What AA, Delta gain from a JAL alliance

Jeremy Hobson Nov 19, 2009
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What AA, Delta gain from a JAL alliance

Jeremy Hobson Nov 19, 2009
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Steve Chiotakis: Japan Airlines is teetering on the brink of bankruptcy, and the two potential saviors are right here in the USA. American Airlines and Delta are offering Japan Airlines a cash lifeline in return for a partnership in their respective airline alliances. Marketplace’s Jeremy Hobson reports from New York.


Jeremy Hobson: Right now, Japan Airlines — or JAL for short — is part of American Airlines’ One World Alliance. That means American’s customers can buy one ticket and connect on a JAL flight and vice versa.

These days, almost every big airline is part of a similar partnership.

Jim Corridore: If you want to be a global airline, you have to fly to where your customers want to go, and an alliance is a much cheaper way to be able to expand your network.

Jim Corridore is an airline analyst with Standard and Poors. He says alliances are great for attracting business travelers — the ones who pay full price for a seat at the front of the plane. They also reduce competition. But there are risks.

Corridore: If your alliance partner defects, suddenly you’re left high and dry without a strong presence in a market.

That’s the dilemma American Airlines faces, as Delta tries to woo JAL from One World to the Skyteam. The winner won’t just be able to market itself as a strong player in Asia.

Seth Kaplan of Airline Weekly says these partnerships also help airlines save money.

Seth Kaplan: So Delta and Air France for example, who have their joint venture, across the Atlantic, they’re able to say, “You know what, maybe we each used to have two flights between New York and Paris. But maybe we don’t need a total of four flights, maybe we only need a total of three flights to really match the capacity to demand.”

And he says they can coordinate the schedules of those three flights so customers can connect to short-haul flights on either end.

Do customers end up paying more? Probably not, according to Kaplan. He says airline tickets are about as cheap as they’ve ever been.

In New York, I’m Jeremy Hobson for Marketplace.

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