Listen in as Star Alliance CEO Theo Panagiotoulias, the head of the first of the global airline alliances, sits down with Aviation Week's Karen Walker to discuss customer experience initiatives and focus areas.
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Rush Transcript
Karen Walker:
Hello, everyone and welcome to Window Seat, an Aviation Week Network Air Transport Podcast. I'm ATW and Group Air Transport Editor-in-Chief, Karen Walker. So welcome on board. I am absolutely delighted this week to be joined by Theo Panagiotoulias, the CEO at the Star Alliance. Theo, a very warm welcome to you. You are joining us, in fact, from Star's Singapore headquarters, so thank you very much for your time today.
Theo Panagiotoulias:
Thank you for having me, Karen.
Karen Walker:
Star, of course, is one of the three airline global alliances along with oneworld and SkyTeam, but Star was the first and it was a real game-changer when it launched in 1997 with founding members Air Canada, Lufthansa, SAS, Thai, and United Airlines. It has now grown to 26 airline members. Theo came to lead Star with some 25 years’ experience in the airline and travel industry, including leadership positions at Hawaiian Airlines, Sabre, and American Airlines. So a lot of experience that Theo brought to this alliance.
Theo, again, thank you so much for your time today. The alliances have always fascinated me. They really were an amazing shift in how airlines operated, particularly some of the very big airlines. As I said, Star really started all of that. One of the things that struck me was that in the years leading up to 2020, leading up to the pandemic, was that there was a little bit of a sense of the shine having gone off the alliances. There were a few questions—Are they really needed? et cetera. I thought that dynamic really shifted with the pandemic.
I mean, at times it seemed like there were two [kinds of] airlines: those that were in an alliance and could keep their networks together because of that, it was huge, and those that weren't and were really wishing that they were. So I think it almost seems to me like we're in sort of another era of the alliances now and we're really seeing the benefits of those for the airlines and for the customers. As I said, Star was the original, a very new concept in '97. So can I just start by asking you, what do you think are the biggest changes since 1997 and also in how Star operates?
Theo Panagiotoulias:
I think what you'll find, Karen, is when Star first embarked on this with the founding carriers, it was about expanding global reach. One airline could not necessarily serve every destination around the world, and it was all about bringing together members to be able to have that broad network to serve their mutual customers. Star was the pioneer of that, and being the largest alliance in the world, we have 95% of the world covered.
I think what happened over time—and you touched on a very good point about appreciating what value alliances bring during the pandemic—there was a pivot from a Star Alliance perspective just prior to the pandemic, around the 2018 period, where the network reach was solidified. It was very powerful. Recognition and rewards for customers were very real and incremental. So the pivot moved away to a large extent from that and a strong focus was on the customer experience.
As the pandemic came to the front, we started seeing that becoming an even more important aspect. How I like to frame this from an alliance perspective is, we at Star Alliance serve our member carriers and deliver upon things that the member carriers cannot do on their own. There are so many things that the member carriers can do, but when you are bringing networks together—the interline experience, for example—our focus is to make that as seamless and as close as possible to an online experience.
Karen Walker:
You've just used a word that I think can get overused in other parts of this industry: “seamless” travel. It's not just the airlines, of course, that use it, but the airports and the manufacturers, the supply chain—everybody uses that term. I'd just like to pick you up on that. From an airline perspective and in particular when you're traveling across multiple airlines within a single alliance, passengers probably take that to mean that everything is the same and equal regardless of which airline they're a prime member with and how many airlines that they're crossing over in terms of loyalty recognition, rewards, the experience of travel [both] onboard and at the airport, et cetera. Can I ask you what Star’s interpretation of seamless travel is and [what are] the biggest challenges to making that happen?
Theo Panagiotoulias:
When we talk about seamless, it's about making the experience as if you are flying the very same airline across multiple sectors. Let's be clear about it. That is the aspiration, that is the journey that we've embarked on. There are so many touch points on a traveler's journey. So when you think about the booking experience, when you think about the airport experience, the connection experience, the loyalty experience, when you look at those paths, there are so many opportunities to solve problems for customers.
At the core of this, you were talking about the pandemic before, Karen, I think one thing that came to the front more than anything during the pandemic is people want to control their own destiny. At the core of that is digitalization and technology. So that's where the opportunity lies. That's where the challenge lies as well. So let's be open about it. These are very complex problems to solve and so focusing on the seamless experience is an aspirational vision or focus that is never-ending. So our focus is very much to solve those problems for customers.
Karen Walker:
So you mentioned, essentially, technology there, IT. I think personally that that's got a huge potential still for the travel industry and for airlines. So airlines are working individually on a lot of that, as are the airports they're based at. How does that work from an alliance perspective? How do you integrate the IT that all the different airline members are doing with something that goes across the alliance members?
Theo Panagiotoulias:
So if I go back to the original point, Karen, when I was referring to the value creation that the Alliance brings to the members is to perform initiatives that the carriers cannot otherwise do on their own. So you're absolutely right. All the various airlines are working on and investing significantly on different types of IT solutions to enhance the customer experience. Where we fit in is: how do we do that when we're bringing multiple airline partners together to deliver that seamless experience?
So, as an example, right now we have an IT baggage hub that allows the airlines to connect the member carriers into the baggage hub [at] once, as opposed to setting up APIs and connections with carriers 26 times. So what that means for a customer is they're able to track their bag across multiple airlines on a multi-sector itinerary as if it is one airline. So that's an example of it.
One thing that we're rolling out this year is seat selection. Eighty percent of seats across our member carriers by the end of this year, you'll be able to assign a seat on multiple carriers within the Alliance. So that's where the seamlessness comes in. I think the point you touched on is right—that word gets thrown around quite a bit. From our perspective it’s at the very center of what we do and you've got to demonstrate tangible outcomes where the customer benefits, and going back to the point I was referring before, having control of their own destiny. If there's one thing that came out of the pandemic that is profound, it is that.
Karen Walker:
Yeah, that people, they almost want to ... Part of it is control, but it's also, I think more and more people want to enjoy being able to take care of their own experience a lot more.
Theo Panagiotoulias:
Absolutely. People want to do that. With digitalization and technology, there's an enormous opportunity to be able to do this on so many different parts of the journey, as I was referring to. If you look at other sectors and other industries, they are leveraging technology in a very aggressive manner. I would say based on my own experience in the airline industry, historically our industry has been somewhat behind. I think we've seen some significant progress, especially post-pandemic where the airlines are significantly investing in this. We know at Star this is at the very core of what our priorities and focus is now and moving into the future.
Karen Walker:
You also touched on baggage handling. It seems to me that that's become a very, very important issue for people, too. They want to be able to really trust that if they hand over their bag, it's going to be where they want it to be. So can you just talk a little bit more about, you mentioned a single touch point for that. Can you just talk a little bit more about what Star is doing on the bag handling side?
Theo Panagiotoulias:
Yeah, so it's bag tracking actually. I mean—and the handling to your point, that's another issue—I mean I think [with] what we're seeing here, the bag tracking is a really good example of this. Again, having control of their own destiny. Things can go wrong in this industry. We know what a complex industry it is. So utilizing technology that allows a customer to fly on one of our member carriers, connecting to another member carrier and being able to track their bag across multiple carriers is a significant customer enhancement experience that allows people to have control of that.
When you look at the key pain points of customers—what they want solved, if you like—it is all about bags. It is about irregular operations. It's being able to personalize and choose what seat is going to be assigned by me. It's about being able to redeem and earn my miles instantly across multiple carriers. These are the pain points. These are what customers ... it used to be though customer expectations, I would argue it's now customer demands. The Alliance in this particular case that focuses and prioritizes on that makes it a powerful competitive advantage versus the competition.
Karen Walker:
Right. So that's what I wanted to pick up on here. As I say, Star was the first, and then everybody else started to very quickly talk and say, "We've got to do something about this." So, I think oneworld came next and then SkyTeam. They're both big alliances in themselves with big names. Can you sum up how you think Star differentiates itself from those other two big alliances?
Theo Panagiotoulias:
I think where we're at [here] at Star is we're at a position where we are the largest alliance in the world. We've got clearly the best breadth and global network, and it's unmatched. As we were talking about before this pivot where we've got that network, we obviously look at that network and see if there's opportunities to enhance it even further. You're always looking for these opportunities, but by and large, because that network is so solid and expansive, the pivot is now with a primary focus on that customer experience.
It's going to be, as I was sharing to you before, along those multiple touch points on a customer journey, focusing on and delivering upon exactly what the customer wants. So I've highlighted a couple of examples of where we've been investing. We've got something else that we're looking at right now, which will be how do we make irregular operations more practical and more convenient, both for the customer and for the member carriers. There are all these different customer experience opportunities where we are on a track that is clear; we're delivering some of these solutions. It's complex, so it does take some time, it takes investment—but it's very clear to us, this is where the sweet spot is.
You are talking about what role alliances play. You've got to be able to create value for your member carriers. If there's duplication in things you do, that's not delivering value. So we've identified [that] we do the stuff that member carriers cannot do. It is unique value creation, and it is geared around the customer. I think we have absolute clarity on that and I see that as a very important differentiator into the future with significant outcomes that come from just words.
Karen Walker:
You've also been doing a lot on the lounge side, haven't you? The Star lounges now at key places as well. So is there going to be more on that front?
Theo Panagiotoulias:
Oh look, we're always looking at those opportunities. The key, again, when you look at the lounges—we opened one up last year. We spent 
8 million ($8.7 million) on a beautiful lounge in Paris Charles de Gaulle, and we have other strategic lounges globally. Again, we think these things through and say to ourselves, when you look at our member carriers, our member carriers invest significant amounts of money in lounges globally, as they should.
So our role is not to duplicate on that. Our role is to identify where is there an opportunity for us to open a lounge that best serves the member carriers in an incremental manner. If you look at Paris as the example, we have, I think it's 12 airlines that serve Paris Charles de Gaulle and the member carriers came together and said, "Let's invest collectively here where it's a win-win all round." That's exactly what comes out there.
So it all goes through the lens of, is it value creation? Is it something that is more effective, more cost-effective, more customer experience, a better delivery of the offering? What is it exactly we're trying to achieve? When we identify that it is uniquely positioned, then Star takes the lead and does that. So the lounges that you see are very strategic and thought through thoughtfully, and there may be other opportunities in the future. I don't have anything to announce today, but we're always looking at that based on those criteria I outlined and the lens that we use to identify such opportunities.
Karen Walker:
You're looking at potential new issues, new things that you can introduce. You're doing that across all the airlines. You've got very big airline brands and then you've got some small airlines and you are across many different types of world regions. I've got to ask you, what are the Star governance meetings like when you've got such a broad set of people in that?
Theo Panagiotoulias:
Constructively lively, as they should be. I think you get many different perspectives to the table, and I think it's just natural. You're going to have different business models with different priorities, different focus points. There's nothing wrong with that. I think you'll find that that's a natural course of business. In these discussions, what we're doing is we're looking for consensus where we've got the customer at the center and in mind, coming up with consensus where we can deliver incremental value.
Now at Star Alliance for example, we have 50 standards that, irrespective of size, irrespective of business model, all the carriers have agreed to; they must meet those 50 standards. We audit those standards very, very strongly on a biannual basis to ensure we're getting consistency and deliver upon the Star Alliance promise and ongoing and continuous customer feedback to make sure that that connecting experience, if you like, that interline experience becomes as online as possible.
So it is a journey. There are different businesses that are involved with different sizes. I emphasize the word different because you've got, irrespective of size, very, very successful businesses that operate within the Alliance. So it's all about finding a sweet spot of consensus, having standards that we all adhere to and following through on them.
Karen Walker:
I have to ask you, SAS, Scandinavian Airlines of course, will transfer to SkyTeam in September. SAS was one of the founding members of Star. So what will that mean losing SAS as a member?
Theo Panagiotoulias:
Yeah, look, I mean Scandinavian was a founding member and I think they are a member that has been appreciated. I know that Scandinavian [is] appreciative and got great value out of Star. Business evolves, business changes. I mean, we understand and respect [that] based on their business restructure and the direction that they've taken, and we wish them all the best in that regard and we'll solidify our position.
Now the beauty is that the member carriers of Star serve the Scandinavian market very, very strongly despite Scandinavian leaving. We've got 3,700 flights or thereabouts a month connecting to 23 hubs worldwide and serving 1,100 destinations, the most of any alliance. So even though Scandinavian left, we've got a really strong position there.
Our number one priority now as the transition happens, and I know Scandinavian is doing the same thing, is making sure we minimize disruption, in particular the impact on the customers, and we're moving forward and it's been a smooth transition. So we wish them all the best. We're going to be aggressive competitors with them and the alliance that they're joining and I'm sure it'll be healthy with customers benefiting from that.
Karen Walker:
Then one last question for you, Theo. All of the global alliances, understandably so, the growth slowed in terms of adding member airlines, but it didn't stop. It hasn't stopped. As I said, I felt very much so that through the pandemic there was a sort of renewed appreciation by existing members and renewed interest by anybody who wasn't in an alliance. So is Star still looking to grow? Is it still looking for new airline members?
Theo Panagiotoulias:
The way I would characterize it is we're always looking for opportunities, but they've got to be very selective opportunities that meet specific criteria. It's got to be value added, it's got to complement the existing network. We've got such a significant network right now. We cover, as I outlined before, 95% of the globe. So we're very comfortable where we're at, but always looking at opportunities. I mean it would be silly not to. So we certainly do look at opportunities, but given where we're at right now in terms of global coverage and network, our primary focus is geared around that customer experience.
As I was sharing with you, it was one of the reasons—well, the main reason—that I joined Star … was the vision of we've got to fix customer experience problems, especially in such an interconnected world where traffic flows amongst different carriers constantly at record levels. It's a complex business, and technology and digitalization are at the very heart of that. Since I've joined and I saw the vision—there's so many opportunities, and that's where our core focus is now. Then if any network opportunities arise that fit our criteria and complement and deliver incremental value even further, both to our customers and the member carriers, we will take that very seriously.
Karen Walker:
Good position to be in, I would say. So thank you so much for your time and insights. I really appreciate it and wish you and Star every success as you continue that path.
Theo Panagiotoulias:
Thank you, Karen. I appreciate you having me and having the opportunity to share some thoughts. Thanks.
Karen Walker:
Thank you also to our producers, Cory Hitt and Guy Ferneyhough, and of course a very big thank you to our listeners. As always, please make sure you don't miss our weekly recordings by signing up via Apple Podcasts or wherever you like to listen. Next week you'll be hearing from our team of editors onsite at the Farnborough Airshow. Thank you again. This is Karen Walker, disembarking from Window Seat.
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