Alliances have become an important strategy for airlines to expand networks, enhance revenue, and reduce costs. Many airlines have entered strategic partnerships through major global alliances like Star Alliance, oneworld, and SkyTeam, which now represent over 60% of global air traffic. These alliances coordinate activities like scheduling, codesharing, frequent flyer programs, and more. However, greater integration is not always better, and airlines must evaluate the right level of partnership based on the potential value and costs for their unique business model and markets served.

1. AIRLINE BUSINESS MANAGEMENT
GLOBAL AIRLINES

5. Alliances have become a powerful tactic
Expand network / enhance revenue / reduce costs
Copyright © 2013 Boeing. All rights reserved.

6. Copyright © 2013 Boeing. All rights reserved.
Strong growth
Number of Airlines
in alliances
% of Global Scheduled ASM
Source: OAG, BCA Analysis

7. Airline alliances
Updated: November 2012
Copyright © 2013 Boeing. All rights reserved.
Star Alliance oneworld SkyTeam
Major Unaligned
(Partners)
U.S./Canada
Europe
Asia Pacific
Other
ASK Share 27% 16% 20%

8. Many methods and levels of partnering
• Revenue and Sales Management
–
–
–
–
–
–
Interline Ticket Agreements (through IATA)
Computer reservation system participation
Code sharing / block space agreements
Frequent flier plan and advertising
Revenue management and pricing
Sales / customer services rationalization
• Network Planning and Scheduling
–
–
–
Connection coordination
Joint schedule coordination
Joint market planning
Copyright © 2013 Boeing. All rights reserved.

9. More partnering opportunities
• Maintenance and Ground Handling
–
–
Ground handling contracts
Contractual maintenance agreements
• Cargo Handling and Sales
• Fleet Planning and Acquisition
–
–
–
Coordinated capacity planning
Alliance fleet harmonization
Alliance fleet planning
Copyright © 2013 Boeing. All rights reserved.

10. Greater integration not necessarily better
Greater
Integration
Alliance Fleet Planning
Alliance Fleet Harmonization
Coordinated Capacity Planning
Joint Market Planning
Joint Schedule Coordination
Sales/Customer Services Rationalization
Revenue Management & Pricing
Frequent Flyer Plan & Advertising
Code Sharing/Block Space Agreement
Contractual Maintenance Agreements
What’s the right level
of integration for your
airline and markets?
Connection Coordination
Cargo Handling & Sales
Ground Handling Contracts
Computer Reservation System Participation
Interline Ticket Agreements (through IA
TA)
Fully Autonomous
Independent Airline
Copyright © 2013 Boeing. All rights reserved.
Alliance Functional Coordination Areas
Fleet Planning/Acquisition
Network Planning/Scheduling
Revenue Management/Sales
Maintenance/Ground Handling
Cargo Handling & Sales

11. Evaluation to determine right partnering level
• Potential value for your airline • Potential costs
–
–
–
Assist in your growth plans
Add new points / markets
Use partner for weaker markets
–
–
–
–
Joining fee
Annual dues
IT costs
Branding costs
• Redeploy aircraft to
stronger markets
• Value your airline can bring
–
–
Lower CapEx expenses
Value of alliance’s marketing
to alliance/partners
– Unique value your airline
brings
Alliance gaps you fill
• Alliance website, marketing
materials, etc.
–
– Prestige
• Sponsorship needed
Copyright © 2013 Boeing. All rights reserved.

12. Key Takeaways
• An airline must build a network and business model that will
maximize the market and passenger it is trying to capture
The LCC business model exploded in the market and will
continue to grow but also may be leveling off… What’s next?
•
• Global network carriers (hub-spoke operators) try to
segments of the market
cover all
–
–
Lots of passengers and revenue
Challenging and capital intensive to operate
•
•
No one airline business model is “right” or absolute
No specific partnering level is “right”
Copyright © 2013 Boeing. All rights reserved.

13. AIRLINE BUSINESS MANAGEMENT
LOW COST MODEL

18. Common characteristics with Global Network model
•
•
•
•
•
•
Large complex fleets
Major hub operations Domestic
and Int’l markets Bilaterally
controlled environment Long haul
& short haul routes Broad range
of service levels
– First class, airport lounges, onboard meals
and IFE
– Economy, buy on board, ancillary fees
Alliance membership
•
Serving multiple segments increases complexity
Copyright © 2013 Boeing. All rights reserved.

19. Business travel is vital to most network airlines
• Will business travel keep growing?
• How can airlines prevent business travelers
economy?
“buying down” to
• Long-haul business travelers value
comfort, convenience, and reliability,
but how much?
• Short-haul business travelers
value convenience and reliability,
but are increasingly price sensitive.
What will they value in the future?
Business traveler expectations can change
Copyright © 2013 Boeing. All rights reserved.

20. Network Airline SWOT analysis
•
•
Strong hub(s)/gateway(s)
Network reach, connectivity
and alliances
Loyalty programs
•
•
•
•
High-cost base
Complex operations
Complex fleets
Cross-subsidization within
network
•
• Business traveler share
•
•
•
•
•
Alliances/joint ventures
Sub-brands
Consolidations
New markets
New model airplanes
•
•
LCCs on short haul
Network competition on long
haul Regulations
Infrastructure congestion
•
•
Copyright © 2013 Boeing. All rights reserved.

21. AIRLINE BUSINESS MANAGEMENT
OPEN SKY POLICY