AIRLINE ALLIANCES

in International Market
The Airline Industry
 De-regularization in domestic airline markets:
1978 – USA , provided carriers to enter and exit routes and price as they pleased
This success in USA inspired many countries to liberalize their domestic markets
1997 – Liberalization of cabotage services by European airlines in EU.
2008 - Increased efforts to remove regulatory access barriers between USA and EU

 As air transport services have been liberalized new competitors have entered the market.

 The new incoming carriers have adopted the low-cost, low-frills business model, contrasting with
the full-service of incumbent traditional carriers.

 Low-cost carriers are usually characterized by higher labor productivity and lower operating costs
that translates into lower fares than traditional carriers.

 Network legacy carriers, have focused on providing wider network coverage through a hub-and-
spoke network model that meets consumer demands of seamless connections with domestic
and international destinations
Strategic Alliances

Carriers enter into cooperative arrangements to generate greater revenue, to reduce unit
costs from economies of size, and to minimize or share risks by strengthening their position
out of their domestic market.

Tactical Alliances Strategic Alliances

⁻ Interline ⁻ Share similar Business objectives
⁻ Code Sharing ⁻ Coordinate services to achieve
⁻ Joint Ventures common goals