ABSTRACT

This chapter addresses the measurable, financial benefits for airline carriers, resulting from a high-level alliance formation. Such a formation is defined as being a market-oriented and efficiency-seeking partnership at the same time. A profitability index is constructed for 12 chosen carriers by dividing operating revenue by operating costs and further adjusting for macroeconomic influences. The index is used for comparing profitability gains or losses for aligned carriers vs. a benchmark. Results indicate that aligned carriers transform their new strategic options into financial benefits, measured by an increase of the constructed profitability index compared to their unaligned peers.