SkyTeam celebrates 10 years

SkyTeam, one of the three major global airline alliances, is celebrating its 10th anniversary this week with events in New York City. Included in the celebration were several announcements regarding new members as well as a press conference where Leo M. Van Wijk, the CEO of SkyTeam, spoke on both the history and the future of the alliance.

Van Wijk had a number of interesting comments about the history of SkyTeam, including its pre-cursor in the “Wings” alliance and the details of its recent growth from just a few carriers to the current 13. The alliance has grown over its 10 year history to now serving nearly 900 destinations across 169 countries with 13,000 flights. Not too shabby.

The numbers do not tell the whole story. In his prepared remarks Van Wijk noted that the alliance has a tremendous presence in North America and continental Europe, but that there are also regions where they are not so strong. Specifically, Latin America, India, Southeast Asia and the Asia-Pacific regions were acknowledged as needing better coverage. Van Wijk stated that the alliance was in conversations with several unnamed carriers in these regions to fill the gaps.

At the same time, however, Van Wijk made it clear that SkyTeam is not interested in growing to have as many members as possible. Rather, they are much more concerned about finding strategic partners who fill specific route coverage areas.

[W]e do not necessarily aim to be the biggest alliance, but we do strive to be the most effective, meaning that we want to offer our customers a global network based on complimentary [route networks] instead of overlap….

[O]ne of China’s leading airlines, China Eastern, yesterday signed an agreement to formally begin the joining process to SkyTeam…. And we intend to add more Asian carriers to our group, thus firmly positioning SkyTeam as THE alliance for Asia.

Certainly a noble goal, but with the limited number of unaffiliated carriers in the regions in question, adding new members will be difficult, especially should the alliance choose to only choose partners with limited overlap in the existing route plan that existing SkyTeam partners operate.

Another significant focus of the SkyTeam alliance in the immediate future is the effort to “Enrich the seamless SkyTeam experience. The alliance is working to improve service consistency across the partners and expects to be able to co-locate airline operations in six airports per year. This co-location will be just one part of the effort towards “intensifying the cooperation between our members,” and working “more effectively to deliver on the promise to our customers.”

The prepared remarks were interesting enough, but the more candid and revealing bits of the discussion came during Q&A portion of the event. Specifically the questions focused on the opportunities for SkyTeam to increase their coverage. Van WIjk did note that “[T]he greatest need – and the greatest challenge – is in Latin America.” Looking at the list of unaffiliated carriers in the LatAm region that challenge is quite real. There are very few opportunities there for growth without a major defection from a currently allied or committed carrier.

Van Wijk was also asked how SkyTeam plans to compete against Star Alliance considering the likelihood that Star Alliance is likely to son have the world’s largest carrier in the combined Continental–United Airlines behemoth. The response was quite simple and certainly in line with what one would expect of a CEO, if not a bit far-fetched:

[SkyTeam’s] global coverage certainly has some light spots compared to Star Alliance, but it is up to par.

Yes, there are certainly a large number of destinations served by the alliance, but connectivity between destinations in the lesser served regions is much more sparse and the number of routes with such limited connectivity is much higher than Star Alliance currently experiences. While overlapping route maps may prove to be somewhat less valuable to the individual carriers they are incredibly valuable to the customers that the alliance members must woo. Overlap will force competition on quality rather than scarcity. That improves the customer travel experience which will generate more business in a manner that is beneficial to all parties. Hopefully SkyTeam will realize this and alter their approach to growing the Alliance.