Jetset: "The Alliance War"

Growing up I was fascinated by the sight of Pan Am planes taking off from exotic locations in Cold War-era James Bond movies. A 1979 route map showed the United States’ former unofficial flag carrier literally flying to every corner of the world: from Mumbai to Montevideo, and from Nadi to Nairobi.

But alas, that map also marked the beginning of the end. Starting in the late 1970s, flag carriers faced an increasingly volatile business environment as they gradually lost their monopoly on once-prestigious and lucrative long-haul routes. Some of the best-known names in the world airline roster have since disappeared: TWA of the US, Swissair, Sabena of Belgium and, of course, Pan Am.

Dominating the skies today are three global airline alliances. Star Alliance, the oldest and biggest, was co-founded by Lufthansa and United, and now boasts 19 members, with Air China and Shanghai Airlines being the newest. Skyteam, launched by Air France and Delta, has ten members, including China Southern. Oneworld, anchored by American Airlines and British Airways, also has ten members but has yet to see a Chinese carrier in its ranks.

Airlines formed alliances to cut costs and increase revenues, creating virtual cross-border mergers without having to clear prohibitive regulatory hurdles. Members within an alliance code-share, or place codes on each other’s flights and sell seats on partner flights as if their own. This practice allows airlines to cover the globe in a way that even Pan Am in its heyday could not, and make more money without adding a single plane.

Consumers benefit, too. You may notice ease of transfer at hubs, especially as alliance members coordinate schedules and push for an “under-one-roof” strategy. Star Alliance members, for instance, will move together into Beijing’s new Terminal 3 and Shanghai Pudong’s new Terminal 2 later this year.

The most-touted advantage, however, has to be reciprocal frequent flier benefits. By joining one program, you can now accrue and redeem miles on all member carriers, instantaneously multiplying your choices for a dream vacation (Star Alliance members, take note of Air China’s new flight to Pyongyang). Top elite members have even more to cheer for, as your status will be recognized across the alliance, meaning perks ranging from priority check-in and boarding, to bigger luggage allowance and free lounge access around the globe.

But it seems that members often take months to be on the same page. One Air China gold member was recently unceremoniously denied entry to a Star Alliance lounge in Switzerland since the computer system failed to recognize his status. And many members – especially those with smaller airlines – do not welcome the added competition for award seats on their home airline.

As grand as the term sounds, global airline alliances often seem to be marriages of convenience. With conditions, members can quit or get kicked out, and they never stop flirting with potential suitors in rival alliances. Air China, a Star member, and Oneworld’s Cathay Pacific cross-own each other. Singapore Airlines, another Star member, has tried to buy a major stake in unaffiliated China Eastern, only to run into a joint counter-bid from Air China and Cathay Pacific. All these intrigues make for some interesting in-flight entertainment. Steven Jiang

This article was originally published on page 34 of the February 2008 issue of That's Beijing magazine.