November 2022, Virtual
21 November 2022, Hilton London Metropole
What’s lies ahead for Star Alliance and its members in 2014? BBT editor Paul Revel talks to the alliance’s chief executive officer Mark Schwab
I meet Mark Schwab in the imposing beachfront Grand Hotel Huis Ter Duin, overlooking the North Sea just outside Amsterdam. We’re here for the CAPA Centre for Aviation summit, where many of the world’s top aviation executives, including more than a dozen airline CEOs, have gathered to debate industry issues. Schwab himself joins his counterpart at Skyteam, Michael Wisbrun, on a panel to discuss the future of airline alliances
Star is the largest of the alliances on most counts, including members (currently 28 airlines), revenue (nearly US$200 billion) and passenger numbers (more than 727 million). However, which alliance wields the most clout in terms of key markets and destinations is a matter for continual debate.
Schwab has only been in his role for two years, but is an aviation veteran, having joined Pan Am in 1975. He’s based in Frankfurt, where Star Alliance has its headquarters at the airport.
“It’s a very efficient spot for us to be set up, because Frankfurt is a great hub,” he says. “A large percentage of our airlines fly to Frankfurt. And to catch an aeroplane, we don’t have to leave our office till 45 minutes before departure. When people come in for meetings it’s very efficient – they can fly in the morning and out in the afternoon.”
JOINT VENTURESWith all the debate around whether various joint ventures and other partnerships undermine traditional airline alliances, how could the changes affect corporate travel buyers? Schwab replies by recalling London in the 1990s, when he was UK general manager for United Airlines. “We would go to the City or any corporate clients, and they’d say: ‘Yes, if we’re flying to the US, we’ll consider you, but actually we need to fly all around the world and we need a solution for that,’” he says. “It was a real barrier for our airline to penetrate the UK corporate market.”
He says when Star Alliance was created in 1997, “all of a sudden the doors started to open up”. As well as being able to “sell the world” to the business market, he says corporate deals under the alliance umbrella had huge take-up, to the point where “today we have well over a billion dollars a year of Star Alliance deals.”
He addss that in the ensuing period, immunised joint ventures have given carriers greater ability to coordinate schedules and pricing, offering “progressively more attractive deals” to corporate buyers.
CHANGING HABITSSome argue that changes to distribution and shopping habits mean that negotiated corporate rates with airlines are becoming less relevant. Does Schwab agree? “No, they’re not any less relevant than they have been. Yes, as the channels of distribution shift we see a change in how people are going about buying travel. But at the end of the day, if you’re a company that needs to go to, say, 50 destinations, the most efficient way to manage that is through one package. That hasn’t changed. If you’re going to buy on the spot market, you have to be very careful that what you are buying is actually a better deal.”
When Qatar Airways joined Oneworld last autumn, the airline’s CEO Akbar Al Baker told a press conference that Skyteam and Star Alliance would soon be “knocking on the doors” of the other two big Gulf carriers. Is Al Baker right, I ask Schwab. The answer is an unequivocal “no”.
He asks: “What would any one of those other two carriers bring to our alliance that we don’t already have? No new cities; we fly to every one of the Gulf states – I think our count is 32 cities that we fly to there. We do 2,500 weekly flights, so we have great access in and out of the Middle East.”
Star does, however, have Turkish Airlines, which has hub ambitions to rival the three Gulf giants. “Turkish Airlines has a very large market, which we are very interested in, and it’s a very fast-growing airline,” says Schwab.
So has Star in fact reached saturation point? “We have a few geographical gaps that we’re focusing on,” he says, but adds: “Sixteen years into a mature alliance, there are not that many gaps left for us to fill.”
LOOKING EASTOne gap that now looks set to be filled is India. As one of the world’s fastest growing aviation markets, this was a key target for Star, and in December last year the alliance board voted unanimously to restart Air India’s membership bid. Star has also made a move to maintain a presence in Brazil when TAM leaves the alliance to join Oneworld in March this year, by voting to extend membership to Avianca’s partner, Avianca Brazil.
So despite the questions raised by some over the big three alliances’ future, Schwab says they’re not going away anytime soon. He says from a traveller viewpoint, frequent flyers would “much prefer to be able to earn and use their miles all around the world – I don’t see any change in their desire to tap into a global network”.
He believes the three alliances have strong future. “Over 60 per cent of worldwide capacity is distributed among the three alliances. The biggest competition is between the alliances, and it’s good, healthy, competition. You pick any two cities in the world that you want to fly between and you have literally hundreds of options – but if you want a worldwide proposition, it’s the alliances that are going to be able to offer it to you.”
CV – MARK SCHWABSchwab is chief executive officer of Star Alliance Services. He and his team coordinate the development and strategies of the global airline alliance from its base in Frankfurt am Main, Germany. Star Alliance was founded in 1997.
Prior to assuming his role at Star in January 2012, Mark held numerous positions in the airline industry at United Airlines, US Airways and American Airlines. Most recently he was responsible for alliance activities at Star member airline United, where he was senior vice-president, alliances.
He began his aviation career in 1975 with Pan Am in Rio de Janeiro and went on to head organisations in Latin America, Europe and Asia. He has spent most of his career outside his home country, the US.
Mark has a degree in Latin American Affairs from the University of Virginia, and is fluent in Spanish and Portuguese. He is married with two daughters.