Airline Alliance Case Study

Airline alliance is a cooperative arrangement in which two or more shipping operators jointly claim to improve competitiveness and thereby improve overall performance in relation to joint operations, although the alliance in airline industry has the negative impact for the airlines companies, the alliances are popular in the airlines companies (Morrish & Hamiliton, 2002). Oster and Pickerell (1986) pointed out that in 1985 report, the alliance was initiated in the late 1980s by the transatlantic alliance and expanded it to almost 50 commuter transport companies and a major airline company which formed in the code-sharing flight manners. As Dresner and windle notification (1996), those airlines companies which didn’t join the airline alliance

(Goel, 2003;Evans, 2001)

In response to the international trend and satisfy the customer needs, the airline companies join the airline alliance one by one. For the big-scale of airline companies, they take the several major cities as a hub-and-spoke route, the use of the frequent-flyer programs (FFPs) and the form of the code-sharing flight to be the basic competitive strategy. It’s the way that covering the domestic and international flight market and the regional flight, also, the developing of the Computer Reservation System (CRS) let the flight ticket sold out more widely, so the airlines companies can have the effective competition in the overseas market. (Tang & Tseng, 2010).Thus it can be seen that the airline companies take the measure to reduce the cost and increase the quality of service, use the global resources to economize the overhead.

There are several scholars who explain the motivation of forming airline alliance (Lorange & Roos, 1991; Glaister & Buckley, 1996; Bennett, 1997), it can be generalized in two factors: External factor and Internal factor

External

Restructure the Economics

Over the past 20years, the liberalization of economic policies by governments have had a major impact on the structure of the airline industry.

Governments take several ways such as the relaxation of bilateral air services agreements, the privatization of airline ownership, the liberalization of international air services and the transfer of foreign ownership of transnational mergers and acquisitions have a significant impact on the future airline industry structure, but many norms and restrictions still affect the global airline industry. Therefore, for international airlines, the only way that the airline companies can do is seeking the strategic alliances in order to enter the market

3. The competition of the global world

Some people believe that the success of large-scale enterprises, the future will depend on their global competitiveness (Ohmae, 1989).Global competition has already been very evident in plenty of industries such as automobile, pharmaceuticals, soft drinks and financial services, but for the airline industry, due to the restrict of the government regulation and ownership, and the customer preference has only recently begun to have a clear global competitive