An Exploration of Strategic Alliance in the Improvement of Airlines' Performance (a Case Study of PT Garuda Indonesia)

The purpose of this research is to explore the improvement of company's performance while comply the high qualified SkyTeam membership requirements. This research also explores the networking impact that company able to obtain, and improvement of integrated ground service that SkyTeam offers to passenger. Research method that used in this research is qualitative method with case study approach. Data sources in this research are primary data, by doing interview with Alliance and Partnership Management and Ground Service Unit from PT Garuda Indonesia, and secondary data from company's documents, and news update which is related to the research theme. The result shows that joining Garuda Indonesia to SkyTeam improve company's performance in terms of passenger service system, quality of safety, human capital skills, brand recognition, and knowledge transfer process. Further, SkyTeam provide new potential market for Garuda Indonesia to Greater China, America, Europe, and Middle East. The integrated ground service that SkyTeam offers also increase the customer satisfaction index for Garuda Indonesia service. Besides that, Garuda Indonesia also faces some obstacles to adjust the high modern passenger service system, ground service officer which lack of SkyTeam product knowledge, and implementation of SkyTransfer which adjust the airport infrastructure and facility

\u3ci\u3eThe Conference Proceedings of the 2001 Air Transport Research Society (ATRS) of the WCTR Society, Volume 3\u3c/i\u3e

UNOAI Report 01-8https://digitalcommons.unomaha.edu/facultybooks/1146/thumbnail.jp

Development of a synergy audit model for sustainability of horizontal airline alliances

Thesis (PhD)--Stellenbosch University, 2003.ENGLISH ABSTRACT: For more than a decade there has been an economic need to mitigate the negative effects of the air transport industry's innate sensitivity to cyclical developments as well as the effects of its inherent lack of substantial profits. The past 20 years were additionally marked by a change in policy that prompted various countries to liberalise and privatise their civil passenger air transportation industry. At the same time, airlines' business ambitions became more global, tapping into markets beyond countries' or continents' main gateways. All three aspects started to change the pattern of airline competition and required new business models. Key features of airlines' novel business models are geographic expansion and thus market development. Global expansion strategies and market development activities in passenger air transportation are, however, not easily and fluidly executable. The airline industry is, to some extent, still nationally regulated, thus impeding passenger airlines from fully participating in the global market-scene and from freely entering promising geographies. Concomitantly, the competitive landscape in which scheduled passenger airlines operate changed drastically, with travel value chains occasionally undergoing revolutionary transformations on both the supply and the demand side. Finally, the air transport service reveals several peculiarities that impact its production, distribution and consummation. These characteristics have inspired the execution of novel forms of competitive strategies that are described and critically discussed in this dissertation. Within this context, a main root cause for passenger airline partnerships appears to be its continued regulation and the circumvention thereof through the horizontal joining of forces, thus emulating concentration tendencies that have long been a fixture in other globalising industries. Consequently, horizontal interairline partnerships were induced and identified as a key competitive device with which to weather the challenges of the new air transport rivalry structures, the increasingly deregulated environment, and the impediments of sustained market regulation. All major airlines are now involved in some type of horizontal collaboration. The spectrum of these linkages is wide and ranges from loose, unattached, operative agreements to long-term, far-reaching, strategic ones, the most salient forms and instruments of which are thoroughly scrutinised in this dissertation. This dissertation additionally presents the general core inducing economic drivers of carrier interrelationship, which are cost reduction, revenue generation and corporate power considerations. While these aspects offer a multitude of possible partnership forms and instruments, the bulk of airline linkages, however, is presently constituted of joint revenue generation and, consequently, jointly pursued marketing and market expansion goals. In view of these causes, the present dissertation engages in a profound discussion of the rationales behind interairline partnerships, their likely evolution and effects on management practice. Essentially, the key importance of airline partnerships in meeting basic economic imperatives on the one hand, while circumventing persistent regulation on the other, questions the sustainability of incumbent carriers' current business models. There are clear indications that a structured sequence of events in establishing interairline linkages is a key success factor for horizontal airline partnerships. However, the empirical examination of contemporary partnerships' governance structures and managerial practice strongly points to a lack of ample tools with which to establish airline partnerships, select the appropriate match between alliance goals and intensity, and govern alliances during their entire life-cycles. This drawback seems particularly unacceptable in view of the urgent requirement for more appropriate managerial practice in today's discontinuous air transport business environment, and speaks loudly of the need for a framework with which to enhance airline partnership output. Most ideally, a coherent, structured sequence of events should be followed in partnership formation, organisational set-up and management in order to bring an alliance to fruition. On this basis, the establishment of a collaboration governance organisation, adequately mirroring the specific partnership type and meeting the specific demands of all partners involved, is equally identified and described as a fundamental success driver in this dissertation. Further structural, organisational and functional issues thereafter need to be considered in order to transform the joint business venture of two horizontally allied carriers into a venture for mutual success. The most essential of these are introduced in this dissertation. Synergy plays a central role in this context. Synergy, as the overreaching intention and result of working together towards a common goal, must be anchored as a prime objective of all forms of partnership activities. Synergy through interfirm linkages can be derived from various collaborative areas and is greatly influenced by both internal and external factors. One gauge for synergy, in particular for the transformation of synergy potentials into synergy effects, is partnership intensity. The measurement of partnership intensity can be used to perpetually monitor the benefits of partnership activities. At the same time, inconsistent or uneven partnership intensity can indicate the existence of dissynergies or frailties in the alliance. The underlying theories of collaborative synergy generation, its main drivers and impediments, with particular reference to horizontal partnerships of scheduled passenger airlines, are explored in this dissertation. In recognition of the theoretical and practical background of airline partnerships and the acknowledged problems associated with their establishment and operation, the present dissertation proposes a novel model dynamically supporting the quest for synergy in airline interrelationships. Incorporating the goals of synergy generation and its continual measurement in interairline partnerships, the synergy audit is designed as a dynamic managerial tool. The synergy audit functions as a recurring device for unleashing all the positive partnership benefits of collaborative scope and width. It aids airline alliance management in transforming the desired benefits of partnership activities - synergy potentials - into real, tangible synergy effects during the entire partnership life cycle. The tool A.PIE (Airline Partnership Intensity Evaluator) supports the synergy audit and, which idiosyncratic to the airline industry, multidimensionally applies the deduced relationship of partnership intensity and synergy to the most salient partnership areas and functions. The present dissertation shapes understanding of the true drivers and complexities of today's airline partnerships. It proposes a circular, multidimensional and dynamic model, thus attempting to enhance the set-up, performance and output of horizontal airline collaboration. From this point of view it endeavours to fill the gap identified in contemporary airline partnership management and practice.AFRIKAANSE OPSOMMING: Sien asb volteks vir opsommin

Closure and restart as an option for a sustainable South African national airline

Abstract: Background: The non-implementation of certain key initiatives of South African Airways’ (SAA’s) turnaround strategy poses a risk that SAA may not recover financially. Objectives: The establishment of SWISS (previously known as Crossair and Swiss International Air Lines) as a successor airline to Swissair’s liquidation was studied to determine the viability of closure and restart of a smaller successor state-owned airline as an alternative option to a sudden liquidation of SAA. Method: The study is based on a literature review of analysis, official reports and financial results. Results: Three distinct phases for the establishment of the successor airline for Swissair were identified: (1) Financial distress of the SAirGroup (Swissair’s holding company) and the factors which contributed to Swissair’s demise. (2) The transition from Swissair to SWISS. Swissair’s grounding was caused by a liquidity crunch followed the announcement of bankruptcy protection. Flight operations were restarted a few days later with financial support from both the State and the private sector. Some of Swissair’s assets, routes, staff and flight operations were transferred to a subsidiary, Crossair, as successor airline, later re-branded as SWISS. SWISS, however, continued to incur losses despite progressively reduced scale of activities and four restructuring plans. (3) As a Swiss-based national airline SWISS, which became profitable following its acquisition by Lufthansa. Conclusion: The transformation of SWISS as successor airline to Swissair is an option to mitigate the risk of a sudden service disruption of SAA. Serious pitfalls require detailed preparation and funding before implementation. SWISS only became successful following its acquisition by Lufthansa

The business model of long-haul low-cost carriers : an analysis of future viability at the example of Norwegian Air Shuttle ASA and Eurowings GmbH

Over the last decades, low-cost carriers used to revolutionize short- and medium-haul markets globally. With the viability of their business model being proven through profitable operations, an increasing number of low-cost carriers entered the lucrative long-haul segment more recently. However, there is yet no prevalent view of the business model viability of long-haul low-cost carriers; recent events such as Wow Air’s insolvency raised strong doubts. This thesis aims at examining the future viability of the long-haul low-cost carriers’ business model by conducting an in-depth investigation of Norwegian Air Shuttle ASA’s and Eurowings GmbH’s long-haul business model. Subsequently, an innovated business model is developed. Key findings include that the business model of long-haul low-cost carriers is principally viable. However, the two selected airlines show that operating profitably remains difficult, regardless of the operating model and organizational structure. To ensure future viability, the business model needs to be innovated. In this context, a lean operating model is crucial to the success of long-haul low-cost carriers. Furthermore, new-generation, fuel-efficient narrow-body aircraft such as the Airbus A321 XLR may open up new potentials for profitable long-haul operations.Nas últimas décadas, as companhias aéreas de baixos preços revolucionaram os mercados de rotas de curta e longa distância a nível global. A viabilidade deste modelo de negócio foi confirmada pelas suas operações rentáveis, o que recentemente suscitou um aumento no número de companhias aéreas de baixos preços a apostar no lucrativo mercado das viagens de longo curso. No entanto, não há até ao momento provas consistentes quanto à viabilidade do modelo de negócio de companhias aéreas de preços baixos em rotas de longa distância; eventos recentes tal como a insolvência da Wow Air deram origem a fortes dúvidas. Esta tese pretende examinar a viabilidade do modelo de negócio de companhias aéreas de baixo custo em voos de longo curso, conduzindo a uma detalhada investigação da Norwegian Air Shuttle ASA e da Eurowings GmbH em rotas de longa distância. Posteriormente, um inovador modelo de negócio é desenvolvido. As conclusões principais incluem a revelação que o modelo de negócios das companhias aéreas de preços baixos em rotas de longo curso é maioritariamente viável. Contudo, as duas companhias aéreas selecionadas revelaram que atingir lucros ainda permanece difícil, independentemente do modelo operacional e da estrutura organizacional. Para assegurar a sua viabilidade, o modelo de negócio tem de ser inovado. Neste contexto, um modelo operacional simples é crucial para o sucesso de companhias aéreas de reduzido custo a operar em rotas de longa distância. Adicionalmente, aviões estreitos de nova-geração com gastos eficientes de combustível, como o Airbus A321 XLR poderão potenciar novas oportunidades de manter operações lucrativas em voos de longo curso

Delta Air Lines, Inc. flying high in a competitive industry an equity research report on Delta Air Lines, Inc. (DAL: NYSE)

This equity research report will first be focusing on the North American Arline industry, analyzing its current form, as well as looking at industry’s opportunities and threats ahead. On top of this, an outlook over the airline industry will also be presented in order to give the investors an accurate view of the present and the future. A further analysis will then be conducted with regards do Delta AirLines Inc. (DAL:NYSE), applying the previous research to provide a fair valuation for the group, resulting in an sustained recommendation of whether an investor should consider invest in DAL, or not

The Winning Hybrid - A case study of isomorphosm in the airline industry

The deregulated scheduled passenger airline industry is in a constant state of motion as managers continually adapt their business models to meet the challenging market environment. Such adaptation has led to a variety of airlines populating the industry; from the birth of low-cost carriers to the transformation of state-owned behemoths to lean and successful carriers. These dynamics challenge airline managers to continuously acclimate their business models and to understand industry evolution. This doctoral dissertation addresses the issue of industry evolution and attempts to propose future airline business models based on airline behavior. The intention is to improve understanding of industry evolution, propose a method for constructing future business models, and aid airline management in future strategic decisions. Three central themes are raised in the research: business model heterogeneity and its impact on airline performance, innovation and imitation as a justification for business model heterogeneity, and future business models grounded on airline innovation and imitation. Each theme forms the basis for the project’s three analyses. The research is categorized according to the customary industrial segmentation of full-service carriers, low-cost carriers, and regional carriers. The findings show that business model heterogeneity is evident at varying degrees in the industry, and that there is a positive relationship between the level adherence to a strategic group’s traditional business model and financial performance. This indicates that airlines that abide by their strategic group’s traditional business model perform better than those that differentiate themselves form the traditional business model. The low-cost carrier group is the most heterogeneous while the full-service carrier group is the most homogenous, which one may attribute to the historical emergence of these two groups. Results from a global survey distributed to airline CEOs show that business model differentiation is predicated on both innovation and imitation. The research shows that all airlines innovate, however business model changes based on this phenomenon may only afford an airline an advantage for a limited time period as imitation is prolific in the industry. Airline behavior indicates that airlines that populate the periphery of their strategic group are more prone to imitate other strategic groups. In addition, it is shown that airlines that closely adhere to their strategic group’s traditional business model are more likely to imitate airlines populating their own strategic group. The final analysis is based on the presence of innovation and imitation in the industry and incorporates these concepts in algebraic analyses which determine the unique combinations that continuously lead to a positive operating margin. The business model results suggest that the clear, historical distinctions between the strategic groups in the industry are becoming blurred, and that a winning hybrid may emerge

The development of long-haul air services from regional and secondary airports in Europe

In recent years there has been tremendous interest in the growth of low-cost airlines in Europe operating from regional and secondary airports. These have been entirely in the short-haul sector, however. Intercontinental services remain dominated by a few large airports such as London Heathrow, Frankfurt, Paris CDG and Amsterdam. This paper examines the recent development of long-haul services and shows that some of the medium sized European airports have seen their network reduced in the last decade, while it also appears more difficult to replicate Ryanair’s use of obscure minor airports in the long-haul arena. Possible means of providing long-haul links to European regional airports are examined. Continental Airlines is launching new routes from New York to places such as Belfast and Bristol with the Boeing 757 offering around 150 seats. These obviously depend upon the hub feed at the US end to gather a much wider range of North American destinations together. Emirates has ambitious plans to serve more European airports from its rapidly growing hub at Dubai. Already it offers the only eastbound long-haul flight out of Scotland (Glasgow-Dubai). Routes between smaller airports catering for the visiting friends and relatives market have developed where there has been historical migration. These are typically at low frequencies. Canada has services from Europe such as Cardiff-Toronto and Lyon-Montreal. Hamburg has a link to Accra in Ghana, Las Palmas (Canary Islands) to Havana, Cuba and Birmingham to Ashgabat in Turkmenistan. In some cases it is possible to support a service through a second stop in Europe (e.g. Lisbon-Porto-Caracas). Low frequency services are also to be found catering for the holiday market such as to Florida or the Caribbean (e.g. Dusseldorf-Orlando). In the absence of any direct long-haul service, connections via a European hub are necessary to access intercontinental points from regional airports in Europe. International alliances between airlines are shown to have been a mixed blessing in this respect. They have generally widened connection opportunities via the major hubs and led to more competitive through fares becoming available. However, some secondary and regional hubs have been run-down in favour of major hubs in the same alliance (which may be in a different European country), reducing accessibility from smaller and more peripheral regional airports. Examples include London Gatwick which has the main London service from many smaller UK airports such as Jersey, Inverness and Plymouth but has been run down as a long-haul hub by British Airways and Copenhagen, which now has very limited long-haul service by SAS; instead a double-change is required from many small Scandinavian airports to reach Star Alliance services out of Frankfurt. The growth of low-cost short-haul airlines such as Ryanair and easyjet may have reduced fares for local passengers but has reduced global connectivity where they have driven a traditional hub airline off the route. A good example is Belfast in Northern Ireland which used to have a link to Amsterdam by KLM. They have been displaced by easyjet, which is fine for passengers only travelling to Amsterdam but beyond there is no longer co-ordinated scheduling and through fares to KLM’s global network. If a passenger does attempt to connect via Amsterdam it will usually cost them more than previously and if anything goes wrong, the connection is ‘at their own risk’. The scope for a long-haul low-cost airline is examined. It is demonstrated that it is difficult to obtain a sufficient cost advantage in long-haul for a ‘no-frills’ all-economy class product. This is because the major airlines are able to obtain very high yields from their first and business class traffic (one full fare first class passenger with a lie flat bed may be paying the equivalent of 40 deeply discounted economy excursion fares). This enables airlines to offer the seats at the back of the aircraft based on a very low marginal cost. It is difficult to increase aircraft and crew utilisation as this is already high on intercontinental sectors. Cargo is less easy to ignore as it provides significant extra revenue on long-haul flights although introduces complexity. It is also difficult to eliminate all ‘frills’ on flights of 8 or 12 hours duration: even if charged for it is necessary to maintain food service (galley space) and in-flight entertainment, while keeping standard provision of toilets, baggage handling etc. The cost saving from using secondary airports is marginal for long distance traffic where it forms a much smaller proportion of total costs. Many of these smaller airports have runway length or apron/terminal space insufficient to handle widebody aircraft. Hub feed is much more crucial for long-haul services: there are few dense routes (mainly Virgin Atlantic’s long-haul network from London plus Paris-New York). Intercontinental services from Frankfurt or Amsterdam typically depend on connections for 70-80% of their traffic. Bilateral air services agreements between governments also restrict the opportunities for long-haul services from regional airports. When the UK-India bilateral was renegotiated to allow extra flights, the three British carriers applying all wanted to use this scarce capacity from London Heathrow rather than any regional airport. Other bilaterals may specifically name the capital city only in the route schedule. It is concluded that the best scope for long-haul services from the regions is to major hub airports in other parts of the world, such as those developed by Emirates and Continental. Opportunities for point-to-point leisure services fall into two main categories: ethnic links and holiday destinations (some of which may already exist as charters). A long-haul low-cost ‘no-frills’ air service is likely to be a risky venture but carriers such as easyJet may be tempted to try this from their bases in secondary airports such as London Stansted or Berlin Schonefeld if profits falter on their European network, using their short-haul services to provide feed. Otherwise, the regional airports are in the hands of the major airlines or alliance groups and their European feeder operations. Important links are currently under threat from lack of capacity for small aircraft at the major hubs, run-down of secondary hubs and competition from low-cost airlines for short-haul traffic.