Airline alliance survival analysis: typology, strategy and duration

Abstract

Alliances have become the organization model of choice in many industries. This study uses data from the Airline Business annual surveys of airline alliances to test a proposed typology predicting survival and duration in airline alliances. The Rhoades-Lush typologies classified key activities of airline alliances by their level of complexity and resource commitment in order to suggest a series of propositions on alliance stability and duration. The results of our analysis indicate that alliances containing joint purchasing and marketing activities had lower risk of termination than alliances involving equity. Furthermore, alliances spanning more than two typologies showed lower risk of termination than one and two typology alliances. This is explained as the ‘strategy effect’ or in other words the tendency of alliances wide in scope to be more resistant to early termination.