The oneworld
alliance, one of the three most important global airline alliances alongside SkyTeam and the Star Alliance, was founded on February 1st, 1999, and has grown to include 13 different member carriers today. The alliance’s principal objective is to be the first choice for international travelers, and since December 2022, it has been headquartered in Fort Worth, Texas. As one would expect, Texas-based American Airlines is a key member of the organization, but Seattle-based Alaska Airlines is also a full member, making it uniquely the only major alliance with two full US members.
In addition to American and Alaska, the airline’s membership consists of British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas, Qatar Airways, Royal Air Maroc, Royal Jordanian, and SriLankan Airlines. Fiji Airways and Oman Air are both set to join the alliance in the coming months, becoming the 14th and 15th member carriers, respectively.
Photo: Markus Mainka | Shutterstock
As of March 2020, the alliance and its member carriers collectively operate a fleet of 3,296 aircraft, serving over 1,000 airports in 170 countries. Carrying over 500 million passengers each year, the oneworld alliance operates more than 13,000 daily flights. The alliance is only set to grow, and its future certainly looks promising. However, it is lagging behind in one key area.
oneworld
- Business Type
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Airline Alliance
- Date Founded
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February 1, 1999
- CEO
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Nathaniel Pieper
- Headquarters Location
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Dallas Fort Worth, USA
- Airlines
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Alaska Airlines, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas, Qatar Airways, Royal Air Maroc, Royal Jordanian, SriLankan Airlines
The oneworld alliance’s market share lags behind that of its principal competitors
The alliance remains the third-largest among the three major global airline alliances, with only 11.9% of passengers on flights today traveling with a oneworld carrier. This sits slightly behind SkyTeam’s market share, which is around 13.7%, and significantly behind the Star Alliance, which serves as the global market leader with around 17.4% of global air passengers flying on a Star Alliance-operated flight, according to data from Statista.
Photo: Vincenzo Pace | Simple Flying
It is important to note that oneworld’s smaller market share is nothing new. The organization lagged far behind its rivals even before the COVID-19 pandemic and the energy price spikes of 2022 which reshaped the air travel market. Back in 2019, the alliance’s airlines carried just 490 million passengers, lagging behind SkyTeam with 676 million and the Star Alliance with 762 million. Furthermore, the suspension of Russian alliance members has also impacted airline alliance growth and market share over the past few years.
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The oneworld alliance has fewer member carriers than its competitors
There is a quick and obvious reason why the alliance has a smaller market share than its competitors, alongside some more nuanced reasons which we will get to shortly. For starters, oneworld simply has fewer member airlines than its competitors, with just thirteen currently, a number that is set to grow to fifteen by the end of the year. Nonetheless, the airline alliance will still lag behind its key competitors in terms of membership, with SkyTeam having 19 active members and the Star Alliance having a massive 25.
In the United States, the airline alliance has the largest market share, but this is true in few other regions. In Europe, the Star Alliance has nine full members (or eight if you do not consider Turkish Airlines to be a European carrier). Oneworld, by contrast, has just three members in Europe, with British Airways, Iberia, and Finnair maintaining full membership. As a result, the airline’s market share in one of the most important global air travel markets is lacking. With most European carriers already in a major alliance, there is extremely little room for the airline alliance to change this, unless it can convince some carriers to leave the Star Alliance or SkyTeam and join oneworld instead.
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With fewer member airlines, oneworld is not able to operate as many flights as its competitors or maintain as high a seat capacity, something which impacts its chances of expanding its market share. Furthermore, some of the alliance’s most important members, such as American Airlines, have had weaker financial performance in recent years, meaning that they have way less of an ability to expand their market share by launching new flights.
Photo: Carlos Yudica | Shutterstock
Furthermore, oneworld also suffers from a concentration of large airlines, such as American Airlines and British Airways, with fewer regional and mid-size airlines feeding into its network. In essence, the alliance needs more Alaska Airlines-type members, which have a smaller footprint but are important as they feed into the alliance’s long-haul network, exposing more passengers to oneworld flights and significantly expanding potential connectivity.
The airline alliance has been dealt some serious blows in recent months
American Airlines also struggles with regional gaps in its global network, something which lags behind the other two alliances. According to Forbes, continuous global connectivity is essential for an airline alliance’s continued growth. At the end of the day, the purpose of an airline alliance is to provide as effective an interconnected global system of transportation as possible, something that becomes difficult when there are no oneworld member airlines that may serve a given region. Oneworld, for example, has extremely weak coverage in many of the world’s fastest-growing air travel markets, such as Africa, Central/Eastern Europe, and, most notably, Latin America. The Star Alliance has a strong presence in many of these developing markets, while SkyTeam is not all that far behind.
Photo: Kristin Greenwood | Shutterstock
While Star Alliance member and Colombian flag carrier Avianca covers Latin America quite extensively and SkyTeam has two Latin American member airlines (Aerolíneas Argentinas and Aeromexico), oneworld has no presence in the South American market since legacy carrier LATAM departed from the organization back in 2020. On September 26th, 2019, SkyTeam member carrier Delta Air Lines announced its intention to buy a 20% stake in the Latin American legacy carrier LATAM for around $2 billion, according to a breakdown from Reuters. LATAM shortly after announced that it would withdraw from the oneworld alliance.
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This was a major blow to the oneworld network, as it heavily restricted its connectivity in one of the most important and fastest-growing air travel markets. The alliance as a whole has attempted to restore connectivity in a few different ways but has fallen short of recruiting a full Latin American member airline. Notably, American Airlines has collaborated extensively with JetSmart to improve connectivity to many destinations in Argentina and Chile, and the low-cost carrier has even been able to join the AAdvantage loyalty network. However, the alliance is still at a considerable disadvantage in comparison to its competitors, and the SkyTeam alliance could be set to become completely dominant in the South American market if LATAM fully enters the organization.
Competitive pressures and industry dynamics have limited the alliance’s growth potential
The last thing that is important to note is that industry dynamics have played a major role in limiting oneworld’s growth, with multiple major carriers struggling or undertaking major efforts that limit expansion potential. American Airlines, for example, is falling behind its competitors in the United States, while Delta Air Lines is seeing record profits and has ample cash to spend on buying shares in Latin American carriers.
Photo: Faiz Zaki | Shutterstock
Nonetheless, the alliance does have a pathway forward that will involve increasing its membership, with two new airlines set to join this year. Furthermore, with the Alaska Airlines acquisition of Hawaiian Airlines and the alliance entry of Fiji Airways, the alliance is set to establish a new foothold in the Pacific market, a position strengthened by alliance members like Qantas, Cathay Pacific, and American Airlines.