oneworld airlines benefit by US$5 billion from alliance fares and sales activities alone in its first ten years

03 February 2009

oneworld®, the world's leading quality alliance, generated US$5 billion in revenues for its member airlines through its alliance fares and sales products alone in its first decade.

Around two-thirds of this - more than US$3 billion - is regarded as "incremental" revenue.  In other words, it would not have been generated if oneworld did not exist.

When the grouping was launched in 1999, it offered just one alliance fare - its round-the-world oneworld Explorer.   Today, that portfolio has grown to more than a dozen alliance fares - a wider range than offered by any other alliance - used by some 100,000 customers in the past year alone.

Revenues from these alliance fares and sales activities in the past year alone are forecast to have reached more than US$850 million - 330 per cent more than the US$200 million achieved in the alliance's first year of operation in 1999.

By comparison, revenues generated by the alliance's member airlines from their passenger activities over the same period have risen 100 per cent, from a collective US$39 billion in 1999 to US$78 billion in their latest full financial years, while their traffic, in terms of passenger revenue kilometers, has increased by 78 per cent on capacity raised by 62 per cent.

These figures were revealed as Chief Executives from all oneworld member airlines met in Madrid - home city of oneworld's first recruit, Iberia - to mark the alliance's 10th birthday. 

The addition of Iberia and other airlines in the past decade has enabled oneworld to double its membership, from an initial five members to ten today, plus around 20 affiliate carriers and one member elect.

oneworld Managing Partner John McCulloch said: "The results from oneworld's first decade makes abundantly clear the growing value the alliance has added to all its key stakeholders.

"In an industry where profit margins are thin at best - let alone at times of global economic turbulence - revenues and cost savings from oneworld have made an increasingly important contribution to our member airlines' financial standings.

"For frequent, international air travellers - our core target market - alliance services and benefits have fast become a ‘must have', so oneworld's customer offering has never been more important in terms of keeping our member airlines competitive and their customers satisfied.

"As we enter our second decade, the alliance's strategy remains the same - focussing on the quality rather than quantity of our member airlines and on adding value for our customers and shareholders."

During oneworld's first decade of existence, its member airlines have generated revenues from their passenger activities totaling almost US$500 billion.  Add revenues from cargo, maintenance and other activities, and their total combined revenues reached nearly US$600 billion during the ten years since oneworld was launched.   That is more than the annual gross domestic product of the world's 18th biggest economy, Sweden.

Interline revenues generated within oneworld - from passengers transferring between flights operated by one member airline to those of a partner in the alliance - have also grown faster than its member airlines' passenger revenues, up 153 per cent during the ten years of oneworld's existence, from less than US$1 billion in 1999 to an estimated US$2.5 billion in 2008.

During the alliance's first decade, those interline revenues have totaled US$16.2 billion - or 3 per cent of its member airlines' total passenger revenues.

In those ten years, oneworld airlines have carried a combined total of 2.5 billion passengers - equivalent to more than the combined populations of the world's two most populous countries, India and China. 

When oneworld was formed in 1999, its founding airlines carried 177 million passengers.   In their latest full years, the alliance's ten current airlines boarded nearly 330 million people, representing 10-year growth of 85 per cent.

Passengers connecting between flights operated by different oneworld airlines have increased by more than 90 per cent during the alliance's first decade, from 4.7 million ten years ago to 8.6 million last year.  In the alliance's first ten years, these transferring passengers totalled 70 million.

Savings from identifiable joint procurement activities alone during oneworld's first decade have totalled some US$320 million.  And cost savings enjoyed by oneworld member airlines as a result of alliance cost reduction activities accrue daily as member airlines share best practices and jointly tackle industry issues.

These revenues and savings from oneworld activities have helped its member airlines establish themselves collectively as the airline grouping with the best profitability record.

Over the past ten years, the combined net profits of oneworld member airlines have totalled US$11.3 billion, while Star's partners have reported collective gains of US$9.3 billion and SkyTeam members have lost some US$19.5 billion between them - and both Star and SkyTeam comprise larger numbers of airlines.  

Reflecting its overall quality focus, oneworld is the only one of the global alliances which has not seen any of its member airlines declared bankrupt.

Productivity within the alliance has grown markedly during the past decade.  While its airlines' passenger boardings have risen by 85 per cent, staff numbers have grown by 37 per cent, from 221,000 in 1999 to 303,000 today.

The size of the combined fleet, meantime, has grown by 43 per cent, from 1,500 aircraft in 1999 to 2,200 today.  Six hundred of these aircraft, worth more than US$50 billion, have been delivered since the year 2000.  As the cornerstone of their commitment to minimise their impact on the environment, oneworld member airlines have outstanding orders for almost another 600 more fuel efficient and quieter aircraft for delivery in the coming years, worth more than US$75 billion.

oneworld member airlines have markedly improved their ability to fill these aircraft, with average passenger load factors across the alliance firming by 7.0 points, from 69.9 per cent at the time of its launch to 76.9 per cent in their latest full 12 month periods.

They have also maintained investment in their customer service and products during the past decade, with all oneworld member airlines now offering seats that convert into fully flat or lie-flat beds in their Business and First Class longhaul cabins.

This record of innovation is reflected across oneworld too - first to take bookings for any alliance fare on-line, first to enable passengers to connect between all member airlines' flights with the convenience of electronic tickets and first to commit to enable frequent flyers to book reward flights throughout the alliance network on-line.

Its member airlines' record of success in the various airline industry award schemes is also mirrored by the alliance, named the World's Leading Airline Alliance for the past six years running in the World Travel Awards, the industry's Oscars - the only alliance to win this title since this award was first introduced - and named Business Traveller magazine's Best Alliance three times.

Key oneworld statistics for its first decade

 

1999

2009           (including member elect Mexicana)

Growth

10 year totals

No of members

5

11

-

-

No of affiliates

21 

21

-

-

Länder

138

134

-

-

Reiseziele

632

673

-

-

Zahl der Lounges

223

548

-

-

Daily departures

 6,170

8,419

-

-

Passengers (000)

177,182

328,626

85%

2,497,805

Interline passengers (000)

4,690

8,598

83%

70,431

RPKs (sched, millions)

415,473

738,896

78%

5,577,234

ASKs (sched, millions)

594,719

961,003

62%

7,528,613

Passenger load factor %

69.9%

76.9%

7.0pts

74.1%

Fleet (operated)

1,524

2,176

43%

-

Mitarbeiter

220,986

302,753

37%

-

Total revenue (US$m)

42,236

99,780

136%

580,665

Passenger revenue (US$m)

38,903

78,057

101%

486,173

Interline revenues within oneworld US$m

997

2,525

153%

 16,214

Revenues from alliance fares/sales (US$m)

200

860

330%

4,994

Identifiable alliance cost reduction savings (US$ m)

-

-

-

320

Operating profit (US$m)

3,102

7,276

135%

23,067

Net profit (US$ millions)

1,708

5,204

205%

11,273

         

Notes:   2009 data for RPKs, ASKs, passenger load factor, total revenue, passenger revenue, operating profit and net profit are based on latest available full year data from member airlines as at 16 January.   2009 data for revenue from alliance fares, incremental revenue, interline passengers are estimates based on latest available data.