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Alliances 'running out of runway'

"SLOW-to-respond, bureaucratic" traditional airline alliances have outlived their usefulness, according to James Hogan, the Irish head of Abu Dhabi-based Etihad Airways, which owns a 3pc stake in Aer Lingus.

The investment in the Irish airline is just one of a number of ad-hoc links Etihad has cultivated around the world – a policy it sees as an alternative to becoming part of a formal alliance of independent airlines.

"The traditional airline alliances have evolved into bureaucratic organisations which struggle to deliver added value to their member airlines, many of which are no longer compatible with each other," he said.

He made the comments in a keynote speech at an aviation industry event in the US capital Washington DC.

Etihad's alternative model is a combination of organic growth, codeshares that allow airlines to share the same route, and minority equity investments in other operators.

Aer Lingus was a member of the One World Alliance of international long-haul airlines until 2007. It pulled out of the group, saying the appeal of the alliance to high-end passengers was no longer relevant.

"If we look at the consolidation occurring throughout the airline industry, we are also seeing more fragmentation within the alliances. This is going to continue as members seek ways to operate profitably in a very competitive environment with high fuel costs and generally slower global economic growth.

"It is easier, faster and far more cost effective to grow through one-on-one partnerships with established, respected carriers than it is to rely totally on our own resources, and to start from scratch in every market we serve," Mr Hogan said.

As well as an Aer Lingus stake, Etihad owns 29pc of Airberlin, 40pc of Air Seychelles, and a 9pc stake in Virgin Australia. It operates 42 codeshare deals.

Irish Independent