Q&A: Horst Findeisen, vice president of business development, Star Alliance

Horst Findeisen has over 25 years experience in the aviation industry and is responsible for coordinating network matters within the Star Alliance

What is Star Alliance's network reach?

There are currently 26 carriers in Star and a further three carriers are lined up to be formally integrated. These are TAM in May, followed by Aegean and Air India. We broke the 1,000 destinations threshold when Continental joined us last year. Essentially, we fly to all the destinations that are really important to reach. Right now we are trying to understand what the Olympic-Aegean Airlines merger will mean for Star's network.

Star is the biggest alliance in the world - is bigger necessarily better?

True, we are the largest airline alliance by any measure, but it is not our ambition to be the biggest; we want to be the best. We introduced the concept and we are the recognised leader. For instance, we are clearly the most global alliance and this is what matters to frequent international passengers in an increasingly globalised world. Our white spot strategy has helped us to identify those areas where our coverage is relatively weak and which airlines would fit our criteria. It is through this process that we are actively involved in conversation with candidate airlines.

You're filling a gap in Latin America with TAM. What about the other gaps in the market, including Russia?

It's not that we don't fly to Russia - or Latin America or Australia - we do. Star members have services to many points there. What we are missing is a regional and feeder network within these regions that connect secondary destinations with the gateways we already serve. That is why we invited TAM to join Star. It provides a valuable feeder system in São Paulo and Rio de Janeiro, allowing Star passengers to fly to their final destinations enjoying the alliance benefits, such as collecting their air miles all the way.

How has the process of an airline joining an alliance evolved?

Five carriers formed Star 13 years ago, and then it actively recruited more carriers in important regions of the world. That has changed and now we see many airlines knocking on our door. Today the alliance concept is firmly established and even skeptics, who initially saw us as a marketing gimmick, now acknowledge the value proposition that Star Alliance offers.

From an airline's point of view, why join an alliance?

From a network perspective, airlines are connected to a network that spans the globe, so they can sell destinations that they can't reach themselves. It's not really feasible to launch service to a secondary airport half way around the world, but you can build a connection there in an alliance. So, economically, it's a valuable proposition in an airline's network portfolio.

Flying from your home base into an alliance partner's hub creates hub to hub routes, which network planners love because flights tend to be much fuller, with higher yields and more traffic flow. Other major benefits include tapping into an enormous frequent flyer base, which is good for attracting premium traffic. Carriers can also benefit from inclusion in broader corporate alliance agreements.

Who benefits the most from an alliance - airports, airlines, passengers or destinations?

It's a win-win situation for airlines and customers, as they have a one-stop shopping experience to connect to over 1,000 destinations. Some airports are also working very well with their hub carrier. Munich, for example, has embraced the concept of Lufthansa in Star Alliance and it has a new dedicated terminal designed to co-locate Star carriers under one roof, so that they are closely connected and within short walking distances.

We are seeing a similar dynamic in Tokyo-Narita, with a dedicated Star terminal. If there is a good working relationship between the airport and the alliance home airline, collectively they will build a growth engine from which all stakeholders will benefit. Collaboration with the common customer in mind is key. Unfortunately, airlines and airports aren't working closely in all cases.

Can an alliance bring any value to the low-fare carriers whose model relies on point-to-point networks?

We realise that these carriers have their own model - some are very profitable, but most are not. Low-cost airlines must keep costs low; hence they shy away from complexity. By design alliances and the combined services they provide are complex. Our model doesn't match with carriers such as Ryanair, and we respect that. Therefore, our approach is to match up quality, full-service network carriers.

What is the impact on an alliance if a member airline financially collapses, as in JAL's recent case (oneworld)?

We are entering a period where this will happen more and more. Liberalisation is slowly coming to our industry and market forces prevail. As in any normal sector we are seeing new entrants and airline exits. What's new is the advent of groupings poaching carriers from each other as well. But the alliance systems as such are firmly entrenched and here to stay.

Which Star carriers are best leveraging the power of being an alliance member?

One of the best examples is ANA, which was originally a large carrier for Japanese domestic traffic and regions around Japan. When it adopted its international growth strategy, it realised that being part of Star Alliance would bring them instant recognition in markets where they were not well known. Founding member Lufthansa should also be mentioned. It continues to be an active driver in Star and is quick to use the many growth opportunities presented through its alliance.