Star Alliance Partners Overcoming Technology Hurdles
Star Alliance partners, following the addition of Varig last
week, expect to break through technology barriers over the next
several months in order to greatly expand customer service
capabilities across the partnership. The advances will be part of
numerous initiatives that the alliance has planned during the next
year aimed at capturing and retaining the elite traveler.
"Automation has been the biggest challenge" for the alliance,
said Bruce Harris, United Airlines' [UAL] director of industry
marketing and alliances. "It's common to every industry -- creating
interconnectivity of different systems so you can translate data and
not make the job more complicated for the frontline employees."
In fact, Varig's delay in joining the other five carriers was a
result of the airline's need to first bring its technology in line
with Star's membership, which includes United, Lufthansa, Air Canada,
SAS and Thai Airways. Carlos Muzzio, Varig's director, North America
and the Caribbean, said earlier this year that the Brazilian carrier's
existing computer reservations system (CRS) and frequent flyer program
databases prohibited full integration of the airline with the other
five partners last May, when the partnership was launched.
Technology coordination, said Harris, is the key to implementing
one of the major items on the alliance's list of priorities: premier
customer recognition. By the end of the first quarter next year,
Harris said that the six partner airlines will be able to welcome
individual passengers -- on any of the partner airlines -- by name,
and access that person's preferences for seating, meals, etc.
Just how much of a problem has electronic coordination been for
alliances? "Technology has been a challenge for two airlines working
together so you can imagine the challenge of four or five airlines
working together," said Morris Garfinkle, president of Washington,
D.C.-based GKMG Consulting. "If they can get common technological
language, it will be a tremendous breakthrough. Everyone is working at
it and recognizes the problem, but the Star Alliance is at the
forefront of solving the problem."
Data system interconnectivity also will give the partners the
capability to check on flight delays on any of the six airlines, when
customers call to inquire. That service will be available by year-end.
Additional Initiatives Planned
Other initiatives that the alliance partners are working on
include having a consistent policy for pet transport, unaccompanied
minors and special baggage; increasing joint purchasing; and
continuing integration of facilities and catering. The big question
for Star Alliance partners, said Harris, is "how do you act together
to maximize value for customers, shareholders and employees? One of
the key common denominators among us is that no one thinks they have
the answer."
Jim Freeman, a Lufthansa spokesman, acknowledged that the
partners are working on joint purchasing efforts, and added that
corporate contracts would be another focus over the next year. "We're
working on joint corporate contracts," he said, "but it still needs
some development and fine tuning."
Freeman also said that there still is room for more joint
advertising and marketing efforts. "It's a gradual process; we've been
trying to set dates to step up marketing, but that will happen when
more of the nuts and bolts issues are dealt with."
GKMG's Garfinkle noted that the alliance is "just starting to be
effective" in getting its message out. "They're being very careful
about ensuring that the internal support is there before they get
external messages out." He predicted that marketing would be gradually
stepped up and that the public "will start seeing [intensified
marketing efforts] more from other alliances like KLM and Northwest
[NWAC], too." Over the next few years, he said, "there will be more
focus worldwide on alliance branding."
Bottom-line benefits already are starting to emerge. In 1996,
global alliances contributed in excess of $100 million to United's
bottom line. Carrier officials anticipate that number will see double
digit percentage growth for 1997. The Star Alliance carriers as a
group, said Harris "are probably 60 percent of the incremental value
to United."
Expanding Global Reach
To continue its expansion, United's Harris said that Star
partners are looking at "key geographical areas" such as the North
Pacific, China and Africa. "It's interesting to see some of the
carriers that have come to us to express interest in joining the
alliance -- some are involved in other alliances." Airlines rumored to
be taking a serious look at linking up with the six-carrier alliance
include South African Airways and Cathay Pacific.
Star, like all the other alliances, Garfinkle pointed out, will
have to fill out its global networks, being very careful to select
airlines that are complementary and not competitive. "If you look at
Star, they don't have a presence in North Pacific Asia or China. The
alliance bodies are there, but they need to get arms and legs."
Still, he concluded that the Star Alliance is "clearly a leader
in the formation of alliance groupings. It is clearly the innovator in
operating under a single brand name and providing seamless
connections" and has spurred other carriers to stake claims as blocks
of airlines rather than ad hoc partnerships.
Mapping Star Alliance Progress
Where they have been . . .
* Terminal facility consolidation
* Lounge access
* Frequent flyer program integration
Where they are going . . .
* Common, worldwide recognition and treatment of elite travelers
* Interconnectivity of data systems
* Provision of flight information on all partners' flights
* Consistent policies for such areas as pet shipment, special baggage
and unaccompanied minors
* Expansion of joint purchasing
* Continued integration of facilities and catering