The “virtualisation” of air travel took another controversial leap forward in Auckland this morning where Qantas subsidiary Jetstar announced an inbound code-share deal into NZ with American Airlines.

While the deal doesn’t yet mean Jetstar’s  Australian customers can book American Airlines flights as if they were operated by the Qantas low-cost subsidiary, its CEO Bruce Buchanan said that day was clearly coming as the carrier continues to out-grow its parent.

It’s another pushback for consumers of the meaning of an airline brand, whether, Qantas, Jetstar or Virgin Blue, each of whom might mean boarding a British Airways, Air France KLM or Etihad Airways flight respectively among dozens of other possible combinations on flights beyond Australia.

One of the “untidy” aspects of the latest surge in “virtualisation” is that Jetstar can sell you a flight within Europe on Air France, which is a direct competitor to British Airways, Qantas’ main European network partner.

The airlines use the terms “code sharing” and “interlining” in relation to these arrangements, and while both mean different things in terms of the carve up of the ticket price and the risks and rewards for each partner,  they are part of the massive blurring of the brands that comes when airlines blend their networks to make them look much bigger than they are in their own metal.

This smoke and mirrors process has been under way since the late ’90s and the invention of marketing alliances such as oneworld or Star.

But this year it has also turned ugly. Canada, France and Germany have all tried to block competitive challenges by the no-tax Middle East carriers such as Emirates and Etihad to the various commercial agreements that allow national carriers such as Air Canada or Lufthansa to combine forces to restrict availability and fare discounting.

There is one set of approvals for older airlines, and one set of disapprovals for newer competitors.

The US Department of Transportation has refused to allow Virgin Blue to set up a trans-Pacific joint venture with Delta Airlines that would give it the same benefits that Qantas enjoys in its relationships with American Airlines.

The ACCC has provisionally refused to approve a trans-Tasman alliance between Air New Zealand and Virgin Blue to allow the common sale of flights and the linking of their respective domestic networks that Qantas and its Australian and NZ Jetstar domestic operations already have.

(Virgin Blue has until December 20 to file a renewed case for approval with the ACCC.)

To consumers paying attention to these things, the airline game at home and away increasingly looks like one in which brand values become less certain, and equality in terms of commercial relationships between older established airlines and newer competitors is not assured.

Peter Fray

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