Airline program alliance is an aviation agreement between several airlines which agreed to partner and cooperate in matters affecting them. These arrangements were made in order to protect common interest or advance a common goal. Alliances offer various services to facilitate their travelers. For instance, an alliance may present marketing branding to help passengers to make interline code share connection within countries. A common computer reservation system is used to offer seamless services to the passengers, the services include, coordinated flight schedules, automatic baggage transfer, code-sharing of flights, fares and ticketing, joint marketing to name but a few. The world’s largest airline alliances are One world (purple), Sky Team (blue) and Star Alliance (grey). The idea of airline program alliance was brought by the fact that most of the competing airlines operate from almost similar technology in offering similar goods and services. Tourism and airline industry operates in a connected manner and thus they are prone to global calamities like terrorism, epidemics, cyclones, earthquakes and many more.
There are several benefits that accrue from these alliances. First, this alliance program helps to cut the cost of operation. By cutting down the cost of operation the airline can be able to save more. Members of the same airline normally shares the same sale offices by doing this they are able cut cost as opposed to a case where an airline would be required to rent an office on its own and employ its own employees. By the fact that members of the same airline alliance share the same maintenance facilities and personnel is another reason that helps them to cut their cost. Maintaining an aircraft is a very expensive and similarly setting a hangar is very expensive. When the airlines join hands they can be able to comfortably contribute amount required for hangars and maintenance facilities as opposed to the case where each airline would be required to have its own maintenance facility.
Another factor that leads to cost reduction is the fact that even services like catering, computer systems they tend to share them. After the airlines have come together while they are purchasing goods and services they are able to negotiate extra volume discounts. After they have been issued with extra discounts the cost of buying goods will be low thus it will enable them to save more. Lastly, operational staff is airline alliances are shared. These staffs include, ground handling personnel, at check-in and boarding desks. Sharing the staffs means that the airlines will not be required to employ many workers and hence saving a lot (Casanueva, Gallego & Sancho, 2013).
An extended network is another benefit that the airline gets. Normally an extended network is realized through code sharing agreements. Majority of the airline alliances starts a code only share network. These extended networks help the airline to reach some new markets where on its own it would not have reached. By reaching some new grounds the airlines customers tend to increase. Under normal circumstances an increase in passengers will automatically lead to increase in the profits (Janawade, 2012).
With the airline alliances the alliances can be able to offer better airport facilities for example the lounges. After joining hands the airlines can be able to offer world class lounges to their customers which would not be the case if each airline had its own lounge. By joining hands the airlines will be in a position to contribute a lot and use those resources to construct a world class lounge. Lounges for these airlines normally have all that the customer may require in lounge.
When the airlines have merged and formed alliances they enjoy a greater ability to serve their passengers. When these alliances are formed their airplanes cover more destinations. For instance, star airline planes cover numerous destinations across the globe. By covering many destinations the customers of these airlines automatically increases.
Apart from the airlines enjoying the benefits of alliance programs the customers also benefit. Frequent travelers benefit more as compared to average customers. For instance, for one to earn tier status in one world program the passenger must travel several times using that airline. When a customer has a silver status in star alliance silver enjoys some benefits which include priority reservations wait listing and airport stand-by, priority boarding whereby the members will be given priority while boarding the aircraft in case the spaces are limited, some airlines goes a notch high where members are given priority while checking in into the airport and lastly their preferred seats are preserved.
When travelers are members of this airline program enjoy reduced prices in their ticket of a certain given route. This is because the operation cost of the airlines is normally reduced. The airlines tend to pass over this advantage to their customers and in the long run the number of their customers tends to increase. Another advantage is that there is a wide range of lounges shared by the alliances (Çetiner, 2013). Moreover, the customers of these airlines have more departure times to choose from for a given route. Alliances in these programs normally have many airplanes so it’s possible for them to have several airlines going same routes after a given time interval. Another advantage that the customers enjoy is that there is shorter travel time as a result of optimized transfers. Finally, travelers enjoys a round-the-globe tickets, this enables travelers to fly over the planet at a considerably low price.
Last but not least the customers enjoy quick mileage gifts by earning mile for unit account on numerous different airplanes. Even if the customers are carried by another aero plane but from the same airline they will still earn rewards. These rewards encourage travelers to use these airlines. In the long run the airline also benefits because it gets more customers.The only disadvantage with these alliances is that they may charge a lot after the competition from other carriers has been erased. If the alliance may start enjoying monopoly of the market it may start charging high.
In conclusion, relationships between airlines started a long time ago. Even though the level of competition between individual airlines is very high the airlines operates within a cooperative framework. The airlines usually sell and accept each other’s tickets among other conveniences. For non-competing airlines it’s only logical for them to take such cooperation to the next level of creating joint fares, sharing codes and many more. This is how the idea of airline alliance programs came up. A recent conducted study shows approximately 66% of the passengers use an alliance carrier that suppose in the aviation industry the alliance are very crucial. The success made by the three largest airline alliances is brought by several reasons including better usage of services at the airports, seamless travel but the most vital reason is code sharing which efficiently merges the airlines.
Casanueva, C., Gallego, Á., & Sancho, M. (2013). Network resources and social capital in airline alliance portfolios. Tourism Management, 36, 441-453. http://dx.doi.org/10.1016/j.tourman.2012.09.014
Janawade, V. (2012). Consumer Perceived Value of International Networked Services: An Exploratory Study of the Case of Airline Alliance. IBR, 6(2). http://dx.doi.org/10.5539/ibr.v6n2p20
Çetiner, D. (2013). Fair revenue sharing mechanisms for strategic passenger airline alliances. Berlin: Springer.