oneworld alliance revenues rise by more than 10 per cent

05 Jun 2007 [08:19h]     Bookmark and Share


Revenues from oneworld alliance fares and sales activities rose by more than 10 per cent year-on-year to almost US$675 million in 2006, helping its partners maintain their record as the most financially sound grouping of airlines.

The seven established member airlines sharing those alliance revenues – American Airlines, British Airways, Cathay Pacific Airways, Finnair, Iberia, LAN and Qantas – classified almost two-thirds of that US$675 million total as „incremental“ revenue, or money they would not have earned had it not been for oneworld.

These revenues are expected to be given a substantial boost in 2007 with the addition to the alliance of Japan Airlines and its associates, Malév Hungarian Airlines, Royal Jordanian and affiliates LAN Argentina and LAN Ecuador from 1 April, followed by Dragonair later this year.

oneworld sales to the corporate sector were particularly strong in 2006, with revenues from corporate accounts increasing by almost two-thirds.

businessflyer, the alliance’s product for small and medium sized accounts in key target markets, generated more than twice as much revenue as in 2005. More than 5,500 businesses are now signed up in France, Germany, Switzerland, the Netherlands and now also Belgium – almost 40 per cent more than a year ago, spurred in part by the alliance’s first external advertising in five years.

Yields from oneworld sales overall remained strong, with almost three-quarters of its alliance fares sold for travel in its member airlines‘ premium cabins.

Some 8 million passengers transferred between the established oneworld member airlines‘ flights in 2006, one in every 30customers they boarded throughout the year.

Revenues generated by this „interlining“ activity within the alliance rose almost 5 per cent to some US$2 billion, including benefits from alliance fares and sales products. That represents almost 3.5 per cent of the established member airlines‘ total passenger revenues.

oneworld Managing Partner John McCulloch said: „In a business where operating margins are generally thin and at a time when fuel prices have reached record highs, revenues from oneworld represent an increasingly important contribution to our member airlines‘ financial standings – and we are committed to increasing the contribution the alliance makes.

„Key factors behind this rise in revenues are the quality of the service oneworld and its member airlines provide, our unparalleled international route network and our unmatched range of alliance fares and sales products. We expect April’s addition of our new recruits, followed by Dragonair later this year, to give these revenues a significant further lift.“

While continuing to build revenues for its member airlines, the alliance also maintained its focus on supporting their efforts to reduce costs. Savings from its joint procurement activities now total almost US$300 million, with the bulk of 2006’s benefits coming from initiatives in the Engineering and Maintenance arena.

These efforts helped oneworld maintain its position as the most profitable airline grouping. Based on the latest full year results from all established members of all alliances, its established members collectively achieved an operating margin of 5.7 per cent – against 3.4 for Star and 3.1 for SkyTeam. At the net level, the profit margin for oneworld’s members collectively was 3.4 per cent, against 2.8 per cent for Star and a negative 8.3 per cent for SkyTeam.

The combined net profits for oneworld’s seven established carriers in their latest full years totalled more than US$2.3 billion, excluding one-off extraordinary items. On the same basis – ignoring asset sales and bankruptcy restructuring charges – the 17 member airlines of Star totalled US$2.2 billion and SkyTeam’s 10 carriers US$1.1 billion.

Over the past three years, the combined net profits of oneworld member airlines has totalled US$5.4 billion, while SkyTeam members have lost US$18.6 billion between them and Star’s partners have reported collective losses of US$20.8 billion. oneworld remains the only alliance without a member having to resort to Chapter 11 bankruptcy protection.

The past year saw oneworld complete its biggest two airport co-location projects yet. In February 2006 its six on-line airlines at Madrid moved into the new EUR6 billion Terminal 4, while early in 2007 five of its six on-line carriers at Tokyo Narita co-located alongside Japan Airlines at its main international hub. Now the alliance is preparing for its largest co-location activity since its launch, consolidating its airlines‘ operations at London Heathrow from March 2008 from the four existing terminals to just two – Terminal 3 and the new Terminal 5.

oneworld also continued its award-winning ways, voted the World’s Leading Airline Alliance for the fourth year running in the 2006 World Travel Awards, based on votes cast by some 170,000 travel professionals, including more than 110,000 travel agents in 200 countries.


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