Will a bloated Star Alliance result in a branding nightmare?

Star Alliance, the largest airline alliance is set to grow even bigger. Star Alliance CEO announced that they may double their size in the recent future – to up to 50 members (a quarter of whom might be Lufthansa’s babies :p).

Among its members are some of the world’s largest and most admired airlines, including Singapore, ANA, Lufthansa, and Thai. But of late, a number of airlines with varying (and questionable) reputations have joined the alliance, including Air India, Egyptair and a couple of Chinese carriers. In the future, Star Alliance looks to get more member airlines from Latin America and Africa – further widening the quality spectrum among its carriers. And this may be detrimental for not just the Star Alliance as a whole, but for individual carriers’ reputation as well.

Bigger isn’t always better

The bigger it becomes, the more diluted the brand becomes. Gone will be the days when to fly from Sydney to Stuttgart, you could fly the pampering Singapore Airlines to Frankfurt, and connect to a super-efficient Lufthansa for the last leg of the flight. Just imagine the disparity in the quality of your experience if you have to fly Singapore Airlines for one leg and connect to Air-India for the other leg of your journey. It’ll almost feel like a downgrade from Business Class to Economy, even if you’re flying the same class throughout.

Though a larger number of carriers will increase Star Alliance’s reach, it will be an uphill battle trying to manage expectations and ensuring a satisfactory experience. It is one thing to achieve operational efficiency – which tends to be the mantra for airline alliances – and totally a different ball-game to maintain service and quality standards across carriers.

What about the tightly-knit OneWorld?

As Star Alliance expands its wings, Oneworld seems to have a differing vision for the future. It is aiming to provide a seamless experience to its customers, not only in terms of operations. With British Airways and American Airlines trying to form a close alliance, and British Airways trying to acquire Iberia and merge with Qantas, a very-very tightly knit alliance is getting even closer.

Hence, even though Star Alliance may offer more destinations, Oneworld will be able to offer a more cohesive and coherent experience to its customers – something thhat might just be a game changer. Moreover, as you can see from the figure below, Oneworld is close on the heels of Star Alliance in terms of capacity in most areas, if not ahead. Hence, a seamless brand experience might turn out to be a true differentiator in the future.

Focus on one thing, and do it well

So now that I’ve pointed out some of the branding challenges Star Alliance might face with its upcoming expansion, what are some of the ways to overcome them? Here are a couple of ideas.

1. All airline alliances have a pre-joining period for airlines where all systems are brought to the alliance’s standards. To ensure brand consistency, Star Alliance should introduce not just operational pre-requisites but also minimum quality and brand standards to be met for new members.

Yes, the above measure would help bring some measure of coherence, but it’s difficult to imagine a consistent brand experience across 50 airlines! I can’t forsee a day when Air-India can match Lufthansa in efficiency or having service in Spanair matching Singapore Airlines’ standards. So what else can be done?

2. Be honest. Since Star Alliance is aiming for the biggest network, then they should just brand themselves as being the largest. They shouldn’t emphasize quality. Instead, just focus on quantity. That’s the safest bet. When people are promised less, they expect less too. When expectations are exceeded, that’s only upside.

What do you think? Will size be a problem for Star Alliance? Will it affect the individual airlines negatively? What would Oneworld and SkyTeam do? Let’s hear your thoughts in the comments. section.

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  • Eric Magnusson

    An interesting question, Shashank.

    Airline alliances are co-branded with their member airlines, as we know. Speaking generally about membership branding: VISA, for example, is able to co-brand irself along with its numerous members without a branding nightmare, and Star Alliance should be able to do successful co-branding also, in its aviation context. I don’t think that a number of member airlines should be a problem as long as Star Alliance does not try to become the primary brand for the participating airlines (which probably it will not try to do).

    Best regards,

    Eric Magnusson
    Minneapolis, Minnesota, U.S.A.

  • Timothy White

    As to most memberships of this type, standards are the key factor in making even co-branading sucessfull. To join an alliance there are standard requirements that need to be met prior to membership acceptance. These range from safety measures to business processes and even using same standard applications to simplify baggage handeling. If Star Alliance maintaints these standards requardless of their size, the only ones that can beifit are the passangers, the airlines and the industry. Once these standards have been achieved for membership there must also be quality inspections to ensure there standards are sustained throught the duration.

  • Amir Hirani

    There is a passenger expectation for standards of service that must be maintained by member airlines in any alliance. As long as Star Alliance can mandate that all member airlines MUST have the same level of cabin service, for the respective classes, then having a larger alliance can truly benefit airline passengers and airlines alike. That said, I do not see how Star Alliance can impose its standards of service on member airlines even if there are minimum standards to be met for joining the alliance. It would be interesting to hear from Star Alliance on this issue.

  • http://simpliflying.com Shashank Nigam

    Eric, Timothy and Amir, thanks a lot for your responses. You’re right that as long as standards are set, it’s beneficial for passengers. to Timothy’s point, standardization of operational and technical processes is indeed a possibility.

    But as Amir mentions, it’s going to be an uphill battle trying to standardize service quality across 50 global airlines. It’s unimaginable among the 10-15 domestic airlines in the US – where regulations and union structures are at least similar.

    If minimum service standards are imposed, who determines the minimum? Singapore Airlines’ minimum may just end up being higher than Air India’s max! Then what? I’d love to hear your thoughts.

  • Cheryl Dimiceli

    I don’t think bigger is necessarily better. The more members the harder it will be for tracking, etc. for traveler. It seems we are headed for a one or two airline system domestically. Again, bigger is not necessarily better!

  • Adrienne Sasson

    The merger craze will become a “nightmare” for the client. The fairplay in competition is being diminsihed and pricing will certainly be negatively affected. They will become the kid with all of the marbles. If you want to play, you will need to play by their rules.

    Only upside will be the ability to use FF points on the allied flights.

  • http://www.ghcpc.org Maria K Todd

    Bloated alliance…. and a bloated ego. What is not bloated is customer service!

    I experienced an horrific experience in nastiness at LAX with a United Airlines (not TED) gate agent and a mobility impaired and hearing impaired traveler, one that included expletives from the mouth of the agent. When I arrived at my destination, I wrote a letter…not a diatribe mind you, a business letter citing facts, names, times, and specifics. I received a form letter that said essentially…”nice to hear from you, please fly again”. It wasn’t even signed!

    I was Premier Executive then. Now I am Exec Platinum with AA.

    Maria K Todd, MHA PhD
    President
    Global Health Care Policy Council
    http://www.ghcpc.org

  • Fiona Murton

    I totally agree that big is not beautiful. What is also frightening is the possible merger of BA and Qantas! Airline supremacy is not what its all about, clients want good value for money and service!!

  • http://simpliflying.com Shashank Nigam

    Cheryl, Adrienne and Fiona, Indeed “big is not always beautiful”. But As Adrienne mentions, the ability to use FF miles across all these airlines can be a huge upside. But is it big enough an upside to compensate for the inconsistent service quality?

  • http://simpliflying.com Shashank Nigam

    Maria, I can totally sympathize with you. I think CEOs of airlines need to be told that airlines are part of the service industry, not transport industry, like Greyhound is in.

    I’m sure you’d remember the Spirit Airlines incident late last year with CEO Ben Baldanza,accidentally hit “Reply to all”on a response to a consumer complaint about a delayed flight instead of just sending it to his associate. His message read:

    “Please respond, Pasquale, but we owe him nothing as far as I’m con-
    cerned. Let him tell the world how bad we are. He’s never flown us
    before anyway and will be back when we save him a penny. “

  • http://freightpath.com Ted Braun

    I believe one can look at alliances in general also as a defense mechanism; simply securing critical mass so that other alliances don’t snap up airlines that can could contribute to your market share. Beyond schedule coordination alliances have not taken as much advantage as they could have from pooling resources, whether in purchasing, maintenance, ground services and, especially cargo. Star Alliance is perhaps more unique in the sense that it is very closely tied in with Amadeus. Lufthansa is also a co-owner of Jettainer, the airline ULD pooling and management company. To answer your question – size does matter. Regarding the customer experience – the saddest example of all is the US market, where there simply is no customer experience whatsoever. Definitely not recommended or worth emulating, but a fact nevertheless.

    Ted Braun
    Owner, FreightPath LLC

  • Parminder Singh

    It depends on what you are looking for as a passenger. If connectivity and points are your most important criteria then Star Alliance is on the right path. Customer experience will differ and it is already being felt. I fly Star Alliance all the time and I can vouch for the difference in service. The preference always remains to fly Singapore Airlines over other Asian carriers.

    I do not think that branding is a nightmare because the brand is well established in the minds of the frequent travelers and there is enormous pull in the minds of frequent traveler to fly Star Alliance. Not every member airline will be able to give dedicated terminals but some basics will be met. Re-accomodation of a Star Alliance member being an important one in the event of a disruption. Consistency can be met in some basic areas but keeping it too high is difficult. Every airline uses a different reservations systems and at each airport the departure control system differs with the service level being more or less dictated by the ground handler.

    Star Alliance is good for the airline as statistics show that 70% of the traffic worldwide is now generated through an alliance. For the new smaller airlines it is specially beneficial as it increases load factor Regional airlines may be benefiting financially but the larger airlines get more benefit.

    Size matters and some level of consistent customer experience counts. So far with the bigger airlines, it has done a fairly good job. Moving forward, it remains to be seen how the newer airlines catch up. Star Alliance could also detail the level of service expected at different regions and airports and that should take care of the expectation of the passenger.

  • http://simpliflying.com Shashank Nigam

    Dear Ted,

    I love the brash way you bring out the facts. Indeed, scale does matter – especially for operations and procurement – but at the same time customer service shouldn’t be compromised. After all, I feel airlines are in the service business more than transport business. Would you ever want to fly the “greyhound of the skies”. Probably not.

    As another reader of my article stated, the ability to use FF miles across all these airlines can be a huge upside. But is it big enough an upside to compensate for the inconsistent service quality?

    In fact, you might enjoy reading an interview I did with Emirates’ VP of Ops for the Americas, who believes scale is Emirates’ key strength and will not dilute customer service. http://simpliflying.com/2008/interview-with-emirates-vp-nigel-page-on-the-a380-flights-to-jfk-sfo-and-lax/

  • http://simpliflying.com Shashank Nigam

    Dear Parminder,

    What a holistic reply! I’m impressed by your depth of knowledge in the area. Indeed, size does matter for an alliance, given the direct relationship with revenue size tends to have. In fact, that’s why I mention in my article that Star Alliance should position itself as the largest, and not talk so much about consistency of service.

    But then, how do you think other alliances should respond? Oneworld seems to be going in a totally opposite direction – with a more cohesive, exclusive group and SkyTeam seems to be running around like a headless chicken.

  • http://www.marblecleaningmiami.com/fl-marble-floor-cleaning-doral.html marble polishing doral

    I love the brash way you bring out the facts. I totally agree that big is not beautiful. Thanks.

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