Competing Through Alliances in the Airline Industry: the Air France- Klm/Delta Air Lines Joint Venture

Delta airlines have multilateral and formed alliances with other airlines. This is beneficial since the airline is able to gain access to international airlines. By forming alliance, the airlines share

The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).

First, the organization can deliberate on the procurement of other minor aircraft to strengthen its position in target markets to further conquer more market shares, e.g., it may invest or acquire local carriers and further upgrade their whole deal flights. As such, clients can select its subsidiary local auxiliaries or via utilization as reciprocal. The Dragonair is a fabulous example demonstrated by its actions. Accordingly, clients will be availed to possess the capacity to choose to agilely orchestrate their routes with Cathay Pacific Airways at all levels arranging from provincial to worldwide.

This is an analysis of the Airline Industry in Europe. The paper will cover the current market situation, including financials and market volume. Following this will be a Five Forces analysis on the factors that affect industry competition. The paper will conclude with key insights into the profitability of the industry and a SWOT analysis of one of the industry’s best performers and what rivals and possible future entrants can learn from their success.

The purpose of the paper is to research and understand how the changes of globalization and technology have impacted the Airline industry. This paper will also apply the industrial organization model and the resource-based model to determine how the Airline industry earn above-average returns. This paper will explain how the Airline industry’s success is through its mission and vision statements with Southwest Airlines as an example. Finally, this paper will evaluate how the importance each category of the stakeholder impacts are to the overall success of the Airline industry.

Global airline alliances in another issue included in Virgin’s external environment. Alliances benefit airlines in many ways as they enable them more market access, convergence of technologies and even help overcome legal barriers (Anon., 2009). One weakness for Virgin therefore is not being part of an alliance such as Oneworld Alliance (Anon., 2009), in order to take full advantage of its potential Virgin should look into adjusting their market strategy and look into joining an alliance, if not form its own.

The risk of entry into the airline industry by potential competitors is low due to the “liberalization of market access, a result of globalization. According to the IATA (International Air Transport Association), about 1,300 new airlines were established in the last 40 years,” (Cederholm, 2016). The cost structure of businesses in an industry is a determinant of rivalry. In the Airlines Industry, fixed costs are high, because before the organization can make any sales, they must invest in air crafts, fuel and service employees. These items come attached with hefty price tags. Industries that require such enormous amounts of start-up capital as predicted by many analysts

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

1. There are a few trends in the US airline industry. One is consolidation, wherein existing players merge in an attempt to lower their costs and generate operating synergies. The most recent major merger was the United Continental merger, which is still an ongoing affair, but has created the largest airline in the United States by market share (Martin, 2012). Another trend is towards low-cost carriers. In the US, Southwest has been a long-running success and JetBlue a strong new competitor, but in other countries this business model has proven exceptionally successful. The third major trend is the upward trend in jet fuel prices, and the increasing importance that this puts on hedging fuel prices and capacity management (Hinton, 2011).

Market structure can be defined as patterns of behaviour by enterprises in an effort to adjust to the markets in which they operate (buy or sell). Pricing strategies and collusive behaviour mergers are a few dimensions of market conduct. It is the industry norm for a legacy carrier to offer service to most popular destinations; Delta reducing routes to a similar schedule as the low-cost airlines is not an option in the multi-billion dollar industry. In order to gain market share from low-cost airlines, Delta must create a value proposition that differentiates itself from its competitors. Many customers will pay a premium if the level of service provided is higher than the low-cost, no-frills

The merger between American Airlines and U.S. Airways is one that can be explained using static game theory models. The two players in the game would be American Airlines and U.S. Airways. Each one of the players would have something to gain from the merger, but they would also have something to lose. In this game American Airlines is our first player. American Airlines’ potential payoff is merging with a company that is maximizing profits, but is also lacking in the customer service department. U.S. Airways is player two, and in this game they are merging with a business that is suffering from chapter 11 bankruptcy, but is excelling in customer service.

The strategic alliance between Qantas and Emirates was a result of a careful analysis of the airline industry and its involving competitors.

first it should be underlined, that in the airline industry, there are two types of buyers (Hartley, 2013). The first type is the individual buyers, who buy tickets for personal or business reasons, related to their own individual well beings. This type of buyers is extremely diverse and there is barely someone who had never bought a ticket, especially in the developed countries. A plane ticked could be purchased directly from the airline company’s ticket offices or from the second group of buyers, e.g. travel agencies and online portals. This buyer group works as a middle man between airlines and flyers. They work with many airline companies to give consumers the best possible flight. Between these two groups there is definitely a large amount of buyers compared to the number of firms. There is low cost shifting between companies because many people choose flights based on where they are going and costs at the time. This is a loyalty to the companies, but not enough high switching costs. Each client needs a lot of important information. They need

The increase need to compete and stay ahead of competition my also facilitate the idea of a multi company alliance. Whereas numerous organisation join together under the same objective to enhance their product or service. For example Qantas airlines recognises that it cannot travel to every corner of the global so it like many other airlines has entered into an alliance that brings together ten of the world 's biggest and best airlines, all committed to providing world-class service and value. This alliance not only strengthens the companies but sees the risks of entering into new markets spread across the board.

The advantages of vertical integration came in handy in the period around 1988 by the SAS, which is a product of a difficult collaboration of three fleets from Norway, Denmark, and Sweden. Ghoshal et al. (1988, 44) say that the difficulties in structure of the airline resulted from the fact that the airline became a consortium and control was distributed among respective governments. The need for vertical integration was thus motivated by the need for improving decision making and reducing the inefficiency of everyday operations of the airline. Additionally, there were problems in the route system of the airline, which needed immediate attention. SAS faced stiff competition from airlines in Europe,