American-US Air merger would boost revival of oneworld alliance

Wed Feb 13, 2013 3:21pm EST
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By Rhys Jones

LONDON (Reuters) - US Airways' LCC.N expected move to the oneworld alliance as part of its proposed merger with American Airlines AAMRQ.PK would be part of a comeback by oneworld, which has lost members and fallen behind rivals Star Alliance and SkyTeam in recent years.

Global airline alliances emerged in the late 1990s as a way for carriers to profitably extend their networks through mutually operated flights and marketing.

Sources told Reuters last week that US Airways would leave the Star Alliance and join oneworld as part of the merger with American. The move would come at a time when oneworld is in the midst of a recruitment drive to plug gaping holes in its worldwide network. Securing a Chinese member is still the main priority of the alliance, which is led by American Air and British Airways.

The $11 billion US Air-American merger, expected to be announced this week, will create the world's largest airline by passenger traffic and help the two carriers better compete with rivals such as Star Alliance's United Continental (UAL.N: Quote) and SkyTeam's Delta (DAL.N: Quote).

"The merger would see one of oneworld's key members becoming bigger and stronger, making oneworld the largest alliance in the U.S., the world's largest passenger market," said Brendan Sobie, chief analyst at the Centre for Asia Pacific Aviation (CAPA).

Oneworld comprises 12 carriers serving 160 countries with 9,500 departures daily. SkyTeam's 19 airlines fly to 187 countries, some 15,000 times a day, while Star is formed of 27 airlines serving 194 countries with 22,000 daily departures.

Oneworld's share of global capacity stands at 11.6 percent, compared to SkyTeam's 18.3 percent and Star's 24.8 percent, according to CAPA data.

Today, the three alliances provide 45 percent of all global seat capacity, according to industry body IATA. The growth of alliances has been spurred by rigid foreign ownership controls that make it hard for airlines to merge between regions, encouraging them to look for other ways to benefit from each other's brands and traffic.   Continued...

A view of two US Airways Express planes next to an American Airlines plane (background) at the Ronald Reagan Washington National Airport in Arlington County, Virginia, February 10, 2013, as negotiations continue this week between parent companies US Airways Group Inc and AMR Corp on a possible $11 billion merger, creating what would be the world's largest airline. Picture taken February 10, 2013. REUTERS/Mike Theiler