3AB: Alliances

Alliances

•  are business relationships, and so it is with airline companies. Airline partners supplement each other’s capabilities and weaknesses with strengths, at different levels of relationships 

Airline alliance 

• Agreement between a group of airlines to cooperate. They work together in marketing and offering flights and connections across their networks. They provide guaranteed benefits to connecting passengers and to each other’s elite members 

• affect the major activities of the carriers depending on the type and level of alliance. Networks could be integrated into different forms by incorporating the departures/ arrivals of a partner carrier 

Air-political

the airline has no traffic rights and is precluded from controlling a foreign carrier that has the right. Bypass the constraints 

Economical

its costs or fleets are unsuitable for that market. Increase market densities 

infrastructural -slots

are not available

Financial-related

the airline has insufficient resources to develop new markets 

Strategic alliances 

• Type of cooperative strategy exists when firms explicitly and formally collaborate 

Vertical alliances

when two firms link up their complementary products. Ex. KLMs turf are europe routes, while NW are american routes, the linkage between KL and NW is vertical – no connection pa 

Horizontal alliances

when two firms in the same market join hands to enhance their competitiveness against other competitors in the market. The partnership reduces competition not only in the market where prior competition between the partners takes place, but also in the other markets of alliance networks. Example, when several LCCs in asia formed their own alliance to compete with the giant LCC - Airasia, they did so to set up a reservations system which can compete with extensive airasia distribution system 

Hybrid alliance

mix of vertical and horizontal alliances and it is likely to have both pro- and anti-competitive effects. Ex. some airlines in horizontal alliances follow a hybrid approach defining activities in a separate contract law (WOW cargo venture formed by few star alliance members

horizontal

• this is because the airlines are all from indian ocean islands , which means they basically have parallel products, and they formed the alliance to be able to better compete with bigger airlines in the region.

Vanilla Airline Alliance was formed by airlines from the indian ocean islands in order to attain greater connectivity in the region, and no other separate arrangements between any of the member airlines seen. This strategic form of alliance is 

Hybrid alliance. The strategic alliance is hybrid as both are member of Oneworld but they have a separate contract to enhance their cooperation. This strategy is hybrid as it may be anti-competitive with regards to its co-members in Oneworld.

American Airlines and Qantas , both members of Oneworld alliance,  formed a joint venture to enhance their partnership.  AAdvantage members will be able to earn more on flights between the United States and Australia or New Zealand. On the other hand, members of the Qantas Frequent Flyer program will be able to earn additional Qantas Points and Status Credits when flying onboard American Airlines. This strategic alliance is a

Vertical alliance. Since Emirates and TAP do not belong to the same alliance and their routes are complementary. 

Emirates and TAP Portugal signed an agreement to turn their codeshare partnership into a more integrated joint venture. Emirates is one of the few major airlines not belonging to the three major international alliance. This strategic alliance is 

Major Airline Alliances (level of integration - coordination) 

• This kind of partnership is reflected when searching for connecting tickets. 

Star Alliance

star alliance leads the way

Star Alliance

• First alliance formed in 1997

• 5 airlines looking to expand their networks and market flights to more passengers came together to form the star alliance

• World’s largest global airline alliance 

Star Alliance

• Frankfurt, Germany 

• 40 affiliates 

• 26 members

• Lowest gaps 

Star Alliance

• Founders: united airlines. Lufthansa, air canada, SAS group, Thai Airways Company 

Oneworld

 travel bright

Oneworld

The alliance's stated objective is to be the first choice airline alliance for the world's frequent international travellers.

•Founded: 1998
•CEO: Rob Gurney (Oct 2016–)
•Headquarters: New York, New York, United States
•Non-voting members: 30 affiliates

13 members

Oneworld

Founders: American Airlines, British Airways, Qantas, Cathay Pacific, Canadian Airlines

Oneworld

smallest of the three in terms of traffic.

Skyteam

caring more about you, the priority is you

Skyteam

was the last of the three major airline alliances to be formed, the first two being Star Alliance and Oneworld. SkyTeam is dedicated to powering the most seamless customer journey of any global alliance.

Skyteam

•Founded: 22 June 2000

•Ceo: Kristin Colvile (2018 - Present)

•Full members: 19

• Based in netherlands, amsterdam 

• Most gaps 

Skyteam

Founders: Delta Air Lines, Air France, Korean Air, Aeroméxico

Value Alliance

we get you there

Value Alliance

a low-cost alliance

In Asia Pacific , it is worth mentioning the  Value Alliance , the first pan-regional low cost carrier alliance with cooperation possible through software from Air Black Box developed under IATA’s New Distribution Capability.  Although called alliance, this LCC group is vastly different form, more of an expanded marketing operation.  It was formed in May 2016 has the following six airline members:

 It offers interlined flights, but little else.

Value Alliance

Cebu Pacific (Philipines)   Cebgo (Philipines)    Jeju Air (South Korea)    Nok Air (Thailand)    NokScoot (Thailand)  *  Scoot (Singapore)

Value Alliance

• 2016 

• Basic alliance 

• We get you there 

• 6 members 

Emirates and Etihad

Two exceptions and do not belong to any of the three major alliances.

code share agreement