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Airline Alliances

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Airline alliances are major global partnerships that typically secure antitrust immunization, develop code share flights, coordinate frequent flyer plans, share check-in services, share or consolidate airport lounges, streamline airport ground handling and leverage integrated operations whenever they can.
The Star Alliance (United, Air Canada, Air New Zealand, All Nippon Airways, Austrian Airlines, British Midland, Landa Air, Lufthansa, Mexicana, SAS, Thai, Singapore Airlines, Tyrolean Airways, and Varig) appears to have a clear competitive advantage over the other alliances. The Star Alliance celebrated its fifth anniversary in May 2002. The Star Alliance has antitrust immunity, has combined and integrated more operations, and is more cohesive than the other alliances.
Oneworld, which celebrated its third anniversary in February 2002, is anchored by American Airlines and British Airways. Other members are Air Lingus, Cathay Pacific, Finnair, Iberia, Los Chile and Qantas. It is the only major grouping without meaningful antitrust immunity and has been turned down twice.
SkyTeam composed of Delta, Air France, Alitalia, and CSA Czech Airlines, recently received final approval from the U.S. Department of Transportation for antitrust immunity. It is the third alliance to be granted antitrust immunity on transatlantic operations, following Northwest/KLM and Star. SkyTeam alliance is now moving ahead to integrate and compete on a global scale.

1. How can Oneworld, SkyTeam, and Northwest/KLM compete more effectively with the Star Alliance?
2. How can Oneworld receive antitrust immunity?
3. You are the president of a major airline that does not belong to an alliance. Should you join one?
4. You are the president of a regional airline that does not belong to an alliance. Should you join one?
5. Are airline alliances good for the consumer?

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1) These alliances can compete more effectively with Star alliance by increasing the number of airlines in their group which will enable them to cover more areas under their operations and achieve better presence globally.

2) One world can receive antitrust immunity by taking members into the ...

Solution Summary

These alliances can compete more effectively with Star alliance by increasing the number of airlines in their group which will enable them to cover more areas under their operations and achieve better presence globally.

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Similar Posting

The strategic alliances of Swissair, the competitive advantages that this alliance brings the company and the dynamics of strategic alliance in the airlines industry.

Swissair finds itself at a competitive disadvantage: it is not a member of a global alliance. To illustrate this look at the following example. Profit margins are quite different for airlines in alliances when compared with airlines, which are not. Let's assume for a moment that the average profits in the airline industry are 15% and that 50% of air travel is performed by airlines in alliances (it is in fact 53% as the case states, but this way it will be easier for you to calculate). Question: given that the global alliances claim 80% of the profits, what do the profit margins in either category (alliance and non-alliance airlines) have to be in order to realize an average profit margin of 15%?

What is the structure of the airline industry (Five forces model)?
What different strategic alliances is Swissair involved in?
Should Swissair form its own (global) alliance? What does Swissair gain from its partners by forming the Qualiflyer alliance?
What are the trade-offs between control, commitment, and trust among partners in global airline alliances? How dominant will Swissair be in the Qualiflyer alliance?

Please indicate references used.

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