Air Transport World

This is progress?

Giving up control of the most important of all IT functions, even within an alliance, is not something airlines are willing to do

Alliance theory and practice continue to be two different things. Theory suggests each alliance should create a single revenue-management system to gain optimal benefit across its multiairline network. But these are airlines we're talking about.

They have spent years developing proprietary revenue-management systems designed for their specific networks and to give them an advantage over the competition. Now some of the former rivals are partners. What to do?

Building new, common systems takes time and pots of money. And regulators are or should be watching how far the systems go in setting prices jointly. Alliances with antitrust immunity can do so; the rest can't. Even for those allowed to price jointly, the permanence of alliances is not a bet most people want to take.

Barry Smith, senior VP-research at Sabre, which still is controlled by American Airlines parent AMR, says, "No one is comfortable giving up his pricing because of the long term." That includes American, which would not have combined its revenue-management system with or, worse still, adopted that of oneworld partner British Airways even if the two had obtained immunity and even at the point of a gun. Smith notes, "It's high risk to give up control of costs and prices."

Two current combines may produce a single system. Now that Austrian has bolted the Swissair-led Qualiflyer, SR clearly dominates. It talks diplomatically about assigning various functions to other carriers, but revenue management is important enough that Swissair will dictate the solution. …

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