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IB/JKBS/APR15 1
IB/JKBS/APR15 2
Presented By :
Gunjan Singh
Farooque Azam
Kapil Jain
 Case study about alliances in airline industry and
issues therein.
 Built around the fact that selling abroad by
exporting home-country production may not be
advantageous because of cost differentials,
changes/modifications that are necessitated, trade
barriers and such like factors.
IB/JKBS/APR15 3
 Joint Venture
IB/JKBS/APR15 4
Acquisition
Merger
 Airlines alliances involve combining of routes, sales,
terminal services and frequent flier programmes.
 Most of the leading airlines of the world have such
alliances.
 Many airlines own stakes in other airlines too.
 There have been mergers too even though original
identities have been retained in certain cases.
IB/JKBS/APR15 5
 Intend covering this part in the following
sequence:-
 General issues.
 PEST analysis to understand emerging trends
in the industry.
 Alliances as strategy.
 Conclusion with questions.
IB/JKBS/APR15 6
 Alliances between airlines on international markets
have become a dominant feature of the airline
industry.
 Many customers today, particularly those travelling
on business, demand a seamless service on
international markets from “anywhere to
anywhere”.
IB/JKBS/APR15 7
 However, no airline is able to efficiently provide
such a service on its own aircraft, and few city
pairs can generate sufficient traffic to justify a
daily non-stop service.
 In order to meet customer demands at an efficient
cost, airlines have had to seek commercial partners
to help them provide the network and service
coverage required.
IB/JKBS/APR15 8
 An airline alliance is an agreement between
multiple independent partners to collaborate in
various activities to streamline costs (e.g., by
sharing sales offices, maintenance facilities, ground
handling personnel, check-in and boarding staff etc)
while expanding global reach and market
penetration.
IB/JKBS/APR15 9
 Such alliances blur competitions.
 Why Necessitated?
 Regulations and Trade Barriers.
 Costs.
 Competition.
 Sluggish economies.
 High oil prices.
IB/JKBS/APR15 10
 Regulatory controls in place to have domestic
control even in developed countries.
 Activities regulated:-
 Landing rights.
 Specific aircraft and airports.
 Frequency of flights.
 Fly beyond.
 Over flight.
 Fares.
IB/JKBS/APR15 11
 High cost of running.
 Competitiveness affected when travellers find the
need to change two different (though allied)
airlines during a journey.
IB/JKBS/APR15 12
 Political/legal
•Continued liberalisation and open skies
policies
•Privatisation of state owned airlines.
•Reduced government regulations.
IB/JKBS/APR15 13
 Economical
•Recession, a substantial decrease in air travel
across the world.
•Increased competition from low fare airlines.
•Increased oil prices.
•Difficulty in determining demand and costs due
to recession.
IB/JKBS/APR15 14
 Social
 People have more airline choices.
 Customers have become more sophisticated and
demanding.
 Increased trend to travel and work abroad.
 Fear of air travel due to terrorism threats.
IB/JKBS/APR15 15
 Technological
•Online ticketing.
•SMS based services.
•Net connectivity and ease of planning
the travel with multiple options available.
IB/JKBS/APR15 16
 A significant political trend is the introduction of
the open skies policies because of globalization and
liberalization. This allows airlines to compete in a
more open and fair way.
 Some of the main economical trends include the
rise in oil prices and the initiation of global
alliances.
 Globalization allows airlines to engage in capacity
sharing and price controls, which ultimately leads
to more fierce competitions.
IB/JKBS/APR15 17
IB/JKBS/APR15 18
Thank You....

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Getting airlines alliances off the ground

  • 2. IB/JKBS/APR15 2 Presented By : Gunjan Singh Farooque Azam Kapil Jain
  • 3.  Case study about alliances in airline industry and issues therein.  Built around the fact that selling abroad by exporting home-country production may not be advantageous because of cost differentials, changes/modifications that are necessitated, trade barriers and such like factors. IB/JKBS/APR15 3
  • 4.  Joint Venture IB/JKBS/APR15 4 Acquisition Merger
  • 5.  Airlines alliances involve combining of routes, sales, terminal services and frequent flier programmes.  Most of the leading airlines of the world have such alliances.  Many airlines own stakes in other airlines too.  There have been mergers too even though original identities have been retained in certain cases. IB/JKBS/APR15 5
  • 6.  Intend covering this part in the following sequence:-  General issues.  PEST analysis to understand emerging trends in the industry.  Alliances as strategy.  Conclusion with questions. IB/JKBS/APR15 6
  • 7.  Alliances between airlines on international markets have become a dominant feature of the airline industry.  Many customers today, particularly those travelling on business, demand a seamless service on international markets from “anywhere to anywhere”. IB/JKBS/APR15 7
  • 8.  However, no airline is able to efficiently provide such a service on its own aircraft, and few city pairs can generate sufficient traffic to justify a daily non-stop service.  In order to meet customer demands at an efficient cost, airlines have had to seek commercial partners to help them provide the network and service coverage required. IB/JKBS/APR15 8
  • 9.  An airline alliance is an agreement between multiple independent partners to collaborate in various activities to streamline costs (e.g., by sharing sales offices, maintenance facilities, ground handling personnel, check-in and boarding staff etc) while expanding global reach and market penetration. IB/JKBS/APR15 9
  • 10.  Such alliances blur competitions.  Why Necessitated?  Regulations and Trade Barriers.  Costs.  Competition.  Sluggish economies.  High oil prices. IB/JKBS/APR15 10
  • 11.  Regulatory controls in place to have domestic control even in developed countries.  Activities regulated:-  Landing rights.  Specific aircraft and airports.  Frequency of flights.  Fly beyond.  Over flight.  Fares. IB/JKBS/APR15 11
  • 12.  High cost of running.  Competitiveness affected when travellers find the need to change two different (though allied) airlines during a journey. IB/JKBS/APR15 12
  • 13.  Political/legal •Continued liberalisation and open skies policies •Privatisation of state owned airlines. •Reduced government regulations. IB/JKBS/APR15 13
  • 14.  Economical •Recession, a substantial decrease in air travel across the world. •Increased competition from low fare airlines. •Increased oil prices. •Difficulty in determining demand and costs due to recession. IB/JKBS/APR15 14
  • 15.  Social  People have more airline choices.  Customers have become more sophisticated and demanding.  Increased trend to travel and work abroad.  Fear of air travel due to terrorism threats. IB/JKBS/APR15 15
  • 16.  Technological •Online ticketing. •SMS based services. •Net connectivity and ease of planning the travel with multiple options available. IB/JKBS/APR15 16
  • 17.  A significant political trend is the introduction of the open skies policies because of globalization and liberalization. This allows airlines to compete in a more open and fair way.  Some of the main economical trends include the rise in oil prices and the initiation of global alliances.  Globalization allows airlines to engage in capacity sharing and price controls, which ultimately leads to more fierce competitions. IB/JKBS/APR15 17