An airline alliance is an agreement of cooperation between groups of airlines, essentially. Airline alliances offer airline members more flexibility and larger networks, while giving travelers such conveniences as the ability to earn frequent flier miles on a partner program of the airline flown.
An example of the benefits of alliances for travelers is this: Travelers who like to earn KLM‘s “Flying Blue” award miles can travel on an Aeroflot flight and opt to earn into their Flying Blue account, because they are both partner airlines in the SkyTeam airline alliance. It is more complicated than this, usually, as reward programs may have different denominations and earning criteria, even within the same alliance, but this is essentially the gist of it.
In January, 2016, an Asian group of four budget carriers formed the U-FLY airline alliance. Together with the similarly newly-formed Value Alliance and Vanilla Alliance, these make up what is slowly becoming known as the “Little Three.”
For more on picking the best one for you, read: Which Airline Alliance Should I Choose?