Strategic Alliances in Aviation Industry: An Assessment of perception of business travellers and benefits of international network development as derived by airlines operators
The proposed study is aimed at identifying the reasons and success factor of increasing alliances being witnessed in airlines sector. Strategic alliances have proven to be successful in other sectors like manufacturing and automobiles but the effectiveness of these alliances in aviation sector are a less researched area. The study will discuss the peculiarities of the sector and reasons that make alliances possible for development of an international network. The results will provide detailed information about the impact of strategic alliances on performance of companies and passengers and the level of satisfaction derived from the increased services after alliance. The secondary data will be used to analyse the profitability of airlines after entering into some kind of strategic alliance. We will focus on two major alliance in aviation sector namely Star Alliance and One World to reach the answers of research questions.
(overall a good proposal where we are experiencing various alliances such as Etihad with Darwin Airline and Air Serbia ;
Since airlines have historically shown poor performance, it has been 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 industry can partly be seen as a response to the uncertainty and risks associated with industry turbulence, in other words, alliances are seen as a way of improving performance in terms of hardening competition (Gracia, 2012).
Since1990s the alliances in airlines sector has remained some of the most critical advents of the industry (Kleyman, 2010). A rich and evolving literature has been develop since then making it easy to understand the implication of alliances on management of airlines as well as on customers of the airline operators. With the change in millennium, there has remained the dominance of three major Global Airlines Alliances and the issues associated with impact of such alliance on price and competition, revenue and marketing innovations and operations of the airline companies (Rhodes and Lush, 1997).
A comprehensive literature has been provided by Latour and Oretti (2007) about the opportunities and challenges for companies in relation to alliances and mergers. A survey conducted by these researchers’ studies the impact of alliances on airlines and revealed that code share is the most productive result helping in increasing traffic in airlines sector.