This website uses cookies to ensure you have the best experience. Learn more

Discussion Surrounding Global Alliances Operating In The Airline Industry

1587 words - 6 pages

The international aviation industry is arguably one of the most competitive and cut-throat businesses in the world today. Characterised by high revenue but notoriously thin profit margins, modern international airlines are constantly searching for methods to gain advantages over their competitors and attract new customers. One of these methods which has become popular since the late 1990s is that of the global airline alliance. Today there are three major alliances in operation, each containing different member airlines. These alliances offer airline customers various advantages over travel with a traditional carrier. Nevertheless, these advantages have been criticised by some as being anti-competitive, there are several examples of airlines that prefer to remain unaligned, and have become extremely successful. Who are these alliances, why are they so popular, and why are they so strongly criticised by some?
The Star Alliance was founded in May 1997 by five airlines from three different continents, and today is the largest and oldest of the three major alliances in operation today. It features the highest number of member airlines of any alliance, and also the greatest number of flights and destinations served (Star Alliance, 2011). It is also independently rated by Skytrax (2011) as the world’s best airline alliance, having additionally won the award every year it has been presented except for 2010, when the award went to Oneworld. Furthermore, the Star Alliance is probably the most useful for New Zealand based frequent fliers, as New Zealand’s principal airline, Air New Zealand is a member. Air New Zealand frequent fliers are able to take maximum advantage of co-ordinated scheduling, frequent flier points, and international lounge access on partner airlines such as Lufthansa, United Airlines, Singapore Airlines and Air China (Air New Zealand, 2011).
Another major airline alliance operating today is the Oneworld alliance. Founded on 1 February 1999 by giants such as British Airways, Cathay Pacific, and Qantas, it has expanded to include twelve member airlines, and has an additional twenty non-voting affiliate members, such as QantasLink, subsidiary of Qantas, and Dragonair, subsidiary of Cathay Pacific. Oneworld also won the Skytrax award for best airline alliance in 2010, and has won more international awards than the other two main alliances (Oneworld, 2011). However, some may argue that the quantity of awards received is irrelevant, and the awards by Skytrax are recognised by many as the leading airline awards. Oneworld is also a useful alliance for New Zealand based travellers, as Qantas’ membership allows frequent travellers access to the benefits of this alliance.
Skyteam was the last of the three major airline alliances to be founded, in June 2000. According to Rodrigue (2005), the Skyteam alliance holds 21 per cent of the market share, when measured by traffic, making it the second largest airline alliance operating today, after...

Find Another Essay On Discussion Surrounding Global Alliances Operating in the Airline Industry

Why Southwest can succeed in the airline industry

2089 words - 8 pages margin was 9.2% compared to industry 2.3%. We need to find out what it is now. What accounts for this enormous difference between SWA and the other carriers? What management policies and operating procedures does SWA follow that the other carriers do not? Ms. Colleen Barrett is looking to the future. What's next with all this uncertainty in the airline industry? Ms. Barrett noted an article she was reading about another low-fare carrier JetBlue

Economic Profile: The Airline Industry Essay

1710 words - 7 pages provide the services. Several factors contribute to the ongoing struggles this industry faces.The travel industry heavily relies upon current market conditions to determine their success. Inflation, fuel costs and weather conditions control the amount and frequency in which the consumer will travel. Each one of these factors determines the supply and demand. If the cost of an airline ticket is low, this usually means that there is a surplus of

Industry Overview of the Airline Industry

1562 words - 6 pages Surviving all odds could be considered a slogan for the U.S. Airlines Industry.Through inflation, depression, terrorist activity and much more the Airline Industry has taken several set backs and still managed to survive. While profits have fluctuate a great deal, the U.S. Airline Industry can be characterized by it steady growth, falling prices and overall stability and contribute a great deal to this economic system. In a brief study of the

Evolution of Airline Industry in India

2328 words - 10 pages , some operators could not sustain and exited the business in 1997. The operating environment of the domestic airline industry underwent a substantial change between 1997-98 and 2011-12. 1997-98 to 2002-03: During this period, Indian aviation lacked focus, leadership and strategic direction, which kept the industry grounded. The sector was both, over-regulated and under-managed. No new entrants were permitted to serve the domestic market

Analysis and Recommendations for the Airline Industry

3119 words - 12 pages 50 million workers who lose their job if the economic situation continues to deteriorate (Global Employment). The unemployment rate is a disaster for the airline industry. Many Americans who are suffering from unemployment will no longer have disposable income for the luxuries of flying. Also, the U.S. airlines have had to lay off more workers than ever before in order to reduce the total cost of operating. Data from the U.S. Department of

The Structure of the Airline Industry

2577 words - 10 pages .Darrow, R., Leimkuhler, J. & Smith, B. 1992, 'Yield Management at American Airlines', Interfaces, vol. 22, no. 1, pp. 8-31.Hanlon, P. 1999, Global Airlines:Competition in a Transnational Industry, 2nd edn, Butterworth-Heinemann, Burlington, MA.Iatrou, K. & Oretti, M. 2007, Airline Choices for the Future: From Alliances to Mergers, Ashgate Publishing Limited, Hampshire, England.McGill, J. I & Ryzin, G. J. 1999, 'Revenue Management

IT Governance in Airline Industry Case Study

1548 words - 6 pages Contents A description of the organisation and the market in which it operates 3 A description of the IT governance used 3 A summary of the case study 4 A critical analysis of the impact of the IT governance on the organisation 5 References 8 A description of the organisation and the market in which it operates Airline and travel industry profitability has been strapped by a series of events starting with a recession in business

Nestle: Operating in a Global Economy

1815 words - 7 pages leader in numerous product lines that have provided a solid foundation for sales and profit. Nestle has strong brand recognition that provides a competitive advantage to get into new markets and expand in existing markets. Operating in the global market means embracing numerous opportunities while avoiding various threats. The strategic management Nestle exhibited serves as an excellent case study in operating in a global economy. History

An Analysis of the Airline Industry

1132 words - 5 pages aviation fuel, besides administrative costs of ground handling and crew. The economics of scale work against too many airlines in a geographic region. This was underlined in the aftermath of the 9/11 attacks when global panic in air travel rendered Swissair untenable as an airline. Similar pressures exist on the dozen airlines operating as international airlines out of Europe. However, the situation is somewhat relieved in domestic travel. With

The Airline Industry Impacts on Economy

1773 words - 7 pages in the end (Jerram, 1998).Due to the airline industries market dependency it is very unstable. Positive and negative externalities affect the entire industry and this makes many airlines unable to remain profitable. The externalities can affect the customers, the global economy, employees, other airlines, and many others. The classification of the airlines industry is debatable due to the nature of the industry itself and its customers. Many

Economic Impacts on the Airline Industry

1858 words - 7 pages article reviews a recent paper by Brock in 2000 by analyzing developments in the airline industry. By taking data from the Department of Transportation in the 1990’s it compares changes in the industry concentration and prices. The article looks at the predatory behavior, changes in average airfares, and proliferation of alliances throughout the industry.Mola, R. (2006). Economic Regulation of Airlines. U.S. Centennial of Flight Commission

Similar Essays

Strategic Alliances In Aviation Industry Essay

1600 words - 6 pages suggested that airline business is not cyclical business but bad business (Das, 2011). Indeed, the combined net profit margins of United States airlines, for instance, have typically been only about half of the Standard and Poor’s 500 list of industrial, utility and transportation companies’ net profit margins (ibid.). For several years the airline industry has been very turbulent and has been through financial ups and downs. Alliances in the

Promotion Tactics In The Airline Industry

981 words - 4 pages ). Today airline advertising focuses on price, rather than the pleasure of the flying experience. Companies use the radio, newspapers, billboards in big cities, tops of taxicabs and sides of buses to put their ads on. Even coffee cups in restaurants are starting to be used for advertisement. The industry has turned more toward e-commerce to keep business going as the economic slowdown and post September 11 security fears continue to ground many

Competitive Strategies Operating In The Financial Industry

1831 words - 8 pages Competitive Strategies Operating in the Financial IndustryECO/365July 02, 2014Competitive Strategies Operating in the Financial IndustryThis essay will explain the difference between market structures, Identify strategies used to best align the market in which the organization competes, as well as demonstration the negative and positive affect a firm may have and how it affects the market strategy. Recommending options to improve profit-making

The Airline Industry Essay

1551 words - 6 pages 2006 the association expected about a $10 billion loss in 2005. However, a few U.S. airlines are able to compete successfully.Dramatic changes in industry structure have occurred against the backdrop of strongly growing airline activity. Growth in air passenger traffic has outstripped growth in the overall economy. The airline industry is highly responsive to economic cycles. Just as most network, airlines are now expected to turn an operating