even is joining the party with Rome-AUH codeshares.

      Is airberlin the Euro short-haul strategy for AF?

      I still believe this announcement though to be QR. Yes Qantas and EK partnership exists but Qantas is largely irrelevant in Europe and Western Asia. Qantas will probably stay in Oneworld because the incremental FF benefits and shared is > the cost of leaving the alliance.

      What is for sure is that AA-EY is out the window very soon. Whether its AA-QR or AA-EK or both remains to be seen.

    2. Well, Transavia seems to be the AF plan for short haul, at least right now. I will be curious to see what Are Berlin ends up doing since it is one odd airline right now. It’s just a weird in between.

  13. CF use your sources… find out where the CEO”s & Attorney’s for
    AA & US Air have been all week !! No announcement yet
    but, in the cards for later this month….

    1. Rich – They signed an NDA so they better be shuttling back and forth like that. Otherwise,it’s a waste. But I have seen no indication that they’re near a deal. I’d love it, but if it happens it’s not going to be announced as a new member for oneworld. This has to be something else.

      Then again, maybe I just need better sources…

  14. My gut instinct is that it will be USAir. As a Chairman’s I sure hope so. Just had 2 flights on United and they don’t upgrade Star Alliance Gold members so whats the use in being in the Star Alliance. They woudn’t even give me a seat in Economy Plus even though it was completely empty. Paid for the first class upgrade anyway. So go USAir and leave the Star Alliance in your dust !

  15. Im going for Qatar with a possible South American secondary. Dont worry about who is sleeping with who outside of the alliance as that is irrellevant. The alliance and other code shares all form part of a multitude of marketing tools. Having said all that, I dont see any huge advantages for Qatar out of joining oneworld.

  16. You seem to get several offers to go off and review things.

    If there is ever one that you don’t want to take up…

    But I digress.

    Everything seems to point to QR; It’s the current favorite. However, OW may come out of the blue with a new member. *If* it was US (which I highly doubt it is) that would mean that the merger was right around the corner–just like when CO joined Star.

    How about JJ? Joining LA over at OW makes some sense.

  17. An acquaintance who worked at AA in their alliance program had strongly hinted that something was brewing with EK. That was probably a good year and a half ago, though, so it’s cold intel at this point If it is a Middle East carrier, I sure wish they would go with QR instead of EK. Two flights, two bad experiences on EK, and DXB is a cesspool to connect through.

    My guess, though, is that the magical mystery airline is TAM.

  18. I just boarded an American flight to Chicago from St. Louis, where further down in the emptier part of Concourse C (which American still has mostly to itself), there is a brand new US Airways sign over an empty gate that was just put up! I fly out of STL on American almost weekly, and can confirm this is definitely a new thing. US has always flown out of Concourse A, and I see no reason that they would suddenly move from their decades-long home to the other end of the airport (and away from United’s gates) unless there was an alliance move or merger development.

    1. I pool in with the statements that some fellow enthusiasts made to me a few weeks ago. Basically, they said that the lines at the gates at LGA had been recently repainted, and that “A320” markings had been added. Since AA only had A319s and A321s on order, this must mean that a merger is imminent. I firmly believe that there is no need to change gate locations or ramp markings or anything like that until after a merger or alliance change is announced. Both would take a long time to finalize, more than enough to make the aesthetic and operational changes.

      1. Thank you, Ben. Changes like gate location in St Louis have nothing to do with a merger. Even if a merger were announced, it would still have to go through plenty of hoops before it happened. You don’t make gate changes this early by any stretch. Look at any previous merger and this just doesn’t happen like this.

        In St Louis, my guess is that someone either need more gates in A so US Airways moved to C or US Airways wanted more gates and moved to C for that reason. Or maybe gates went out of service in A because they’re doing some work. Who knows? But I can tell you that this has absolutely nothing at all to do with a merger.

        1. Fair enough, but as a wishful thinker, I still hold hope that it could be more than a timely coincidence!

  19. Because Qatar joining would probably be the worst possible outcome for OneWorld as it currently stands, and bad news is more common than good news, it probably is Qatar.

    Why can’t the Big 3 of Oneworld get together and coordinate their code-sharing efforts? I am not talking about something that is an anti-trust violation, just code-sharing.

    Here are the problems with Qatar joining that many of you have already pointed out.

    Qantas and Emirates vs. Air Berlin/Etihad and Air France vs. IAG/AA and Qatar. This poses a serious foundational conflict throughout the alliance.

    The problems for OneWorld if QF leaves are obvious so I won’t spend much time there. As bad of a hub as Abu Dhabi might be, Emirates does fly to DFW now and they would probably make the most sense. And at the very least that would leave Air Berlin/Etihad and Air France as the only odd combination.

    But While AB is not a huge carrier like IAG/AF/LH, they fill a very big void for OneWorld, especially the airlines other than IAG. OneWorld has a very big hole in Central Europe after the collapse of Malev. Star and SkyTeam are huge there and OneWorld is tiny. S7 is not the answer with the strict Russian visa requirements. Who would want to connect there and risk being stranded without a visa, if such a transit is even allowed?

    OneWorld needs Air Berlin badly. I am sure IAG would be very happy to be OneWorld’s sole European airline, they after all blocked Swiss from entering and sent them to LH’s waiting arms. Swiss would have been perfect but that opportunity is long gone unless LH decides to sell their interest.

    Perhaps OneWorld could siphon off a carrier from South Central Europe but I doubt they would find them appealing. I flew Tarom and found their service to be quite good.

    I am really surprised that the EU allowed SkyTeam and Star to get so big in Central Europe but they did and there is probably no going back now.

    If OneWorld loses AB and QF they will have serious problems in Australia and Central Europe. Personally, I think Etihad makes the best sense for all with their growth spurt about to kick into high gear, but with an apparent Sky Team deal in the works, I don’t see that happening.

    Maybe the best that OneWorld can hope for is an anti-trust block by the EU should Air Berlin try to join Sky Team.

    FYI, IAG does do some limited code sharing, especially IB, with some carriers from other alliances, but I would expect those arrangements to decrease as IAG grows.

    The one thing I am certain about is that the 3 big Gulf Airlines pairing up with different OneWorld players will cause a lot more problems than it will solve. a 3-way split would be the worst thing they could do. Why can’t they put more thought into this while there is still time?

    Maybe they tried with Etihad and Etihad simply wants to go to Sky Team. They might not have control over that, but surely something could be done about BA and QF going in different directions. Their growing distance from each other really puzzles me.

  20. I would be relieved if the announcement is simply Tam joining as most expect to happen.

    The pros and cons of a US merger have been debated. I will not go through that again, but I will say I think it is inevitable at this point.

    1. Horton may oppose it, but I think most analysts seem to view it as AA’s best shot to emerge from bankruptcy. The AA unions have 3 seats on the creditor’s committee and they all want to merge. The odds are that a majority of the committee will push a merger and it will have to happen at that point.

    2. Something may be up with Alaska and SkyTeam. That takes them out of the picture.

    3. JetBlue says they do not want to merge, and as many have pointed out, they work with many airlines. An AA/JetBlue merger would still leave AA a distant 3rd behind DL and UA and would have big logistical problems at JFK moving passengers between terminals.

    4. The only merger that makes any kind of sense and would bring AA up to scale with DL and UA is AA/US.

    All of these factors combined with Parker’s urge to merge convinces me it is a matter of time.

    But I don’t know whether that means tomorrow’s announcement will be about that. Horton did say a month ago that a decision to merge would come within weeks. Nobody else pointed that out but we are within his timeframe for an announcement. Maybe it is late due to the problems with the pilots?

    Again, I am not saying an AA/US merger is a marquis merger, but I don’t think US is an ‘ugly girl’ like the CEO of UA said (then apologized). It would bring a lot to AA (I think US flies to more continental European cities than AA). But most importantly, it is the last major legacy carrier left and AA must grow to compete. It is inevitable.

    One more thing, AA seems to have a bad habit of buying competitors and/or just having market share, then giving it away, then wanting it back when it would have been cheaper to keep it in the first place.

    AA let WN become the biggest carrier at LAX. AA let DL grow way too big at JFK. Now they will have to pay to get the market share back, if it is even logistically possible to get it back.

    1. Well said, Rampman. On that last paragraph, however, who cares about getting market share back? If it makes sense to fly routes profitably, then do it. If not, don’t. Market share is overrated.

  21. CF, you are correct that airlines need to make a profit. DL seems to be doing well at JFK and just bought most of US’s slots at LGA. This did not happen overnight. AA let the LGA/JFK market slowly slip out of its hands and now it wants it back as a cornerstone. They waited too long.

    I still have a bad feeling the announcement tomorrow is about Qatar. A 3-way split of the Gulf carriers among different OneWorld members is bad news for the alliance or at least one or two big players.

  22. Thanks CF,

    Regardless of what Horton wants, it is the credit committee which will have the final say. With three of the members already in support of a merger, it should only take one or two more. I would imagine the PBGC, which also has a seat, would be very open to the idea. That might be all the unions will need.

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