1. Made understandable by Bonsai Team©
Airline Alliances
Made understandable by Bonsai Team©

2. What is an Airline Alliance?
No Generally accepted definition
“Substantial” agreement
Multilateral & Multinational
Combination of route networks
Common marketing brand

3. Deep reasons Solution to enter markets Regulatory framework
Taking over a foreign airline
Domestic services in a foreign market
Second best way

4. Why such an alliance? Economies of scales & scope Synergy
Service on hubs
Maintenance
Operational
Less advertising costs
Large scale marketing campaigns
Enter new markets
Economies of traffic density
Synergy
costs shared
Marketing
assets

5. Why such an alliance? “Branding” Better service More customers!
Simpler travel
More network routes
Optimized schedules
Better prices
Full range of services
Frequent Flyer Programs
More customers!

6. Main hurdles Regulation State agreements Antitrust laws
Fear from small airlines:
Asymmetry, Instability
Losing independence
Difficulty of consensus

7. Types of airline alliances
Strategic Alliances
Joint Business Flights
Pooling
Franchising
IT Sharing

8. Types of airline alliances
Marketing Alliance
Interlining
Code-Sharing
Joint services/engineering
/maintenance

9. Apparition of these alliances
1944: ASA – Strict nationality provisions
After WWII: “Flag carriers”
US Deregulation several domestic airlines
alliances with regional feeders
Europe: deregulation starts 1986
1989: Northwest & KLM: codesharing
1992: Common Aviation Market
Community Ownership

10. Apparition of these alliances
Privatization of almost all the “flag carriers”
stays national symbols
“Open Skies” Agreements
End of the bilateral system
Liberalization : major catalyst
Share of the world’s air traffic
“The Airline Industry Guide 2003/04” Airline Business

11. Airline Alliances Today
3 main alliances
Market Share

12. STAR ALLIANCE CHRONOLOGY
Air Canada, Lufthansa, Scandinavian Airlines System,
Thai Airways International and United Airlines.
Ansett Australia, All Nippon Airways, and Air New Zealand.
Singapore Airlines, BMI, Mexicana, and the Austrian Airlines Group.
Asiana Airlines, LOT Polish Airlines, and Spanair .
US Airways, Adria Airways, Croatia Airlines and Blue1.
TAP Portugal, America West Airlines (merging with US Airways).
Swiss International Air Lines and South African Airways.
Air China and Shanghai Airlines.
Turkish Airlines and EgyptAir.
Continental Airlines and Brussels Airlines
Launch date: 1997
World’s first and largest airline alliance
Five founding airlines: Air Canada, Scandinavian Airlines System, Thai Airways International and United Airlines
Full members now: 26 and 3 more companies are expected to become members in 2010.
The creation of Star Alliance was a milestone in airline history because of its size.
It sparked the formation of rivals: Skyteam and One world.

13. Star Alliance Lufthansa + United World largest airlines grouping
2000 aircrafts
173 destinations
130 countries
Lufthansa + United
World largest airlines grouping

14. SKYTEAM SkyTeam is the second largest airline alliance in the world.
CHRONOLOGY
Aeroméxico, Air France, Delta Air Lines, and Korean Air
CSA Czech Airlines and Alitalia
Continental Airlines, KLM and Northwest Airlines
Malév Hungarian Airlines, Air Europa, Copa Airlines, Kenya Airways, Romania's Tarom as sponsored members.
Aeroflot
Air Europa, Copa Airlines, Kenya Airways and China Southern Airlines
Swiss International Air Lines and South African Airways.
Air China and Shanghai Airlines.
Continental Airlines and Copa Airlines move to Star Alliance.
Vietnam Airlines and Tarom are expected to become members
Launch date: 22 June 2000.
SkyTeam is the second largest airline alliance in the world.
Four founding airlines: Aeroméxico, Air France, Delta Air Lines, and Korean Air
The company slogan is “Carrying more about you”
SkyTeam also operates a cargo alliance called SkyTeam Cargo.

15. SkyTeam Air France+ Delta Airlines 496 Destinations 117 countries
289 lounges

16. ONEWORLD
Launch date: 1 February 1999.
Oneworld is the third largest airline alliance after SkyTeam and StarAlliance.
Six Foundings airlines: American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Quantas.
The alliance has the biggest expansion in its history when Japan Airlines, Malév and Royal Jordanian.
Oneworld was voted the world’s Best Airline Alliance in 2002, 2004 and 2005 Business Traveller Awards and named the World’s Leading Airline Alliance for the seventh consecutive year at the 2009 World Travel Awards.
CHRONOLOGY
American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Quantas
LAN
Japan Airlines, Malév, Royal Jordanian,
Mexicana

17. oneworld British Airways + American Airlines 561 Destinations
131 countries
380 lounges

18. Market share by network capacity

19. Emirate’s model 1993 - Cooperation agreements with Cyprus Airways
1994 the sixth largest airline in the Middle East.
Emirates received a 10 year contract to manage SriLankan Airline
Incorporation and growth: an Emirates’ strategic option -> the largest airline in the Middle East
The Gulf War had helped Emirates by keeping other airlines out of the area.
A partnership agreement with US Airways entered in the fall of 1993

20. Facts about airline alliances
Fragmented sector
6 main % market share
Consolidating
70% codeshare agreements
50% linked FFP
Only 15% joint ground/inflight facilities
Centered around 1 American & 1 European
Alliances with independent airlines
Also for cargo airlines: WOW Alliance, SkyTeam Cargo, ANA/UPS Alliance

21. Any questions?
Thank You!