We hear all the time about airline passenger alliances, but what about cargo alliances? There have only been two significant ones – the WOW Alliance and SkyTeam Cargo. In this article, we take a look at the smaller of these, the WOW Alliance. Peaking at four airline members, it stopped operating shortly after dropping to just two.
Cargo alliances
The three main passenger alliances – Star Alliance, Oneworld, and SkyTeam, come up all the time in our reporting. These bring together many of the world’s major airlines and offer operational benefits for both airlines and passengers. We also see airlines move in and out of alliances, such as LATAMs exit from oneworld in 2020.
These alliances cover cooperation and closer ticketing between airlines (although airlines also enter into separate joint ventures or codeshares). They also offer passengers greater and simpler connectivity and shared frequent flier benefits across alliance members.
But what about airline cargo operations? Several airlines have also formed alliances to cover this. These allow airlines to share freight capacity and enable simpler handling from origin to destinations with standardized procedures (much like passenger alliances do).
There have only been two alliances of significance. The WOW alliance was formed in 2000 between SAS Cargo Group, Lufthansa Cargo and Singapore Airlines Cargo. And SkyTeam Cargo was formed in the same year, just two months after the formation of the SkyTeam alliance. Four SkyTeam members joined initially – Aeroméxico Cargo, Air France Cargo, Delta Air Logistics, and Korean Air Cargo.
Growing the WOW alliance
Unlike its competitor, the WOW Alliance was not linked to a passenger alliance. Although the three initial airlines were Star Alliance members (SAS and Lufthansa were founding members and Singapore Airlines joined in April 2000), WOW didn’t focus on joining just the Star Alliance members. Perhaps it would have been more successful if it had, as only one other airline joined the alliance.
JAL Cargo joined the WOW Alliance in July 2002. This saw the alliance reach its most active. According to CNN, at the time JAL joined, the WOW Alliance controlled 17% of the global freight market. It served 523 cities in 103 countries.
Continuos problems for WOW
After 2002, no new members were added to the WOW Alliance. This left the stalled alliance with several problems and ultimately led to its closure.
With just four members, it was left with major gaps in its network. With only European and Asian members, the obvious missing coverage was in the US. Delta Air Lines was a founding member of the rival SkyTeam Cargo alliance (and it added Northwest Airlines after the merger in 2008), but WOW failed to recruit any US airline member.
Linked to this, the decision to open the alliance to all members, not just Star Alliance likely harmed their ability to recruit more alliance members.
Transport Weekly looked at the problems with the alliance in an article in 2008. They noted that by this time, member airlines had started to compete, rather than work together. It wrote,
“Members of the WOW alliance are reported to have competed against each other and to have failed to agree on joint offers.”
Members drop out
Lufthansa Cargo was the first member to leave the alliance, in 2009. It did not see any future in the alliance, wit frustrations about the lack of revenue or technical sharing between the members. Supply chain publication, The Loadstar, quote Lufthansa Cargo’s director of Japan and Korea, Michael Stormer’s views on this departure:
“The problem with WOW was that there was no joint cash box. We still had to sell our own capacities, and it was used as an extension of the network or extra capacity, but it was only used for cargo, not on our own flights. And there was no alignment on the IT or handling – so just normal interline business. It was a marketing tool which had no real advantage for customers.”
This departure was followed in 2010 by JAL Cargo. Its departure was necessary as it stopped operating cargo-only flights in 2009. This came as part of a solution to reduce debt at the time (as reported in blog airlinesgeeks.com) but meant it could no longer continue in the cargo alliance.
Cargo alliances are still operating, but not WOW
With the reduction to just two members, the WOW alliance stopped operating sometime after 2010. It is not clear exactly when, but Singapore Airlines confirmed to Simple Flying that it has stopped operating.
Its competitor, SkyTeam Cargo, has been much more successful. Its strategy of recruiting within the Star Alliance, and thus likely building on other cooperation between airlines, has worked well. From its founding with just four Star Alliance members, it has grown to 12 members.
SkyTeam Cargo has gone on to add coveraAL ge in other parts of the world (where WOW has never had members). In South America, Aerolineas Argentinas Cargo was added in 2013 (Aeromexico Cargo was a member from 2000), and Chinese carriers China Airlines Cargo and China Cargo Airlines (part of China Eastern Airlines) joined in 2012 and 2013. And the most recent addition has been Saudi Cargo in April 2019.
There are other smaller partnerships between cargo airlines as well. Lufthansa Cargo, since leaving the WOW Alliance, went on to partner with ANA Cargo in Japan. Reporting on this in 2015, The Loadstar explained how it was motivated by Lufthansa’s desire to partner in Asia, and how this deal was based on a revenue-sharing model (likely a response to its disaffection with WOW). It also reported that Lufthansa was looking to partner further, possibly in North America.
So it would seem that whilst they are not as prevalent as passenger alliances, there is still a place and benefit from cargo alliances. The WOW Alliance perhaps just didn’t work as planned, but perhaps some form of it could still make a competitive comeback.
We would love to hear your thought on WOW, and any details you know of its history or current state. Let us know in the comments.
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