Air Berlin climbs into Oneworld | Business| Economy and finance news from a German perspective | DW | 27.07.2010
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Air Berlin climbs into Oneworld

Air Berlin is spreading its wings to join the Oneworld alliance. The carrier expects membership to enlarge its route network, increase efficiency and consolidate its market postion against rival Lufthansa.

An Air Berlin plane

Ready for expansion: Air Berlin

German low-cost airline Air Berlin is joining the Oneworld alliance. The agreement was officially approved on Monday evening in Berlin.

Full membership in the alliance is scheduled for the beginning of 2012. Air Berlin plans to begin cooperating with American Airlines and Finnair on November 1, with 38 routes including nine transatlantic connections being offered under a code sharing agreement. Most of the destinations will be in Europe and Asia.

"Together with our partners we can offer a global route network in the future," Air Berlin chief Joachim Hunold said during a press conference on Tuesday.

"Central Europe - and especially Germany - was one of the areas where we wanted to expand," Willie Walsh, CEO of British Airways, added. "This is real progress in the competition with the other alliances."

Air Berlin CEO Joachim Hunold

Oneworld is the perfect match for Air Berlin, says CEO Joachim Hunold

The other two alliances are Star Alliance, which includes Germany’s biggest airline Lufthansa, and Skyteam, comprised of Air France and KLM. Oneworld's member airlines include British Airways, American Airways and Iberia. All alliances involve close cooperation on flight plans, connections, frequent flyer programs and the airport lounge access.

Striving for expansion

Air Berlin is the first discount carrier added to a major airline alliance. It’s a logical step, says aviation analyst Klaus-Heiner Roehl from the Cologne Institute for Economic Research: "They have the flight schedule, the structure, different kinds of planes and so on. They have always been more of a regular airline than a low-cost carrier."

And, after all, Air Berlin has grown bigger and bigger over recent years. In 2006 the company bought German carrier dba. One year later it merged with LTU - allowing it to offer long-haul flights to San Francisco, Cape Town and Bangkok, for example.

The first half of 2010 saw passenger numbers decrease due to the ash cloud created by eruptions of volcanic ash in Iceland - as did all European airlines. By June the company had recovered: Air Berlin carried 3.4 percent more passengers than in the same month last year. And shares in the airline bounded ahead by more than 4 percent on Tuesday after it announced its plan to join the alliance.

Passengers wait in a terminal as a plane takes off behind them

Lufthansa and Star Alliance still enjoy a dominant position in Europe

Major league

"Air Berlin has grown from a little charter airline to one of the leading carriers in Europe," Hunold said on Tuesday. When it comes to passenger numbers, Air Berlin is now the fifth biggest airline in Europe and the second biggest in Germany.

On a global level though, Air Berlin is not among the major players. "It is about 15 percent of the size of Lufthansa and also much smaller than British Airways and Air France," analyst Juergen Pieper from Metzler Bank said. In terms of size, passenger numbers and revenue Air Berlin’s competitor Lufthansa is still way ahead of them.

Hence for Pieper the move was a defensive necessity: "They had to join a bigger alliance with more powerful partners in order to survive long-term. Without this move Air Berlin would have had to face a difficult year and also a difficult future. It looks more positive now."

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A win-win situation

The future looks brighter for Oneworld as well. Air Berlin's membership allows the alliance to fill a gap in Oneworld’s presence in Europe. So far its competitor Star Alliance had the upper hand on the German market. "Air Berlin helps Oneworld to get face-to-face with Star Alliance," says analyst Pieper, adding that competition will surely intensify.

But: "There is no need for Lufthansa - or the Star Alliance - to panic," said aviation expert Klaus-Heiner Roehl - especially considering many flights will probably go through London Heathrow, as British Airways is one of the anchor airlines of Oneworld: "Heathrow airport is not very popular for transfers. Changing from one plane to another is cumbersome and strenuous. So some people might consider if that’s worth it."

Author: Monika Griebeler
Editor: Sam Edmonds

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