Oneworld changes the game with Air Berlin addition

Oneworld continued to dominate alliance news with Tuesday’s press conference unveiling Air Berlin as its newest member. Far beyond adding 75 new gateways and challenging Lufthansa/Star Alliance in Central Europe, the deal breaks an unspoken rule by allowing a discount airline into the Old Boys’ Club dominated by former flag carriers and network giants.

All three alliances have long resisted adding budget airlines into the mix for fear of diluting their brand and confusing travelers in search of a “seamless” experience. Pricing and frequent flier miles were a further concern, with network carriers jealously guarding their hold on big-spending business travelers.

Oneworld expects to fully integrate Air Berlin by early 2012, but a quick look at the upstart’s prices and policies suggest the process won’t be an easy one.

Air Berlin significantly undersells its future partners, even on long-haul flights. For a Miami-to-Munich itinerary in late September, the numbers look like this:

• Air Berlin – $737
• American – $1,167
• British – $1,321

For premium travel, the discrepancy is just as pronounced. Here’s how business-class fares stack up for a New York-to-Zurich itinerary in late September:

• Air Berlin – $2,489
• British – $3,322
• American – $3,445

For frequent fliers, Air Berlin offers topbonus, a generous-but-confusing program that awards miles based on four different geographic zones and four different fare categories. Even the cheapest business-class fare earns a 100% mileage bonus, so that JFK-Zurich trip is worth 17,960 miles (before tier-level bonuses are applied). Compare that to BA, where Club World fliers earn 50% fewer bonus miles on tickets that might be 30% more expensive.

How will Oneworld reconcile such differences? Member airlines will have 18 months or so to hash out their differences, but Oneworld’s official announcement did contain one possible clue. From the press release:

Members of Air Berlin’s topbonus frequent flyer programme will be able to earn and redeem rewards on any of oneworld’s 13 other top-class carriers, with top tier members able to use any of the group’s 550 plus airport lounges, and its network will be covered by oneworld’s full range of alliance fares.  Frequent flyer cardholders of oneworld’s established airlines will be able to earn and redeem rewards when flying Air Berlin.

What’s intriguing is the phrase “oneworld’s 13 other top-class carriers.” We can’t find that description in any previous membership announcement, leaving us to wonder if the alliance is setting up a two-tier structure to avoid diluting the brands of full-price members.