chapter  9
24 Pages

Challenges to Federation Governance

Airlineallianceshavebecomemuchmorethanjustacollectionofcodesharesand mutuallyrecognisedFrequentFlyerProgrammesbetweenseveralpartners.They increasinglytakeonsomecharacteristicsoforganisationsintheirownright.In somecases,alliancegroupgovernancestructures(suchasStar's'AMT'- Alliance ManagementTeam-andoneworld'sManagementCompany)aresetup.These groupscantakeavarietyofgovernancestructures.Oneimportantcharacteristicof agovernancestructureisthenumberandtypeofmemberairlines,andhowthey arelinkedtoeachother.Forexample,theycanbeacommunityofequals,where eachmemberhasthesameweightindecidingalliancematters.Ortheyconsistofa veryheterogeneousmembership,wheretwoorthreeleadairlinesareoften surroundedbysmallerpartnersthatprovidethemwithfeed.Asthenumber(and diversity)ofalliancegroupmembersincreases,sowillitscomplexity.Growing complexityinasystemofrelativelyindependentunitsmeansthatatsomepoint, coordinationbetweentheunitsbecomessodifficultthattherewillbeaneedfor somestructuralgovernance.Itisatthispointthatthealliancebecomesan organisationinitsownright.Eventually,thisorganisationacquiressomedegreeof authorityovermemberairlines,andmembersaredeeplyembeddedinthegroup structuresoastomakeitfairlydifficultforthemtoleave.