Airline alliance cuts fuel costs

By CHRIS DANIELS


SEATTLE - Dealing with ever-rising fuel prices is the main focus of the Star Alliance airline network at the moment, says its chief executive, Jaan Albrecht.

Jet fuel prices had been high before, but the competitive landscape had changed dramatically.

The comments underscore Star Alliance member Air New Zealand's warning last week that rising fuel costs and increased competition would hit its profits.

Albrecht said the alliance was getting bulk-buying discounts from oil suppliers through joint purchasing arrangements at several airports, including Air NZ destinations such as Los Angeles, Heathrow and San Francisco.

The alliance's vice-president of finance and strategy, Brock Friesen, said the joint fuel purchasing arrangement had saved alliance members $US50 million ($73 million).

Alliance membership - now at 15 airlines - was having a significant effect on the finances of member airlines.

It did not give one big saving, but a lot of small co-operative aspects, such as the joint buying of internet bandwidth, were making it financially worthwhile being a member.

The Star Alliance has been involved in setting a joint standard for small regional jet purchases by some members - something it hopes to continue with bigger plane orders.

It says the plane makers like this, as it is cheaper to produce similar aircraft.

The airlines are hoping they can get bulk-buying discounts when ordering the standardised planes.

Air NZ's status as a member of the Star Alliance was thrown into doubt by its long-running unsuccessful attempt to form an anti-competitive alliance of its own with Qantas.

The Australian carrier is a member of the rival oneworld alliance, which has British Airways as its main European member.

Neither the alliance nor Air NZ would say so, but the penalty cost of leaving the Star Alliance could have been as high as $US50 million .

Another alliance vice-president, Christian Flick, said the possibility of Air NZ's leaving the alliance had not been raised during the whole Qantas application process.

"We are like a family," he said.

* Chris Daniels travelled to Seattle courtesy of the Star Alliance.