Flying for Free: How Alliances and Partnerships Work

December 15, 2018 Flying for Free Series

By The Pointer

Before we get back to planning Rob and Elena’s trip to Paris, there’s one more piece of background information we have to discuss: airline alliances and partnerships.  They are fundamental to how you can get value out of loyalty programs. 

So what do we mean by “alliance” or “partnership”?  Well, American Airlines and Finnair, a European airline based in Helsinki, Finland, are partners.  Let’s say that you’re a loyal American Airlines customer and a member of their AAdvantage loyalty program, but you’re taking a trip from Helsinki to Prague on a Finnair flight.  You don’t have to miss out on earning American Airlines miles.  You can still earn AA miles on that flight because of the partnership agreement between AA and Finnair.  Finnair frequent flyers can also earn Finnair miles when flying AA flights.  The same is true for redeeming miles.  You can redeem American Airlines miles for flights with Finnair, and vice-versa.  Because of this partnership, both airlines’ loyalty programs become more valuable because their members now have access to a wider flight network for earning and redeeming miles.  This is the core reason airline alliances and partnerships exist.

The Big 3 Airline Alliances

As you can imagine, this concept works so well that there aren’t just individual agreements between airlines.  There are several alliances where multiple airlines are all partners with each other:

  • Star Alliance – United Airlines, Adria, Aegean, Air Canada, Air China, Air India, Air New Zealand, ANA, Asiana Airlines, Austrian, Avianca, Brussels Airlines, Copa Airlines, Croatia Airlines, Egyptair, Ethiopian, EVA Air, LOT Polish Airlines, Lufthansa, SAS, Shenzhen Airlines, Singapore Airlines, South African Airways, Swiss, TAP Air Portugal, Thai and Turkish Airlines
  • oneworld – American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LATAM, Malaysia Airlines, Qantas, Qatar Airways, Royal Air Maroc (coming soon), Royal Jordanian, S7 Airlines and SriLankan Airlines
  • SkyTeam – Delta Airlines, Aeroflot, Aerolineas Argentinas, AeroMexico, AirEuropa, Air France, Alitalia, China Airlines, China Eastern, Czech Airlines, Garuda Indonesia, Kenya Airways, KLM, Korean Air, Middle East Airlines, Saudia, Tarom, Vietnam Airlines and Xiamen Air

As you can see each of the major alliances has a major US airline (United is part of Star Alliance, American is part of oneworld, Delta is part of SkyTeam).  It’s important to know which airlines partner with each other because it opens up your options.  If you really want to fly from New York to London on American Airlines, you can earn American Airlines to book a seat on that flight or you could use the miles of one of their partner airlines like British Airways or Cathay Pacific, for example.

Non-Alliance Partnerships

Not every airline is part of one of the big 3 alliances, though.  One of the biggest airlines in the US (with one of my favorite loyalty programs) is Alaska Airlines, and they’re not part of an alliance.  Instead, they created their own network of partnership agreements for their MileagePlan program.  They have a lot of partners: American Airlines, British Airways, Cathay Pacific, Condor, Emirates, Fiji Airways, Finnair, Hainan Airlines, Icelandair, Japan Airlines, Korean Air, LATAM, PenAir, Qantas, Singapore Airlines and Ravn Alaska. 

Unlike an alliance, these airlines are not all partners with each other, they’re just partnering with Alaska Airlines on an individual basis.  In other words, you can expect to use British Airways Avios to redeem for a flight on Royal Jordanian because they’re oneworld partners.  You can’t expect to redeem British Airways Avios for a flight on Emirates just because they’re both partners of Alaska Airlines.  However, you can expect to redeem British Airways Avois for a flight on Alaska Airlines or vice-versa.  Many airlines have set up loyalty programs, like Alaska’s, with a series of individual agreements such as Emirates, Hawaiian and Etihad to name a few.

There are other non-alliance partnerships as well.  Sometimes, airlines “cheat” on their alliance partners by forming additional partnerships that go beyond the alliance.  You may have noticed earlier that American Airlines partners with Alaska Airlines even though Alaska Airlines isn’t a oneworld member.  That is common.  Alliance members often have non-alliance partners, too.

Cherry Pick The Best Value

So why does all of this matter?  Now that you know how alliances and partnerships work, a world of possibilities opens up.  Let’s say you want to fly from New York to Frankfurt in business class, and United operates flights to and from Frankfurt that work perfectly for your schedule.  Your first instinct is probably to see how many United miles you need for that trip.  In this case, it’s 120,000 miles (per person, round trip) plus $120.41 in taxes and fees.  That’s a daunting number of miles. 

However, United is part of Star Alliance so you could book the same flights through one of their partners’ programs.  One of their partners is ANA, a Japanese airline.  Since each airline has their own loyalty program with their own prices, you can get a great deal by shopping around.  ANA only requires 88,000 miles + $120.41 (vs. 120,000 United miles + $120.41) to book the very same flights. 

This is what frequent fliers call a sweet spot.  Later in the series, we’ll talk about how to earn miles in foreign programs, but for now, take comfort in the fact that you’re not tied to the airline that operates the flights you want to take.

A Word of Warning on Fuel Surcharges

In the United States, we tend to think of points as a way to get “free” flights because they cover most of the cost of the ticket.  That isn’t necessarily the case in the rest of the world.  In addition to local taxes, many airlines also pass on the cost of fuel surcharges.  In my opinion, this is a baseless scam, but I’ll save that rant for another day.  For you, that means you should prioritize using airlines that don’t pass on fuel surcharges or that minimize them.

In the example above using ANA miles to fly on United, there is no out-of-pocket cost difference because most US-based airlines like United don’t pass on fuel surcharges.  However, the difference becomes very clear if the same itinerary (New York to Frankfurt) were being flown on Lufthansa, a Star Alliance that does pass on fuel surcharges.  Then, you’re choosing between 140,000 United miles + $120.41 or 88,000 ANA miles + $1,176.51.

Going with ANA is no longer a slam dunk easy decision, and a traveler who knows these quirks could save $1,056.10 and thousands of miles by flying on United and booking the trip with ANA miles.

If you want to save on both miles and taxes/fees, book with a loyalty program that has low mileage prices for your route (ANA Mileage Club in this case), and fly on an airline that doesn't pass on fuel surcharges (United) or use a loyalty program that shields its members from partner fuel surcharges.

This just became more complicated…help!

Complicated is your friend in this game!  If this were simple, everyone would do it, and there wouldn’t be any great values for savvy travelers like us.  All we need are the right tools to help us organize the information we just discussed.  I created a chart summarizing which airline shield you from partner surcharges and which ones pass on surcharges.

Let's say you're using British Airways Avios to fly on American Airlines from Phoenix to Los Angeles.  You'd start by looking up the first column next to British Airways.  The "Yes" tells you that British Airways will charge you a fuel surcharge for this booking if the partner has a fuel surcharge.  In this case, the partner you're flying with is American Airlines so we'll looking at the second column of their row.  It tell us that they only have fuel surcharges on transatlantic routes.  This Phoenix to LA flight won't cross the Atlantic Ocean so we're good: no fuel surcharge being passed on.

As you can see, the only airlines that protect you from all partner surcharges and never pass on fuel surcharges are United and Avianca.

With what you just learned and this chart, you have a tremendous advantage over less informed traveler that see big surcharges in their award search, and have no idea how to avoid it.  Hopefully, this helps you score some value down the road, but first, let's get back to Rob and Elena.

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