A Content Analysis of International Airline Alliances Mission Statements

Background: Mission statements have come to play an important role as tools for organizational value sharing. Objectives: This study aims to shed light on what types of values are highlighted in international airline alliance members’ mission statements, and whether there are significant differences or not. Methods/Approach: Quantitative content analyses have been conducted with the goal to investigate mission statements of 61 members of international airline alliances: Star Alliance, SkyTeam, and oneworld. Results: Frequency test outcomes reveal that “philosophy”, “self-concept” and “location” are the predominant components in oneworld, “philosophy” is the primary component in SkyTeam, and “philosophy” and “customer” are the focal components of Star Alliance. According to chi-square tests, Star Alliance members emphasize “customer” more often than others do, and oneworld members highlight “profitability” more often. One-way Anova tests with a post hoc analysis reveal that Star Alliance members cover more components than SkyTeam. Conclusions: The theoretical implication of these findings is that they reveal the existence of unique values among international airline alliances members offering a competitive advantage. As a practical implication, these findings will be helpful for international airline alliances and airline managers for comparative purposes

Strategic Capacity Planning Problems in Revenue‐Sharing Joint Ventures

Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/154244/1/poms13128_am.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/154244/2/poms13128.pd

Airline alliances: permanent advantages?

O objetivo neste trabalho é examinar os efeitos das alianças entre empresas de transporte aéreo de passageiros. Dentre seus benefícios, costumam-se citar: possibilidade de alocar a melhor aeronave para cada segmento com economia de custos, expansão da rede, maior oferta de serviços, maior número de pares origem-destino para um mesmo total de pax.km voados. Esses benefícios são claros em uma análise ceteris paribus. Os benefícios estimados não se materializam como previsto. Isso porque, embora cada uma das empresas pertencentes à aliança passe a voar em distâncias maiores, carregando maior número de passageiros, acaba ocorrendo uma redução de tarifas em decorrência de fatores ligados à indústria, como a elevada concorrência no setor, provocada pela desregulamentação e pelo surgimento de empresas de baixo custo que provocam ganhos apenas modestos para as empresas pertencentes às alianças.The aim of this paper is to examine the effects of passenger airline alliances. The following tend to be included in the list of benefits of such alliances: the possibility of allocating the best aircraft for each flight segment with cost savings, network expansion, a greater offering of services, and a larger number of city pairs serviced with the same total pax. km flown. All else being equal, these benefits seem clear in analytical terms. However, the expected benefits did not materialize as anticipated. The reason for this is that even though all firms in the alliance flew longer stretches, carrying a larger number of passengers, these carriers were affected by the drop in fare prices, driven by industry-related issues, such as the sector's heavy competition, caused by deregulation, and the emergence of low cost airlines. All of this resulted in alliance member carriers achieving only modest earnings.El objetivo en este trabajo es investigar los efectos de las alianzas entre empresas de transporte aéreo de pasajeros. Entre las ventajas se suelen mencionar: la posibilidad de destinar la mejor aeronave para cada segmento con economía de costos, la expansión de la red, la mayor oferta de servicios, el mayor número de pares origen-destino para un mismo total de pax.km volados. Dichas ventajas quedan claras en un análisis ceteris paribus. Las ventajas estimadas no se materializan según lo previsto, pues, aunque cada una de las empresas que forman parte de la alianza pase a volar en distancias mayores, llevando a un mayor número de pasajeros, ocurre una reducción de tarifas en virtud de factores relacionados con la industria, como la alta competencia en el sector, oriunda de la desregulación y de la llegada al mercado de empresas de bajo costo, lo que aporta a las empresas que forman parte de las alianzas sólo beneficios modestos

Airline alliances: permanent advantages?

O objetivo neste trabalho é examinar os efeitos das alianças entre empresas de transporte aéreo de passageiros. Dentre seus benefícios, costumam-se citar: possibilidade de alocar a melhor aeronave para cada segmento com economia de custos, expansão da rede, maior oferta de serviços, maior número de pares origem-destino para um mesmo total de pax.km voados. Esses benefícios são claros em uma análise ceteris paribus. Os benefícios estimados não se materializam como previsto. Isso porque, embora cada uma das empresas pertencentes à aliança passe a voar em distâncias maiores, carregando maior número de passageiros, acaba ocorrendo uma redução de tarifas em decorrência de fatores ligados à indústria, como a elevada concorrência no setor, provocada pela desregulamentação e pelo surgimento de empresas de baixo custo que provocam ganhos apenas modestos para as empresas pertencentes às alianças.The aim of this paper is to examine the effects of passenger airline alliances. The following tend to be included in the list of benefits of such alliances: the possibility of allocating the best aircraft for each flight segment with cost savings, network expansion, a greater offering of services, and a larger number of city pairs serviced with the same total pax. km flown. All else being equal, these benefits seem clear in analytical terms. However, the expected benefits did not materialize as anticipated. The reason for this is that even though all firms in the alliance flew longer stretches, carrying a larger number of passengers, these carriers were affected by the drop in fare prices, driven by industry-related issues, such as the sector's heavy competition, caused by deregulation, and the emergence of low cost airlines. All of this resulted in alliance member carriers achieving only modest earnings.El objetivo en este trabajo es investigar los efectos de las alianzas entre empresas de transporte aéreo de pasajeros. Entre las ventajas se suelen mencionar: la posibilidad de destinar la mejor aeronave para cada segmento con economía de costos, la expansión de la red, la mayor oferta de servicios, el mayor número de pares origen-destino para un mismo total de pax.km volados. Dichas ventajas quedan claras en un análisis ceteris paribus. Las ventajas estimadas no se materializan según lo previsto, pues, aunque cada una de las empresas que forman parte de la alianza pase a volar en distancias mayores, llevando a un mayor número de pasajeros, ocurre una reducción de tarifas en virtud de factores relacionados con la industria, como la alta competencia en el sector, oriunda de la desregulación y de la llegada al mercado de empresas de bajo costo, lo que aporta a las empresas que forman parte de las alianzas sólo beneficios modestos

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

Alliance revenue management in practice : techniques and simulation analysis

Thesis (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2011.Cataloged from PDF version of thesis.Includes bibliographical references (p. 139-142).The primary motivations for the formation of airline alliances have been to increase revenues and decrease costs for alliance partners. A major advantage comes through increase in the number of destinations served by an airline at little costs, by using codesharing. Airlines share seat inventory on each other's codeshare flights which complicates their revenue management practice and leads to sub optimal revenue gains. This thesis analyzes the challenges related to alliance revenue management in practice and proposes innovative and feasible solutions to increase revenues for the combined alliance. The four key dimensions of the alliance revenue management problem are analyzed: recording & forecasting, seat allocation method or optimizer, codeshare valuation in the optimizer and availability control of codeshare bookings. The performance of different techniques is quantified using the Passenger Origin-Destination Simulator (PODS). It is found that sharing of information between partners to different degrees can be used to improve revenues. A new valuation scheme called dynamic valuation is developed in an effort to increase the combined alliance revenues by using bid price sharing, a method of sharing information related to codeshare legs. Dynamic valuation leads to additional revenue gains in the range of 0.30% to 0.50% over other techniques. This can translate into an incremental revenue gain, up to $ 100 M per year, for larger airlines in alliance partnerships. Dynamic valuation also provides a basis for further development of models related to revenue sharing proportions of alliance partners. The challenges and risks involved in implementing dynamic valuation are discussed.by Himanshu Jain.S.M.in Transportatio

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

The Impact of Strategic Airlines Alliances on Brand Management Practices: The Case of Royal Jordanian Airlines in Oneworld Alliance

The trend over several decades towards the creation of global brand alliances in the highly competitive airline industry is likely to persist. However, few academic studies consider how such horizontal brand alliances have been achieved and even fewer analyse their creation and maintenance from an individual company’s perspective. Furthermore, current studies are largely derived from a western management perspective: little work has been done in the Arab world or the Arabian airlines apart from recent studies of Gulf carriers. This thesis adds to this small body of work by examining Royal Jordanian Airlines’ role within the Oneworld Alliance. In particular, it analyses how the entry of a small airline into a large, well-established global organization affected the airline’s branding practices. The thesis also explores in lesser detail the branding and marketing strategies within the global alliances. A qualitative approach was used; purposive and snowball-sampling techniques were adopted to analyse 61 semi-structured interviews with senior managers and other actors within the airline industry. Two main themes have emerged: the first theme, the Airlines Industry’s Attitude towards Brand Alliances, examines the major challenges in the airlines industry, demonstrates the main motivations behind forming strategic airline alliances and explores the relationship between globalisation and the initiatives to formulate more strategic airline alliances. The second theme, the key branding and marketing strategies, investigates the alliances’ brand practices and marketing strategies and explains how a small national airline company has responded to this trend and offers a set of potential choices for future. Also this study provides compelling evidences of how the Oneworld Alliance creates branding value for the small airlines member and contributes toward understanding the case of the Arab world and the interplay between global alliance brands and national airlines companies. Finally, it demonstrates a number of issues that the alliance members need to address in order to avoid any brand dilution or negative spillover effect