Question

In the commercial aviation industry, strategic alliances are utilized everywhere. This could be in the form of codeshares (where one airline places their airline code and flight number on a flight operated by another carrier) or group partnerships (like the oneworld alliance) where many airlines operate and market in some cohesive manner. In this particular industry, what are the benefits? What are the risks for those who fail to form valuable strategic partnerships?

Answer 1

Consumers benefit from stronger networks, seamless travel and the ability to book an international itinerary through a single network.

One of the most important benefits of alliances is the decrease in ticket prices when linking cities to each other. The big number of passengers on these flights allows for an increase in aircraft load factor, lowering thereby trip costs and serving interests of both passengers and carriers.
Airlines were also able to provide passengers with varied flight schedules and a wider choice of take-off and landing times, which lead to reduced travel time.
Alliances seek to improve quality standards and passenger services, and apply minimum standards at all stages

For those who fail to form strategic partnerships will find it hard to compete with those who are formed partnerships as their costs are higher and hence ticket prices will be higher, consumers will have fewer options in flight schedules and increased travel time. In the long run the survival of firms without strategic partnerships is very challenging.