Understanding Airline Alliances and Partnerships

One of the more confusing concepts that new Travel Hackers face is the concept of the Airline Alliance.  Inevitably, one of the more common questions from people trying to get into the game is “if I collect Aeroplan, does that mean I can only fly with Air Canada?”.

Quick answer, no … no it does not.

To confuse matters even more, airlines that are part of alliances can also form partnerships on the side.

Let’s jump in and try to decipher this whole thing.

What Is An Airline Alliance?

Alliances can be a very complex beast especially if you start looking at things like interline agreements and marketed flights but I’m not going to go that deep.  What I’m going to focus on is how alliances can greatly benefit you as a Travel Hacker.

As a definition, an Airline Alliance is a partnership amongst 2 or more airlines on a substantive level.  This means that there is cooperation amongst the airlines that are part of the Alliance which can include things like shared lounges, common computer/booking systems, shared ground crews, etc.  In many instances, these Airline Alliances will work together to set similar prices or have offset schedules so as not to compete for market share.

 

Why Are Alliances Important?

For the most part, airlines are governed by a general rule that states that they are allowed to fly from their home country to a destination country and vice versa.  Unless an airline gets special permission, they are not allowed to operate between two countries where they are not based.

For example, Air Canada can fly anywhere in the world as long as the flight originates or terminates in Canada.  Vancouver to Tokyo (or vice versa) is okay but Tokyo to Shanghai is not.

The only exception to this is called a Fifth Freedom flight.

Without Alliances, airlines would be very limited in where they could fly.

Why Do Airlines Form Alliances?

The main reason that airlines join Alliances is to provide their customers with further global reach on their routes while minimally impacting their overhead and operating costs.  Even with the advent of long range aircraft with low operating costs, like the 787 and the A350, airlines still need these Alliances to reach to destinations around the world.

For example, Air Canada flies from Canada to Hong Kong, Shanghai, and Beijing, but what if you wanted to go to see the Terracotta Warriors in Xi’an?  Air Canada does not service that airport nor is Xi’an anywhere close to the airports I mentioned above, so what’s a traveler to do?  If Air Canada was not part of the Star Alliance, your only option would be to book a separate airline ticket from Canada to Hong Kong, Shanghai or Beijing and then an onward ticket to Xi’an … and that’s not convenient at all.

Rather than inconvenience their customers, Air Canada helped form the Star Alliance, which now has 27 partners, one of which is Air China.  In the example above, because of this Alliance, a customer could book an Air Canada ticket from Vancouver (YVR) to Shanghai (PVG) to Xi’an (XIY) even though the PVG-XIY leg would be on Air China.  In this particular example, the YVR-PVG flight would be an Air Canada marketed and operated flight, while the PVG-XIY leg would be an Air China operated flights, marketed by Air Canada.

What Are the Major Alliances?

There are three major Alliances in the world, the Star Alliance, Oneworld and SkyTeam.  Let’s briefly examine each one.

Star Alliance

The Star Alliance is the largest Airline Alliance in the world and is the Alliance that Air Canada belongs to, thus the one that you are most likely to care about.

As I mentioned earlier, Air Canada was one of the founding members of Star Alliance, along with Scandinavian Airlines, Thai, Lufthansa, and United.  As you can see from the chart below, all founding members are still part of the Star Alliance.  The diversity of the airlines is probably the best among the Alliances.  Asia, Europe, North America, South America and even Africa is well represented here.

Oneworld

OneWorld is the smallest of the Big Three Alliances but is probably the second most important to Canadians because of the relative ease of collecting British Airway Avios.  As you can see below, there is a strong European and Middle East focus in the Oneworld Alliance.

SkyTeam

SkyTeam is the 2nd largest of the Airline Alliances but there is very little talk about it here in Canada because there simply aren’t a lot of options to collect miles in this alliance if you are based in Canada.  The focus with SkyTeam seems to be Europe and Asia.

Why Alliances Are Important to Travel Hackers

Part of the agreements amongst Alliance Members is that award seats are made available to each member airline’s rewards program.  If we look at Aeroplan as an example, anyone holding Aeroplan Miles can book an award seat (if it’s available) on a Alliance Member’s airline.  Say you wanted to go from Brussels to Paris, well we know that you can’t get there on Air Canada but you can get there on Brussels Airlines, which is part of the Star Alliance.  In the example below, you can see that I can redeem 12,500 Aeroplan miles for a BRU-CDG flight in Economy.

This is simply to say that miles earned on an airline that is part of an Alliance, can be redeemed on any airline in that Alliance (assuming there is award availability).

How Do American Express’ Membership Rewards Relate to Alliances?

I’ve told my readers over and over again, that if at all possible, collect your miles in a transferrable program like Membership Rewards.  By doing this, you give yourself a lot more options.  Let’s take a quick look at where you can transfer your Membership Rewards Points.

Notice anything interesting?

That’s right.  You can transfer your Membership Rewards to all three Alliances.  Star Alliance is represented by Aeroplan, OneWorld is represented by British Airways and SkyTeam is represented by Delta.

What does that mean to you?  We’ll instead of thinking “I have access to 3 airlines”, think I have access to 3 Alliances, which represent a WHOPPING 62 Airlines!  This is why Alliances are key to Travel Hackers.

The four key credit cards that open up this world of possibilities are the following:

American Express Gold Personal – 25,000 Membership Rewards after $1,500 spend – No Annual Fee for the First Year
American Express Gold Business – 30,000 Membership Rewards after $5,000 spend – No Annual Fee for the First Year
American Express Platinum Personal – 60,000 Membership Rewards after $3,000 spend – $699 Annual Fee (get that to $299 – info in the review)
American Express Platinum Business – 75,000 Membership Rewards after $5,000 spend – $399 Annual Fee

As you can see from the picture above, Membership Rewards transfer at a 1:1 ratio for Aeroplan (Star Alliance) and British Airway Avios (OneWorld).  Delta has a transfer ratio of 1:0.75.

Ok.  I Get Alliances .. What the Heck is an Airline Partnership

At a layman’s level, an Airline Partnership is very similar to that of an Alliance with the key difference being that the frequent flier points are not ubiquitous amongst partners.

In my examples of Alliances above, you can redeem your Aeroplan Miles for flights with any Alliance member flight and any Star Alliance Frequent Flyer Program can redeem for Air Canada flights.

With a Partnership, it doesn’t work the same way.

For example, let’s look at Alaska Airlines, which has one of the best Partner Networks around.

As you can see, Emirates is a partner with Alaska and Alaska has 17 additional partners including Cathay, British Airways, Qantas and others, however, if you look at Emirate’s partner airline charts, the only shared airlines are JAL, Korean Air, and Virgin America.

So while you can use Alaska Miles to book on Emirates, you couldn’t use Emirates Miles to fly with any of Alaska’s other partners outside of JAL, Korean Air and Virgin America.

Understanding Partnership Quirks

Because Partnerships work out their own agreements, there is very little consistency with miles required to redeem for a destination.  If we look at the pricing for Canada to Asia using Alaska Miles, we see a dramatic difference between Cathay Pacific and Emirates.

Whereas if we looked at a redemption on an Alliance Partner, they would be much closer.  It should be noted that while they may not be exactly the same, they are much closer than what we see in the chart above for Alaska.

Another notable difference with Partnerships is that typically, you can only fly with the airline you are redeeming the points from and one partner airline, as is the case with Alaska Airlines.

Conclusion

One of the ways you can really start to maximize your points is by understanding both Alliances and Partnerships because it really does open up your world in terms of what you can redeem for.  To get a better sense of how you can maximize your points in both an Alliance (Aeroplan) and a Partnership, check out my series on how to redeem for a mini-RTW on Aeroplan and my case-by-case, step-by-step series on booking Alaska Partners.