Oman Air is apparently considering joining oneworld, an airline alliance, sponsored by Qatar Airways (pictured). But would this be a good move for the Omani carrier, or could Qatar Airways be the main beneficiary? Read on to find out…
Why would Oman Air want to join an alliance?
Put simply, joining an alliance makes sense for many airlines because it allows them to grow revenue while (in some cases) dramatically reducing their cost of sale. As a special form of interline agreements between carriers, alliances offer passengers three benefits:
1. Codeshare:
Flights on several airlines in an alliance are marketed together as if they were one, with each flight on a ticket carrying a common code against the flight number. In principle this makes it easier for passengers to find offers and buy tickets, leading to higher demand, market share and revenue
2. Seamless connections & ticketing:
Connecting flights on alliance members can be offered as a single package with one price. Most of the time it is cheaper for passengers to fly with an alliance than buying separate tickets, improving the carrier’s competitive position – the revenue cost of cheaper tickets is offset by both more seats sold and reduced cost of sale
3. Loyalty benefits:
Membership of one airline’s programme is treated as membership of another for miles earning, redemptions and certain benefits like airport lounge access and priority check-in. When passengers fly a route not offered by their preferred carrier, choosing an alliance partner over another airline who is not a member helps retain status and earn points – compelling reasons to buy a flight even if it is not the cheapest.
It is worth pointing out that alliance membership is not strictly necessary to achieve any of these benefits.
How do different alliances stack up from Oman Air’s perspective?
There are three major airline alliances – oneworld, Star Alliance and SkyTeam – and each have their unique selling points.
Oneworld is probably the alliance best-suited to passengers who care about and are willing to pay for premium cabins, for while each alliance features members with high service standards, oneworld’s are the most consistent.
At the global level, Star Alliance probably has the best network, with giants like United, Turkish Airlines, Lufthansa Group and Singapore Airlines serving every continent except Antarctica. SkyTeam probably has the best access to specific emerging markets in Asia and South America.
Oneworld member Qatar Airways offers one-stop global connections via a short flight to Doha and from this perspective they would be a good partner for Oman Air. But they do not offer connections onto any of Oman Air’s longhaul services, suggesting that the bulk of the benefits will accrue to Qatar Airways rather than Oman Air. Oneworld’s network power beyond Muscat is not great.
British Airways operated to Muscat pre-pandemic, will probably do so again and offers nice longhaul connections to Oman Air’s London flights. Malaysia Airlines will feed Oman Air’s Kuala Lumpur flights. But it is hard to see Oman Air’s network connecting nicely to Sri Lankan Airlines, Cathay Pacific, JAL, Finnair, Qantas or other oneworld members either down-route or at Muscat.
However Oman Air’s alignment with oneworld on the passenger experience side is strong. Until recently their branding was handled by the person who had previously built Qatar Airways’ product, leading to commonalities, and the airline aspires to the high quality experience characteristic of oneworld.
Star Alliance may be a better fit. There are Muscat services in all directions from Swiss, Turkish Airlines, Ethiopian Airlines, Air India and Thai, who also complement Oman Air’s own flights at their own hubs. And supporting Oman Air’s other services would be Lufthansa and Egyptair (and perhaps Singapore Airlines if Oman Air reinstated services to the island state). If Muscat is a fortress of any alliance, it is a fortress of Star Alliance.
SkyTeam could be a good choice too – Air France and KLM have flights to Muscat, but there are no options east or south. However other SkyTeam members Kenya Airways, Aeroflot and Garuda Indonesia would be well-placed to feed Oman Air’s flights to Nairobi, Moscow and Jakarta. Saudia is also a member.
On balance I would not recommend Oman Air join an alliance
It seems to me that if Oman Air joins oneworld that is more to the benefit of Qatar Airways than Oman Air itself. Star Alliance and SkyTeam would probably generate better connectivity, improved support for longer services, better feed of traffic into Oman and more revenue overall given the current network. The risk of competing with other alliance members at the hub is managed well elsewhere and this can be achieved in Muscat too.
But there is little competitive pressure within the region as Etihad and Emirates are not alliance members. Oman Air has a robust competitive position as the carrier who serves Oman and it is not clear how alliance membership will improve the situation. I do not think that they need to join an alliance.
But Oman and Qatar seem to have a close relationship and the two countries supported each other during the 2017-21 Qatar diplomatic crisis. So when I see Oman Air talking about joining oneworld I really see them wanting to work closer with Qatar Airways.
Oman Air will find joining an alliance costly and complex. Membership fees, systems integration and commercial management with the alliance in mind may all end up more costly than they think. Working more closely with Qatar Airways without joining oneworld, or joining oneworld as an affiliate member, would deliver all or most of the benefits of membership at significantly lower cost. Instead I would recommend that:
1. Oman Air and Qatar Airways enter into a comprehensive codeshare agreement where every flight on one has a codeshare on the other; and
2. The two airlines merge their loyalty programmes and commercial product into a joint venture a bit like Air France-KLM’s Flying Blue so passengers flying one can earn miles and status valid on the other.
Those two together will offer Oman Air and their passengers most of the benefits of oneworld membership at significantly lower cost.
Of course, it is possible that Qatar Airways might pay Oman Air’s costs of joining oneworld as a thank you for diplomatic support. If that happens then Oman Air would have no reason not to enter the alliance. I leave that question to the diplomats though.
What do you think Oman Air should do? Let me know – oliver AT ransonpricing DOT com