Airline Alliance - Rationale

Rationale

Benefits can consist of:

• An extended network: this is often realised through code sharing agreements. Many alliances started as only a code sharing network.
• Cost reduction from sharing of:
  • Sales offices
  • Maintenance facilities
  • Operational facilities, e.g. catering or computer systems.
  • Operational staff, e.g. ground handling personnel, at check-in and boarding desks.
  • Investments and purchases, e.g. in order to negotiate extra volume discounts.
• Traveler benefits can include:
  • Lower prices due to lowered operational costs for a given route.
  • More departure times to choose from on a given route.
  • More destinations within easy reach.
  • Shorter travel times as a result of optimised transfers.
  • A wider range of airport lounges shared with alliance members
  • Faster mileage rewards by earning miles for a single account on several different carriers.
  • Round-the-world tickets, enabling travelers to fly over the world for a relatively low price.

Airline alliances may also create disadvantages for the traveler, such as:

• Higher prices when all competition is erased on a certain route.
• Less frequent flights: for instance, if two airlines separately fly three and two times a day respectively on a shared route, their alliance might fly less than 5(3+2) times a day on the same route. This might be especially true between hub cities for each airline. e.g., flights between Detroit (a Delta Air Lines fortress hub) and Amsterdam (a KLM fortress hub).