chapter  8
12 Pages

Extraction of Financial Benefits by Alliance Partners

Theultimategoalformostairlinesinjoiningalliancesistoimprovefinancial performance.Intermediateobjectivescanbenumerous,themostobviousbeing survival,increaseinmarketshare,increaseinyields,orreductioninoperating costs.Theairlineindustryissuchacomplexbusiness,thoughnotnecessarilyvery muchdifferentfrommostofthefast-cyclebusinessesoftoday,comprisingso manyinterdependentvariablesthathaveaneffectonthefinancialperformanceof companies,thatitisnoteasytoextracttheexactcauseforfluctuationinfinancial performance.Factorsthatmaketheairlinebusinessuniqueincludethefactthat operationsarestillregulatedextensively,forexampleintheareaofsafety,andthe factthatinfrastructureiscongestedinsomemarkets.Also,alloperatorsusethe sameairportsandaircrafttypes,makingitverydifficulttodifferentiatewithinthis business;moreover,costlevelsvarysignificantlyfromcountrytocountryfor historicalreasons.