The three multilateral airline alliances have pursued an aggressive expansion policy since their launch, and now their global footprints are almost complete. Their new challenge will be to retain members and fill in the few remaining gaps in their coverage, possibly through deals with hybrid-model airlines and low-cost carriers (LCC), whose growth outpaces that of network airlines.

Oneworld has trailed its bigger rivals, SkyTeam and the Star Alliance, almost since the global alliances started their rise 15 years ago. The smallest of the three groups was jolted when Japan Airlines (JAL) filed for bankruptcy protection in January 2010 and reviewed its alliance strategy as part of its restructuring. JAL considered leaving Oneworld to join SkyTeam, and played the alliances against each other for its own benefit. Because the stakes were high for Oneworld, alliance members American Airlines and British Airways led a concerted effort to keep JAL in the group, and SkyTeam remains the only global alliance without a Japanese partner. All Nippon Airways (ANA), the largest airline in Japan by passenger numbers, has been a core member of Star since 1999.

However, SkyTeam has cemented its place as the leading alliance in China and Taiwan, where it has four full members: China Southern Airlines, China Eastern Airlines, Taiwan's China Airlines and Xiamen Airlines, which joined at the end of 2012. China Eastern became a member in June 2011 together with subsidiary—and former Star member—Shanghai Airlines. SkyTeam has 39% of system-wide seat capacity in China and Taiwan, according to Innovata, whereas Oneworld has just 8%, despite the membership of Cathy Pacific Airways. Star, which counts Shenzhen Airlines and Air China as members, has 20%. Overall, aligned carriers account for almost 75% of all available seat kilometers (ASK) in China and Taiwan, well above the global average of 61%.

“There are parts of the world where some alliances have a very strong position, while other alliances have a smaller footprint—Russia [and the Commonwealth of Independent States] is an example,” says Mark Diamond, principal at aviation consultancy ICF SH&E. “In certain countries, such as India, or continents, for example Africa, they represent a minority of seats offered and they offer additional opportunities for alliance growth.”

Other changes in the alliance environment and regional market shares will come from mergers and acquisitions, notes John McCulloch, senior principal at the Seabury Group. “The traditional alliance footprints are just about done now, with the exception of India and Africa, and we will see more adjustments from one alliance to another as the game is played out with mergers.”

Oneworld suffered the demise of Mexicana in 2010 and Hungarian flag carrier Malev in 2012, as well as the bankruptcy filings of JAL and American Airlines parent AMR Corp., but it will soon narrow the gap with Star and SkyTeam thanks to two high-profile mergers: the tie-up of LAN and TAM Airlines in Latin America and the combination of American Airlines and US Airways.

Oneworld's gain comes at the expense of Star, which will lose TAM in Latin America and US Airways in North America. US Airways accounted for 9% of the entire alliance's ASKs. “We will miss the volume they have,” admits Star CEO Mark Schwab, though he is quick to point out that “we lose 28 small and medium-size destinations, so it is not that big of an impact.” Both alliances have assured each other that they are “committed to a customer-friendly transition,” he says. And Star does retain its biggest member, United Continental.

But Star has to rebuild its presence in one of the fastest-growing and largest markets in Latin America yet again, having already lost Varig to bankruptcy in 2005. Besides TAM, there are only two sizable airlines left in Brazil, low-fare carrier Gol Linhas Aereas Inteligentes and hybrid Azul Airlines, and these are not ideal fits in terms of Star's business model. Gol is not a candidate anyway, given that Delta Air Lines has been clever enough to invest in a minority stake and tie it to the SkyTeam camp, and Azul is based at Viracopos International Airport in Campinas and simply serves secondary markets.

So Star is betting on Avianca, the second-largest airline group in the region, combining Avianca, Grupo TACA and Aerogal in Ecuador. The alliance hopes to turn Avianca Brazil, a small but rapidly expanding operator with a 6% market share, into as much of a feeder as possible. But Avianca CEO Fabio Villegas is taking a cautious approach to the potential closer integration of Avianca Brazil. “We have a lot of projects coming up,” he explains, referring to the consolidation of TACA and Aerogal into Avianca, the deepening of its relationship with Star, and dealing with constraints at Bogota's El Dorado International Airport. Nonetheless, Villegas concedes that a merger is something “that has to be explored.”

Meanwhile, none of the alliances have members in another emerging market, India. Star suspended the inclusion of Air India following multiple delays. And Kingfisher Airlines stopped the countdown for its Oneworld membership only months ahead of what looks like its permanent grounding. The only major airline left for potential alliance membership is Jet Airways, which is in need of new equity. It has been talking to Etihad Airways about the acquisition of a minority stake, but Etihad's board is seeking assurances on the security of its investment. So far, Etihad appears to be the only foreign airline to be prepared in principle to inject capital into Jet Airways, which puts the airline in a strategic dilemma.

“Network-wise, we only have one major white spot, India. We have no immediate solution to address this,” says SkyTeam CEO Michael Wisbrun. He claims the alliance is not actively looking to add new network members in other parts of the world, “but we are interested in making agreements with hybrids or low-cost carriers to support our members in particular gateways.”

The hybrid option provides carriers the benefit of alignment without full membership costs, and it allows SkyTeam affiliation with carriers—and their often strong domestic market share—that would otherwise stay away from alliances. “We can offer them a simple set of operational connectivity services, such as through check-in of passengers and baggage, via our IT SkyConnect hub,” Wisbrun notes. 'The low-cost segment is where the growth is, and we see selected opportunities here.” The concept is being tested with WestJet Airlines in Canada and Gol in Brazil.

One highly contentious issue has been whether the alliances should accept the three Persian Gulf carriers, if they wish to join. Qatar Airways is in the process of joining Oneworld; it will be a full-fledged member by early next year. Oneworld CEO Bruce Ashby argues that the addition of Qatar gives Oneworld access to “a lot of interesting Asia-Africa flows where we are quite weak.” The alliance also hopes Qatar will boost its presence on routes from Latin America to Asia or from Asia to Southern Europe. Qatar Airways CEO Akbar al-Baker says he selected Oneworld because it was the only alliance giving him unlimited freedom to grow.

Star's Schwab, by contrast, sees “enormous value for [Persian] Gulf carriers to join the alliances, but it takes away value from the other carriers. They have no home market, no frequent-flier programs. The arithmetic is simple.”