“Whether you're in an alliance or you do it for equity ownership's sake, is a tactic,” says United’s Kirby. “It's not the strategy.”
United Airlines President Scott Kirby expects the carrier to have the most airline partners than any of its competitors by “early 2020.” But at the same time, Kirby agrees with Delta Airlines CEO Ed Bastian that alliances don’t offer as much value to airline brands and customers as they should.
United, which is one of the five founding airlines that comprise the 28-member Star Alliance, can also boast that it has addressed one of the glaring problems associated with alliances, Kirby said: namely, allowing alliance travelers to choose seat assignments.
The topic was discussed in reference to Delta’s joint venture with LATAM, which appeared to call the future of alliances into question. For Kirby, rather than offer a simple thumbs up or thumbs down on alliances, the issue is in how airlines consider any partnership with another carrier.
A Seamless Experience
“To me, whether you're in an alliance, or you do it for equity ownership's sake, it’s only a tactic,” he said. “It's not the strategy, it's the tactic to get to the end. Sometimes, the appropriate tactic is to buy an ownership stake. We have ownership stakes in Azul and Avianca, for example.
“But we have phenomenal partnership with a number of the other Star Alliance carriers: Lufthansa, ANA,” he continued. “And we're getting deeper and deeper integration. I don't think an ownership stake is required. I don't think alliances are dead, per se, but whatever tactics you use, it has to be focused on a seamless experience for the customer.”
When Jeffrey Goh replaced Mark Schwab as CEO of Star Alliance in June 2016, alliance members told the incoming chief that “his job is 100 percent about getting the experience to be more seamless,” Kirby said.
“We focused more on white spots on the map and it's cooler, it's sexier to sign up a new airline, and bring in a new partnership, but the blocking and tackling one of the one we had first,” he told Hegeman. “You can't run fancy plays down the field until you can run the basics.”
Finding Value In Alliances
Kirby insisted that there’s been improvement, but acknowledged there’s a lot of work left, particularly in the case of the corporate travelers.
“One of the things we're going to have to do is create a world where we can have one representative show up for a corporate buyer and cut the whole deal,” he said. “When we have this six different airlines that are all in a different city, different time zones, you've got to get approval, it's incredibly frustrating to corporate buyers,” he said. “We're moving in that direction; we're not there yet.”
In defining what a “seamless experience,” being able to choose seats across a number of flights is table stakes.
“It’s crazy to me how these alliances can't even assign seats today,” Kirby said. “But I believe that there's value in having a bigger network for our customers. You can accomplish that with alliances, again, as long as you do it seamlessly, or you can do it through ownership stakes. However you do it, you have to create a seamless experience to get to a global network – that’s really the strategy.”