Deregulation of the airline industry in the United States in 1978 led to the formation of the alliance. The deregulation was the most notable event that brought about the radical changes within the industry. M. Potter claims that Alliances are a means to extend or reinforce competitive advantage, and not a sustainable means of creating it. Oum, Taylor, and Zhang (1993) offer a universal definition: a worldwide airline network composed of a group of related airlines that provide services to consumers. They do so through a common computer system, automatic baggage transfer system, fares and ticketing, joint marketing, code sharing of flights and coordinated flight schedules. This paper will discuss the extent to which alliances have become a characteristic of the airline industry. Why did airlines come about? Deregulation of the airline industry lead to the formulation of alliances. The effects of deregulation were quick to filter though it took almost a decade for the European countries to follow. The airlines could now choose the ways they wanted to take and fix the prices as they found it fit without any regulatory interventions. It thus enabled airlines to work according to demand-supply and other market factors. Airlines gained their freedom, and they had to fend for themselves in taking careful steps in order to walk the paths of positive financial bottom lines. Globalisation has set in new rules and with Increased Competition for and from new markets, the ground markets have altered airlines to adapt slowly to these challenges. Alliances have contributed highly to solving such problems as described by Harrigan (1988, p.67). With the Privatisation and unpredictability of the new market and its inherent vulnerability to global incidences, the industry had to adapt itself to aliening with the privatised industries as a survival mechanism. From basic code-sharing agreements, these alliances have come along the way, and today involve a closer co-operation between partners. They ensured they integrated with even the non-flying partners like hotels and credit card companies. The hotels and credit companies play an extremely significant function in the development of the global airline industry. Airlines had to integrate their flight Routes by flying from shared hub points and common terminals and coordinating their flight schedules. Thus, passengers who want to connect from one alliance partner to another can do so with little inconvenience and effort. Airlines in an alliance offer fares that favour a combination of alliance partners because they have an integrated route network in place. This includes fares around the world that display the alliance global network. It permits travellers to travel round the earth entirely using the members of a single alliance leading to the Low Cost Revolution. Member airlines have linked their mileage programs in order to satisfy the consumer craving for miles. This helps them to reward travellers for flying within the alliance network. M. porter says that Alliances are frequently transitional devices. They proliferate in industries undergoing structural change or escalating competition, where managers fear they cannot cope. They are an indication to uncertainty, and comfort provider. Strategy and airline alliances De la Sierra (1995) claims that in order to gain a competitive advantage in the global marketplace an alliance has to be internationally strategic. It must posses the following
EXTENT TO WHICH ALLIANCES HAVE BECOME A CHARACTERISTIC OF THE AIRLINE INDUSTRY Module Title: Module Code: Module Leader/Tutor: Date: Introduction An alliance is an agreement between two or more parties, made to advance common goals and secure, common interests…
This paper looks at two mergers that occurred in this industry between the years 2004 and 2011- merger of British Airways-Iberia and the Continental-United merger. This paper aims at evaluating the strategies behind these decisions, projected achievements and what prompted the companies in this industry to come up with the ideas of mergers and acquisitions.
U.S. Airline Industry Analysis
Although European players dominate the aviation industry in general, majority of the large players operate in the United States.
Although this strategic amendment assisted the industry to improve the growth at its initial stages, the revenues again declined by the beginning of 1990s.
It helps in economic growth, world trade, tourism and international investment. According to the International Air Transport Association, for the last three decades the number of passengers travelling on scheduled flights has increased on average by over six percent annually.
Prior to the airline deregulation of 1978, the industry was almost like a cartel with very few number of airline industries serving different American states. Nevertheless, an inevitable and unexpected competition arose which resulted into a dire instability in the industry; hence, the advent of the Civil Aeronautics Board was established to administer the industry’s structure and competition.
During the year 2005, Lufthansa dispatched average sales of an approximate 19 billion euros; this signified an increment of an approximate 7 percent. The operating profit also augmented from an approximate 51 percent to which implies an approximate 5 million euros.
Mergers and acquisitions (M&As) have been the growing trend within the last few decades. The increasing number of M&As within the last few years can be associated in part by rapidly changing technologies, with particular advances in computing and communications, the quest of market dominance, as a strategy of entering into new markets and in all to wipe out competition (Cummins & Xie 2007, Cummins et al., 1999, Cummins and Xie, 2005).
Business firms have realized that they cannot survive without marketing. Marketing plays a significant role in the sustainability of an organization. In this paper, marketing in service industries is discussed (ICFAI Center for Management Research (ICMR)).
It can be seen that a strategic alliance is extremely advantageous if managed properly. In case of HRM, the alliance will not have any serious consequence unless employees are shared or transferred among the alliance partners. In such a case, the