Why Aeroflot Won’t Leave Skyteam Even Though They’re Frustrated With Delta

Aeroflot is a surprisingly useful member of Skyteam for those wanting to redeem Delta miles.

But via Milepoint, the Russian flag carrier is making noises that they want out of the alliance.

Russia’s largest airline Aeroflot may opt out of the global SkyTeam alliance and join a different one due to disagreements with its code-sharing partners, the Kommersant daily reported Friday citing industry sources.

The reasons are that they are handcuffed into deals with Delta that make US pricing (in its view) uncompetitive, and frequent flyer policies that don’t work for them.

Aeroflot is reportedly unhappy with being tied into expensive prices set with its SkyTeam alliance partner Delta for flights to the United States, one source close to company management told the newspaper.

Competitors are offering fares considerably lower on flights with stopovers.

Aeroflot is also unhappy with the frequent flyer miles policies of SkyTeam, which it sees as “unprofitable”, the source told the newspaper.

My first read of ‘unprofitable’ frequent flyer policies was expense of redemption but that makes little sense since Skyteam is generally the least generous with redemptions, other alliances would likely drive up costs (as Continental found when it moved over to Star Alliance, its redemption costs were much higher than anticipated even after accounting for how much higher they anticipated costs would be).

So it almost has to be linked to the costs of providing benefits and elite qualifying miles. Delta, of course, now offers reduced status miles for Aaeroflot flights.

And word is Delta is using its frequent flyer partnerships to strong arm partners into business deals they aren’t otherwise comfortable with.

But it is highly unlikely that Aeroflot is actually looking to leave Skyteam and instead is sabre rattling as a negotiating tactic to push back on Delta. At least that’s my read.

If they were actually serious about leaving Skyteam, they’d be negotiating in private and not making noise in the press. It would be advantageous to them, if seeking best possible terms, to appear happy in Skyteam but with the idea that they could be induced into another alliance. Public griping about how unhappy you are makes it look like you want to leave and will take an inferior offer. It lowers your price.

It’s against Aeroflot’s interests to talk publicly about their desire to leave Skyteam if they actually want to leave Skyteam.

Unless, of course, they’re having trouble getting oneworld and Star to return their calls (which is unlikely). In that case, public chatter could induce individual member airlines who would see advantage in an Aeroflot linkup to start initiating conversations.

Much more likely is that Aeroflot is posturing, sending Delta a message that there’s a breaking point and to back off — that if they try to extract too much from the airline, that they’ll bolt and then Delta will be worse off.

In a separate piece, an Aeroflot executive is reported to say “[t]here is no point in cooperating with” Delta.

Now there’s certainly some threshold at which Aeroflot leaves, and I’m not saying it can’t happen, but the fact that this is being bandied in the press tells me we aren’t at that point. The speculation in the media is suggestive that Aeroflot isn’t actually likely to leave, rather than suggestive that they will.


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About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. As long as they stay in for the next 10 days, so I can complete my award trip to Russia! 🙂

  2. I think…at least in spirit…Delta has already left Skyteam. I don’t think Skyteam means much to them but their strategic codeshare, joint venture, and equity investment partners mean a lot. Skyteam is just so 20th Century 🙂

  3. @MarkJ

    very good observation… it’s important to add that at least in spirit… Delta no longer has a frequent flier program. 😉

  4. I find it quite interesting how Delta is becoming the evil empire overnight from a consumer perspective. From a business-model perspective, if they continue their strategy and are able to force some of their partners to fall in line with their terms, plus make some more VS-type investments, and the whole thing proves to be sustainably profitable – it’s entirely possible that DL may be creating something that is as game-changing (for them) as the original idea behind the alliances.

  5. Have to agree with @Erik – DL is basically doing what it wants and is getting its way in most cases. We may not like some of the consequences, but can anyone argue that the company is not aggressively asserting itself and becoming a tough major player? It is pretty clear these days were DL stands – for better or worse, and people are flying them. They have a plan – unlike UA and maybe somewhat to a lesser extent AA. Skyteam has become a secondary consideration as DL positions itself similar to Emirates or the other ME carriers. Aeroflot is certainly posturing, butI suspect that you may be wrong about them leaving. Such tatctics define your position; it doesn’t necessarily weaken your position. Perhaps they already have something in the works?

  6. You should read the original article in Komersantь ( in Russian ) before coming to such conclusions . My opinion

  7. Spare us! You write a travel blog. You’re not a businessman. Your constant speciation on matters outside your pay grade are laughable.

  8. @Mike I’ve read that article, linked above, and it reinforces the views expressed in the post i think. If you think there’s something that underscores a different conclusion would love to hear that analysis.

  9. Gary, your analysis is where you SHINE. I love your insight on the industry, as well as the restaurant recommendations. 🙂

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