2.1 The awareness of Star Alliance- how it is till now
2.1.1 Brand development
The creation of airline alliance in the 90’s was driven by new level of competitive awareness in the sky transportation field. There were many elements that influenced the decision of bounding airlines such as to gain the competitive advantages by code-sharing to make growth in market share. Many alliances were created back then, but later they consolidated and formed five big alliances that exist till today and one of those and the biggest one is Star Alliance. The airlines within the alliance that were under one network, still could maintain their own identities.
Despite the fact that Star Alliance was founded in 1997, the building of the started earlier in 1996
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The first stages were really troublesome on many levels but in result it can only gotten better. Concerning the integration it was doubt that it would process flawlessly from the very start. As to look at the Lufthansa’s CEO, Thomas Sattelberger quotes, it can be clearly heard the frustration in his tone on the issue of the lounge access, but he assured that they are working on it. Underneath this problem shows how much has to offer and how strong is the alliance. On daily basis CEO’s do not tolerate major obstacles, in particular when advantage is taken of their firm. After all Lufthansa provided extra services in the lounge to all members of alliance without returned favor. This proves that any of the members would remove itself from the alliance when there is a problem because being in it is too …show more content…
Business model of Star Alliance is seem to be working properly with the large area of possibility to travel and using frequent flyer programs. The biggest issue is the loss in integration between the airlines or even absents of it. For the material and immaterial benefits integration must be wide spread not only visible in small groups.
To work more efficiently they should invest and make a centralized IT infrastructure for all of the systems. There were also too many cases where customer felt defrauded because of losing their baggage or being unable to enter the lounge. These examples show the failure of delivering services which were claimed by the alliance to be offered. That kind of inadequacy can cause a customer to breakdown and stop using the company’s services. Start Alliance is expected to bring seamless travel environment so it should unify their operations.
The focus on a value should also be taken care of. Every airline should be examine on how much value do they add to the alliance, because keeping a carrier just for the sake of having the largest number of members does not seem to be profitable. With the measuring of the worth of each airline it can be noticed which carrier fits and which would be better somewhere else. This should be done also in definitive way, because right now the added value can be seen, but it needs to be more precise. After all this would help to see clearly the benefits
6.1.2 Strong brand and alliances. It has strong brand, ties and alliances; with its large market share American Airlines is known for its unique personality, which is recognized by its customers through good quality products and services received. The company has strong international ties and alliances, “American is one of the founding members of one world alliance, whose members and members elect serve more than 1,000 destinations” (American Airlines 10-K, page 5), such alliances increase flight frequencies in international markets for American Airlines. An alliance such as one world could
An example in aviation industry that has successfully employed a strategic alliance is Qantas Airlines, who entered into a non-equity strategic alliance with the large Middle-Eastern airline Emirates. Strategic alliances are evident
This report will be discussing strategic management to a company in the airline industry. This report will examine a chosen company’s strategic management and outline the stages. Strategic management is analyzing the situation facing the firm, also on the foundation of analysis formulating a strategy and lastly implementing strategy. Strategic management is the identification and the description of strategies that can be used by managers so as to attain better
2. United Airlines likes to use strategic planning to try and stay ahead of the competition but in its history it has not always worked. United Airlines has tried to make mergers without the approval of the union and were not able to complete it when the department of justice said that the merger would not happen because it would bring a loss in competition. One of the things that has helped the business, is that they use a hub and spoke method for their passengers. This allows the company to provide many different air ports and terminals that its customers can use and also helps to stream line flight schedules and saves the company millions of dollars every year. Partnering with these major companies to form a global alliance helps to circumvent national laws, share resources to develop additional routes and global marketing strategies. The major alliances were Star, Oneworld, SkyTeam, and Wings. The agreememnt that these companies made to work together saved all of the millions of dollars and was able to help all of the companies to compete globally.
Singapore Airlines have a dual strategy that balances purposes that are traditionally viewed as incompatible opposites. The Harvard Business Review describes this as being “a premium service provider and a cost leader”, (Heracleous & Wirtz, 2010). Combining product differentiation through uncompromising customer focus which “includes everything that would enhance the travel experience for the customer” (Phong, 2014) and cost leadership “product leadership does not mean ever-more complex offerings or throwing money at a problem”. In general, Singapore Airlines strategy is about organic growth and enhancement of partnerships with other airlines. However, Singapore is investing its healthy profits in other airlines, such as SilkAir and Virgin Australia both to establish presence in those markets, and to build partners for codeshare arrangements. Singapore Airways maintains low operational costs through outsourcing of support functions, such
Working beneath the American Airlines name, a standout amongst the most perceived brands on the planet, the consolidated aircraft will have a vigorous worldwide system and a solid money related establishment. The merger will offer advantages to both carriers' clients, groups, workers, financial
To retain its cost advantage in the wake of the global recession, AirAsia entered into an alliance in January 2010 with Jetstar, the low-fare subsidiary of Australia 's flag carrier, Qantas. This was the first time two leading budget airlines had collaborated in this fashion. The alliance allowed the companies to explore joint aircraft purchasing, passenger and ground handling services cooperation and the transportation of each other 's passengers in the event of a disruption. Assuming the focus of the alliance was on cost sharing for services and aircraft procurement, it might prove effective.
Five major passenger airlines dominate their industry by size (Grant, 2013, p. 479). But their size, legacy costs and hub and spoke business model created significant exit barriers (Grahm & Vowles, 2006, p. 108). New competitors not only started with no entry barriers but also few if any exit barriers. Legacy carriers had to identify new innovative strategies to augment their core business models to profitably compete.
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.
The Airline companies now a day are mainly depending on marketing to attract new customers and to maintain sustainable relationships with them by promotions, Rewards and Loyalty programs.
The company can create strategic alliances and promote growth in the airline industry by leveraging code share agreement with other airlines. Codeshare arrangement between airlines has been a developing strategy on the rise within the airline industry, where one flight operated by an airline is jointly marketed as a flight for two or more airlines. This approach has been a key feature in promoting major alliances between airlines. It offers the airlines the opportunity to broaden its services in unfamiliar, new markets and destinations as well as assist in reduce operational cost, since the airline would sacrifice its capacity to the operating code sharing partner who bares the operational cost. Code sharing creates opportunity for airlines to establish connections beyond their own network and boost sales across the industry.
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 airline industry can be considered an imperfect oligopoly. There are several large carriers that dominate long distance flights, and many small carriers that compete for short distance flights. Competition is fierce, and the return for most carriers is very low. Some airlines are trying to differentiate themselves, like JetBlue for example, by offering superior services at low prices. Other low cost airlines, like Southwest, offer low costs with no frills. Most airlines offer a frequent flyer programs in order to develop brand loyalty. In recent years there has also been several alliances formed between airlines. These alliances enable
Through s Porters Five Forces analysis (Figure 1 – Appendices) the greatest threat for Qantas is the rivalry. Qantas is taking advantage of this opportunity as through the alliance it creates greater certainty for the shareholders while also being able to increase its numbers in international routes to 33 one-stop destinations in Europe in addition to 31 one-stop destinations in the Middle East and North Africa (Ryan, 2012). Additionally, as competition was putting pressure on the market while Qantas was restricted by financial reasons, this alliance came as a great opportunity. Furthermore, from 31st of March Qantas frequent flier point users were able to book Emirates flights while the customers’ high status with Qantas was recognized at Emirates as well. Lastly, on European, Asian and African destinations Qantas mirrored Emirates baggage policies (from 20kg to 30kg) (Panaus Travel, 2013).
In less than twenty years, the global industry has gone through tremendous change. Several airlines had gone out of business that had been on top of the industry for years. One of the remarkable changes had been airline alliances. The case focuses on the airline industry and how airlines are forming alliances and joint ventures. It then introduces the partner firms Air France KLM , and Delta . Air France KLM had over 25 collaborative agreements with other carriers and was a founding member of Skyteam, one of the leading airline groups. Air France KLM and Delta Airlines formed revenue