Star Alliance’s CEO on managing the world’s largest airline alliance 

Little more than a quarter of a century ago, in May 1997, five of the world’s largest airlines, United Airlines, Scandinavian Airlines, Thai Airways, Air Canada and Lufthansa, came together to form what is still the world’s largest airline alliance, Star Alliance.  

This move kicked off a chain reaction, with some of their direct competitors scrambling to form their own alliances. British Airways and American Airlines led in the formation of oneworld, while Air France had a similar role in the launch of SkyTeam.  

Fast forward 25 years and it’s hard to find a major flag carrier that hasn’t joined one of these three major blocs. But at the same time, the airline industry landscape has become more complex than it used to be in those early days. Large chunks of a growing market have been swallowed by non-aligned low-cost carriers and large regions of the globe, such as China, India, and the Middle East, have become major nodes in the global air traffic system. And all of this has happened amid a wave of technological change that has turned the distribution and marketing landscape upside down.  

So, are airline alliances still relevant in 2024? And how can they best serve the interests of their members?  

Exactly one year after his appointment, AeroTime spoke with Theo Panagiotoulias, CEO of Star Alliance to try to answer to these questions and learn about the way Star Alliance is navigating the increasingly complex environment while striving to provide value to its members.  

Panagiotoulias, who is Australian with Greek roots, has been in the airline industry for more than 26 years. Prior to taking on his current role, he held a series of executive positions at American Airlines and Hawaiian Airlines, as well as at Sabre, one of the world’s leading providers of airline booking software.  

Although some of these roles had a global dimension, the fact that Panagiotoulias was predominantly based in Asia-Pacific also provided him with a privileged vantage point to witness the rapid growth of aviation in the region.  

“Having spent many years in Asia-Pacific has obviously been very helpful because you’ve got so many emerging markets in Asia-Pacific where a lot of the growth is coming from,” he said. “I combine that with having also worked for US companies in the past.” 

“This has helped me better understand what direction the industry is taking and what role the alliance has to play,” he added.   

The operational, technological, and commercial experience Panagiotoulias gained in those engagements has certainly come in handy within his current role. But when it comes to leading such a diverse alliance a big dose of diplomatic skill is also paramount.   

“Within an alliance, you’ve got multiple members with different business priorities serving different types of communities and different focus points and priorities. So, you’re looking for consensus to drive forward enhancements and improving the customer experience,” Panagiotoulias explained. “That’s at the core of what we do.” 

What sort of governance mechanisms exist within Star Alliance?  

“Consensus is at the core of what we do,” Panagiotoulias said. “There’s nothing negative about that at all. When you think about the different business models that are represented within an alliance, by different airlines with different priorities, different focus points, serving different communities. So, there are going to be many different perspectives, and it doesn’t make any of them wrong.” 

He continued: “The overwhelming majority of these airlines have got very successful businesses. So, finding the sweet spot, focusing on that, and achieving consensus is at the heart of Star Alliance.”  

As of July 2024, Star Alliance counts 26 members in its ranks. The anticipated entry of ITA Airways, following the European Union’s approval of its acquisition by Lufthansa, will balance out the move of SAS, one of its founding members, to SkyTeam. The latter resulted from Air France-KLM becoming an investor in the Scandinavian carrier.  

“We understood and respected the fact that their business had evolved. They had their own challenges; they restructured their business and that has led them down a different path,” Panagiotoulias said. “That’s business. That’s life.” 

“They were a founding member and contributed greatly,” he continued. “I know that they got great value from Star Alliance, and we wish them nothing but the best. From our own perspective, though, network-wise, we’ve got still multiple carriers that continue to serve Scandinavia very strongly.”  

Another important point is, how much room for maneuver does the alliance enjoy? And which areas of responsibility are covered by the alliance, and which pertain to the individual airlines?   

“We put it through the lens of the customer experience: what are the initiatives airlines cannot otherwise do on their own or what are those they cannot as efficiently or as effectively implement on their own?” Panagiotoulias said.  

To illustrate this point, he referred to Star Alliance’s new lounge at Paris-Charles de Gaulle Airport (CDG) airport, which opened in October 2023. 

“In Paris, for example, we have 20 airlines serving Charles de Gaulle Airport, so it’s obviously a critical market for our member carriers. So, we came to the determination that the most viable and effective way of moving forward would be to have a Star lounge providing all the features, attributes, and services that you need and expect of a lounge in such an important market. So, it’s a good example of that,” Panagiotoulias said. “The alliance is not here to duplicate efforts or to do things that the individual airlines can do.”  

So far, Star Alliance has opened five other branded lounges at Amsterdam Schiphol (AMS), Rio De Janeiro-Galeão (GIG), Buenos Aires-Ezeiza (EZE) and Los Angeles International (LAX), all which are located at major international airports that are not Star Alliance hubs.  

The lounges may provide a tangible experience, but most Star Alliance projects take place behind the scenes. The alliance’s role is, more often, to smooth processes such as inter-airline bookings and airport connections, and to help provide a seamless experience across its members’ combined networks.  

“That’s where our customer experience focus is so crucial because we work on multiple projects and initiatives in areas where the airlines themselves simply cannot do it on their own,” Panagiotoulias said. “I’ll give you another example, a really straightforward one. When we look at baggage tracking, airlines have invested a lot of money in technology to be able to track baggage, but when customers are traveling across the alliance network, the airlines themselves really struggle to deliver that in a cost-effective manner. So, we have the Star Alliance baggage hub.”  

“All member carriers connect into that hub, which gives the customer the ability to track their bag across multiple airlines in the network as if they were flying on just one airline,” he said.  

When it comes to realizing this seamless across-network experience, Star Alliance has identified four pillars on which to focus.  

“When you think about the customer journey, you’ve got the booking experience, the airport experience, the connection experience at the airport and the loyalty experience along that pathway,” Panagiotoulias explained. “There are so many opportunities for us to be working on behalf of the carriers to make that experience more seamless and solve problems for customers. And at the heart of that, it’s IT and digitalization, that’s what our primary focus is.” 

As anyone who has worked in an airline’s IT department can attest, getting an airline’s many different software systems, which manage different aspects of its operations, to talk to each other is often a daunting task. Now multiply this by 26. How does Star Alliance manage to smooth things out across its eclectic membership?  

“It’s not an easy one at all,” Panagiotoulias said. “It requires a lot of investment and effort, but we actually have multiple IT hubs at Star Alliance, which provide our airlines with the ability to connect onto the rest of the network.  

“I just gave you the example of baggage tracking. We give them the ability to do that through all kinds of different ways where it is just much more cost-effective and practical than doing it on its own. But, most importantly, we are delivering that seamless customer experience. This is no longer an expectation by customers, it’s actually a demand.”   

Panagiotoulias also highlighted another of Star Alliance’s projects – facilitating cross-carrier seat selection when booking.  

“By the end of this year we’ll be rolling out seat selection, which will give customers the ability to choose their seat across multiple member carriers,” he proudly stated.  

Marketing is another area in which any alliance must distinguish its own actions as an organization from those of its individual members. A visual example of this is the Star Alliance livery with which member airlines commit to adorning 3% of their international fleets.  

Star Alliance is a brand in its own right, but how can it best complement or add to the brand of each of its member airlines?   

“We are the ones behind the scenes. Ultimately, it’s the member carriers that communicate the messaging to the customer,” Panagiotoulias said. “For example, if you are traveling on Lufthansa from Frankfurt to Okinawa, and there’s a connection in Tokyo with ANA. Lufthansa, they will be able to have the bag connected all the way through and they will communicate that. That’s the point of seamlessness. It’s providing the customer with the opportunity to engage with the outbound airline of their choice within the alliance and then connect to another Star Alliance member and do it seamlessly.” 

“And that’s exactly what we’re focusing on, what we’re delivering upon,” he added. “There’ll be more and more of that in the future.”   

Another project Star Alliance is working on is customer loyalty. When fully implemented it will allow the frictionless earning and spending of miles on any of the members’ respective loyalty programs.   

“The key point about this is giving the customer the ability that, if you’re flying Lufthansa and you are a Miles & More member and you want to redeem your miles, for example, with ANA, you will be able to do it instantly,” Panagiotoulias said. “We are the only alliance that will offer that.”  

“On each of our four pillars [booking, airport, connection and loyalty experience – ed. note] there are various initiatives going on at each given time because these are the most critical touch points from a customer perspective. And we will continue to do that moving forward in the future,” he continued, adding that Star Alliance is also working on biometrics to enhance the airport experience.  

One of the most stressful experiences regularly faced by passengers is short connecting times. This is another area in which alliances can provide a differential edge, Panagiotoulias explained.  

“We have connection centers that attend strategic airports around the world,” he said. “We have technology in place that informs the airline employees when flights are coming in late and are going to potentially misconnect with other flights further on.  

“These connection centers are at key strategic hubs, places like Chicago (ORD), Frankfurt (FRA) and Houston (IAH). So, we have the technology in place to inform, proactively get to the gate and physically escort customers to their onward flights to mitigate the impact. Last year, for example, we helped 300,000 customers avoid misconnections this way.”  

He added: “We all understand that irregular operations happen. The key is how you deal with it. This is the first step and it’s a very powerful one. It’s been serving us very well. We will continue focusing on using technology to mitigate the impact of irregular operations even further and be able to reaccommodate customers proactively, more efficiently, more effectively, when these do happen.” 

“Right now, we do a lot of that manually,” he said. “In the future we want to leverage technology to automate that even further.”  

Star Alliance does not sell tickets directly to the public, that corresponds to each of its individual member airlines. But there is one exception: the Star Alliance Round the World ticket. As its name implies, this is a fare that makes it possible to circumnavigate the globe by combining flights on Star Alliance’s different carriers.  

“That’s a unique Star Alliance product,” Panagiotoulias said. “The member carriers provide us with the fare information, etc. and we construct it. It’s a very popular product for people that want to do a multi-stop round-the-world trip, and we continue to offer that on our website.”  

Interestingly, the airline executive shared that this offering is most popular among business travelers.    

“If a business traveler is looking to go to New York, London and Tokyo from Sydney, for example, it’s great value, especially in the premium cabins, as opposed to getting two round trip tickets and combining them,” Panagiotoulias said. “There’s a very powerful value proposition in that. From a corporate perspective it is super popular. But what we’re now seeing is a premium leisure type of traveler.”  

He continued: “We’re seeing really strong growth in that space. And I’m sure you’ve seen this in people that you’ve interviewed with other airlines. This is a segment that has grown significantly since the pandemic, and it continues to grow. This product has seen a lot of growth in that regard.”  

AeroTime did not miss the chance to ask Panagiotoulias about the fact that a number of carriers have established their own network of partnerships outside the alliances they formally belong to. But he didn’t seem too concerned.  

“We have very few exceptions because our network is so vast. Exceptions are granted by the membership collectively, but there are specific criteria that need to be met,” he said. “For example, where the network doesn’t necessarily serve a very specific geography. You’ll see some of those, but they’re very few and far between.  

“We have very clear standards, 54 standards, that all the members must meet to be part of the Star Alliance. We’re very diligent about that and the carriers are very disciplined with that, as well. So, we are very comfortable with where we stand and as long as the members are comfortable.” 

“What it comes down to is that, from a network perspective we are very strong,” he said. “And we are comfortable being the largest alliance in the world.”   

Panagiotoulias also explained the process an airline must go through when seeking to develop partnerships with carriers outside the alliance.  

“There are terms and conditions that airlines adhere to as part of being in Star Alliance. Anything outside that, they will bring it forward to the chief executive board for discussion and a decision will be made on whether to grant it or not,” he said. “But as I said, it’s so few of them. If any member carrier wanted to pursue that because there was some unique opportunity, there are rules. And they need to submit it for review and approval.”  

Is it a similar process when it comes to deciding on new projects and initiatives?  

“Our role is to mediate and facilitate the various initiatives and ideas that come up,” Panagiotoulias said. “The subject matter expertise really sits within the member carriers and our role is to facilitate and mediate the conversations amongst the carriers and to bring forward these types of initiatives, achieve consensus, and then drive and implement what the carriers want.” 

“We facilitate those conversations,” he continued. “We also facilitate the various subject matter experts across the member carriers. Once we get consensus, then the responsibility is to serve the members and make sure we follow through and implement those initiatives.” 

Decision-making within a 26-member group is not an easy task. What are the different ways member carriers use to reach decisions? 

“There are various sorts of criteria depending on the level. We’ve got multiple levels. It starts with the chief executive board who sets the strategy. Then, we’ve got the airline management or the alliance management board, which makes sure that the strategy gets executed,” Panagiotoulias said. “We’ve also got committees where the subject matter experts are, which is where many of the ideas originate and are voted upon. There are all kinds of different ways of doing it. But ultimately, the key point is achieving consensus.”  

Ultimately, it seems that some compromise and flexibility is an important part of getting everyone onboard and moving things forward.  

“By and large, our governance works very, very well, although we’re always looking at it to enhance it further to make sure that we’re doing it as quickly as possible and as consensual as possible and driving the initiatives where there is consensus across the membership,” Panagiotoulias said. “With 26 member airlines, you’re obviously going to get a lot of different perspectives and points of view.”  

He added: “These are not right or wrong, because different airlines have got different priorities.”  

When it comes to implementing its own alliance-wide projects, Star Alliance has its own team and resources.  

“In terms of resourcing, we obviously have our own IT organization. We have a mix of our own people and partnerships with third party vendors,” he said. “Whether it’s Accenture, TCS or others, we dedicate substantial resources to the development and delivery of the various solutions. There’s a mix of both. But we’ve got a significant number of resources to support that.” 

“In addition, we’ve obviously got other types of resourcing, customer experience, focus and working with the various carriers on identifying the right solutions and initiatives,” he added. “We’ve got commercial people, finance people, a broad group of people.” 

So, are there any other airlines ready to join Star Alliance? Panagiotoulias wouldn’t say.  

However, since Star Alliance is already the world’s largest alliance, Panagiotoulias appeared to be more concerned with qualitative rather than quantitative growth.  

“We are the world’s largest airline from a geographical perspective. We cover 95% of the globe. So now the focus is very much on customer experience enhancements, on making the journey more seamless for travelers,” he said. “You’ve got many consensus points there amongst the airlines, irrespective of their differing business models and priorities. That’s what we focus on.”   The post Star Alliance’s CEO on managing the world’s largest airline alliance  appeared first on AeroTime.

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