An Empirical Study for Investigation of the Effects of Strategic Alliances in the Civil Aviation Sector: THY (Turkish Airlines) Case

Nowadays companies have to be reorganized in order to adopt changing environmental conditions and try to take advantage of opportunities arises while avoiding the emerging threats. One of the aforementioned reorganization effort is the strategic alliences between firms. The low rate of full capacity, high costs and high tax rates pushed airline companies for forging partnerships and as a result of this huge strategic alliances occured as like Star Alliance, One World and SkyTeam. These partnerships has built code sharing, frequent flier programme and similar collaborations helped the existing capacity usage to the maximum level. So that this provided crutial cost advantages to the companies. In this paper it is aimed to find out whether Turkish Airlines participation to the Star Alliance with signing engagement letter in 2006 has made structural change in firms profitability and within this frame the current ratio and asset turnover rate of Turkish Airlines between 1992-2013 is modelled on return on equity. Performed strategic alliance being examined by Chow test methodology and it is found that this alliance has resulted a structural change on firm’s return on equity. DOI: 10.5901/mjss.2014.v5n22p10

Optimisation dynamique de la sélection de vols partagés d'un transporteur aérien

RÉSUMÉ Le partage de vols est une pratique désormais très répandue qui permet à un transporteur aérien d’apposer un de ses numéros de vol sur un vol exploité par une compagnie partenaire pour ainsi considérer ce dernier dans son propre réseau. Malgré qu’il ait été prouvé à maintes reprises que ce type de partenariat peut générer d’énormes revenus additionnels, il reste très complexe pour une compagnie aérienne de choisir quels vols partager avec quels partenaires. L’objectif du présent projet est de proposer un outil d’aide à la décision qui optimise les revenus d’un transporteur aérien en considérant deux aspects qui n’étaient pas expressément considérés dans la littérature : l’impact de rendre un vol partagé dans le réseau et les interactions qui existent entre les vols que l’on souhaite rendre partagés. Pour ce faire, une méthode heuristique est développée. À chaque itération, la demande est répartie sur le réseau en fonction de la sélection de vols partagés et cette sélection est modifiée dans le but d’augmenter la profitabilité du transporteur. Pour accélérer la résolution, la demande est répartie sur des graphes réduits au lieu de considérer le réseau entier d’un transporteur. Un modèle mathématique de répartition de la demande est construit et validé à l’aide d’un logiciel existant afin d’être utilisé à l’intérieur de l’heuristique. De plus, une méthode de blocage du flot est employée pour assurer un plus grand réalisme. Deux algorithmes basés sur l’heuristique développée sont appliqués pour optimiser la sélection de vols partagés d’Air Canada avec un partenaire et, en deuxième temps, avec deux partenaires. En comparaison avec deux méthodes actuellement utilisées, ces algorithmes proposent des sélections de vol qui génèrent beaucoup plus de revenus. Les résultats obtenus démontrent également qu’il existe une interaction claire entre les vols partagés choisis et qu’il est important de considérer cet effet dans l’optimisation de la sélection de vols partagés. Toutefois, les algorithmes proposés nécessitent de très longs temps de résolution et rien n’assure leur convergence. Des recherches plus approfondies devront être menées pour accélérer la résolution de l’heuristique proposée, pour améliorer la précision du modèle de répartition de la demande utilisé et pour étudier plusieurs facteurs reliés à la gestion de vols partagés qui n’ont pas été considérés dans le présent projet.---------- ABSTRACT Codesharing is now a widespread practice that allows an airline to put one of its flight numbers on a flight operated by a partner airline and consider it in its own network. Even though it has been repeatedly demonstrated that this type of partnership can generate important additional revenues, it is very complex for an airline to choose which flights to share with which partners. The objective of this project is to provide a decision support tool that maximizes the revenues of an airline considering two aspects that were not explicitly considered in the literature: the impact of adding a shared flight in the network and the interactions that exist between flights that are chosen to become codeshared. Therefore, a heuristic is developed. At each iteration, the demand is distributed on the network considering the codeshare flight selection and this selection is modified in order to increase the profitability of the carrier. To speed up the resolution, the demand is distributed on reduced graphs instead of the full network. A mathematical model of demand distribution is built and validated using existing software before being used in the heuristic. In addition, a blocking flow method is used to ensure greater realism. Two algorithms based on the developed heuristic are used to optimize the codeshare flight selection of Air Canada with one partner and with two partners. In comparison with two methods currently used, these algorithms propose codeshare flight selections that generate much greater revenues. The results also show that there is a clear interaction between selected flights and that it is important to consider this effect when optimizing the selection of codeshared flights. However, the proposed algorithms require very long resolution times and their convergence is not guaranteed. Further research should be conducted to acccelerate the resolution of the proposed heuristic, to improve the accuracy of the demand distribution model used and to investigate different factors related to codeshare management that were not considered in this project

Resource Exchange Seller Alliances

Many carriers, such as airlines and ocean carriers, collaborate through the formation of alliances. The detailed alliance design is clearly important for both the stability of the alliance and profitability of the alliance members. This work is motivated by a real-life liner shipping "resource exchange alliance" agreement design. We provide an economic motivation for interest in resource exchange alliances and propose a model and method to design a resource exchange alliance. The model takes into account how the alliance members compete after a resource exchange by selling substitutable products and thus enables us to obtain insight into the effect of capacity and the intensity of competition on the extent to which an alliance can provide greater profit than when in the setting without an alliance. The problem of determining the optimal amounts of resources to exchange is formulated as a stochastic mathematical program with equilibrium constraints (SMPECs). We show how to determine whether there exists a unique equilibrium after resource exchange, how to compute the equilibrium, and how to compute the optimal resource exchange. SMPEC problem, which is generally very difficult to solve, is well-posed in the paper, and robust results can be obtained with a reasonable amount of computational effort

Improving joint revenues through partner sharing of flight leg opportunity costs

Thesis (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2012.Cataloged from PDF version of thesis.Includes bibliographical references (p. 125-128).Airlines participating in alliances offer code share itineraries (with flight segments operated by different partners) to expand the range of origin-destination combinations offered to passengers, thus increasing market share at little cost. The presence of code share flights presents a problem for airline revenue management (RM) systems, which aim to maximize revenues in an airline's network by determining which booking requests are accepted. Because partners do not jointly optimize revenues on code share flights, alliance revenue gains from implementing advanced RM methods may be lower than an individual airline's gains. This thesis examines seat availability control methods that alliance partners can adopt to improve the total revenues of the alliance without formally merging. Partners share information about the opportunity costs to their network, called "bid prices", of selling a seat on their own flight leg, a mechanism termed bid price sharing (BPS). Results show that BPS methods often improve revenues and work best for networks with certain characteristics and partners with similar RM systems that exchange recently calculated bid prices as often as possible. Gains are typically only achieved if both alliance partners participate in the code share availability decision (called dual control) rather than one partner only, but implementation of dual control is more difficult for airlines in practice. In the best case scenario, gains of up to .40% where achieved, which can translate into $120 million per year for the largest airlines. In our simulations, BPS with dual control and frequent bid price calculation and exchange was the only method that produced consistently positive revenue gains in all the scenarios tested. Therefore, alliance airlines must consider the trade off between revenue gains and implementation difficulties of more frequent bid price exchange or dual control.by Alyona Michel.S.M.in Transportatio

Network Revenue Management under Competition within Strategic Airline Alliances

Airlines often cooperate with partners within strategic alliances to offer their customers itineraries beyond their own networks. However, despite the cooperation, the alliance members often remain competitors on other routes and compete for customers. This thesis takes into account the competition between two alliance partners and models it in a linear program. An algorithm is developed to compute optimal capacity allocations in pure Nash equilibria based on the model. For cases, in which a Nash equilibrium does not exist or cannot be found within a pre-defined time, a heuristic approach is described to compute an approximate Nash equilibrium. Computational studies show the applicability of the approaches in real-sized airline networks. Finally, suggestions for future research are made

Revenue Management for Strategic Alliances with Applications to the Airline Industry

Die Dissertation erscheint parallel im<a href="http://www.dr.hut-verlag.de/9783843902595.html"> Verlag Dr. Hut, München An airline has to decide whether to accept an incoming customer request for a seat in an airplane or to reject it in hope that another customer will request the seat later at a higher price. Within strategic alliances of airline partners this decision problem grows more complex. The presented work develops an option-based capacity control method, which dynamically decides on the acceptance or the rejection of customer requests to maximize the combined revenue of the alliance partners