Qatar Airways is expected to finally announce it will join the Oneworld alliance on Oct. 8. Oneworld will celebrate the deal as an important milestone in the its development. The question is: what development? The past few weeks have seen fundamental change in the landscape of long-haul air travel. Qantas Airways was the first to announce a U-turn by forming a bilateral partnership with archrival Emirates while dropping a long-standing joint venture with British Airways. Etihad Airways is pushing its German Oneworld partner Air Berlin to go for a bilateral deal with Air France and put less emphasis on the global alliance. And Qatar Airways, now welcomed into the camp of its former opponents, may simply illustrate the surrender of European and Asian legacy carriers.

Increasingly, more of those legacy airlines are recognizing that they will not be able to curtail the growth of Qatar, Etihad and Emirates. Attempts to fend Persian Gulf carriers off have included limiting traffic rights, lodging complaints about state subsidization, and filing arguments against export credit support, citing unfair competition. None of the strategies worked, partly because European and Asian carriers certainly also have benefited from subsidies. Now the idea seems to be: “If you can't beat them, join them.”

But there is another underlying trend that must have all the alliances worried: Most carriers seem to prefer strong bilateral ties over the global groups that are sometimes too restrictive in allowing their members other partnerships and too demanding in terms of integration of sales tools.

In addition to Air Berlin and Qantas, TAM Brazil's experience highlights the shift. TAM is expected to exit the Star Alliance as a result of its merger with LAN. The two South American-based airlines formed the Latam Group this year. That was TAM's first decision against alliances. Its second could be that it might eschew Oneworld, even though LAN is a founding member. Becoming an independent airline would enable TAM to retain its bilateral ties with Star Alliance carriers while reaping the benefits of its merger with LAN.

Qatar Airways has been negotiating its admission into Oneworld for months. Oneworld has traditionally had a more relaxed approach toward what members are allowed to do outside of the alliance. But it speaks volumes that it has selected Qatar to strengthen its Asian operation. In a strange way, it is countering the all-but defection of Qantas to Emirates by mirroring the effort.

Admitting Qatar could also be a sign that Oneworld is not sure whether Hong Kong's Cathay Pacific Airways is going to stay for the longterm. And even if it does, the value may be limited: Cathay cannot introduce a joint venture with British Airways on the all-important London route because such an arrangement would never be allowed by the regulatory authorities. On the other hand, Cathay is tied to Air China, a Star Alliance member, through cross-ownership. Even traditionally restrictive Star had to accept this.

Etihad has an extensive network of nearly 40 bilateral code-sharing agreements that contributes around 20%—or close to $1 billion—to its annual revenues. It has abstained from alliances so far and if there was one option for the airline, it would probably be Air France-KLM's SkyTeam. That is because it is currently negotiating a code-sharing deal with Air France. Talks have been “very good and are continuing,” says Etihad CEO James Hogan.

While the negotiations primarily involve Air France and Etihad, an eventual deal would also include its affiliate Air Berlin. “If there is an opportunity, we would be keen to see that happen,” Hogan tells Aviation Week.

Linking Air Berlin with Air France would not automatically put into question the German carrier's membership in Oneworld in the short term, but it would shift the carrier's network priorities to align even more with the broader Etihad strategy and raise the question of how much added value the alliance membership brings. Hogan's opinion is that “Oneworld is secondary.”

Etihad bought a 29% stake in Air Berlin late last year for $105 million, while also providing a $255 million loan to its new partner. The German carrier's financial results have been deteriorating rapidly, but Hogan says he is convinced the company will turn the corner. He predicts Air Berlin will return to profitability “in the next 12-18 months.” And “they won't need another loan.”

Hogan cites ex-BMI CEO Wolfgang Prock-Schauer's appointment as the head of network and strategy at Air Berlin as important. The network “needs to be refreshed” and Air Berlin executives “know they have to make tough decisions.” Etihad has “no intentions” to fly North Atlantic routes from Europe, even though the bilateral air service pact between Germany and the United Arab Emirates grants UAE carriers limited fifth freedom rights to the U.S.

Etihad is close to announcing ties with Garuda Indonesia. The arrangement primarily concerns code sharing. Garuda's planned entry into the SkyTeam alliance was recently pushed back until 2014, mainly to allow more time to resolve information technology issues.

Airline Alliances
Members Aircraft Annual Passengers(millions) Revenue (U.S. $ billions) Daily Departures Destinations
Oneworld 13 2,381 324 105 8,627 810
Leadingcarriers American Airlines, British Airways, Air Berlin, Iberia
Star 27 4,433 680 182 21,555 1,356
Leadingcarriers United Airlines, Lufthansa, US Airways, Singapore Airlines
SkyTeam 18 2,644 mainline + 1,406 from related carriers 537 N/A 15,000 993
Leadingcarriers Delta Air Lines, Air France-KLM, China Eastern Airlines, Korean Air
Sources: Oneworld, SkyTeam, Star Alliance