Airline Alliances Research Articles

An Examination of the Sustainability Activities of Global Airline Collaborations within the Scope of IATA's Sustainability Goals

This study aims to evaluate the sustainability activities of the global airline alliances Star Alliance, SkyTeam, and OneWorld within the framework of the International Air Transport Association's (IATA) sustainability goals. Specifically, it focuses on key areas such as achieving net-zero carbon emissions by 2050, promoting new aircraft technologies, enabling greener travel (in terms of noise and air quality), enhancing energy, resource, and operational efficiency, managing cabin waste and recycling, adopting sustainable aviation fuels (SAF), and protecting biodiversity. Using a content analysis methodology, data were gathered from publicly available sources, including airline sustainability reports, annual reports, and information from the IATA website. This systematic analysis provides an objective evaluation of how well these airline alliances are aligning their strategies with IATA’s sustainability goals. The findings reveal significant disparities in the alliances’ commitments. For instance, Star Alliance and OneWorld members exhibit deficiencies in biodiversity conservation, while SkyTeam members show slower progress towards achieving the net-zero carbon emissions target. Additionally, all three alliances demonstrate varying degrees of success in adopting SAF and implementing other sustainable practices, such as waste management and the promotion of new aircraft technologies. By identifying the strengths and weaknesses across the alliances, this research offers critical insights into how the aviation sector can more effectively contribute to global sustainability efforts.

Examining the determinants of Indian airlines’ revenues

The Indian aviation sector has undergone remarkable growth, driven by the emergence of low-cost carriers and diverse business models. This has resulted in a surge in passenger numbers and aircraft orders, establishing India as a vibrant global aviation market. However, this rapid expansion is accompanied by significant financial challenges, leading to distress and insolvency among numerous airlines. Despite optimistic growth forecasts, high operating costs and relatively low revenue returns pose substantial hurdles. Motivated by these challenges, this study aims to uncover the key factors influencing revenue generation in the Indian aviation industry by analysing expenditure components and their impacts on costs. The objective of this study is to address the research gap stemming from the lack of previous studies on Indian airlines that address endogeneity issues related to airline expenditures. By utilising data from 2007 to 2022 sourced from the audited annual reports of each airline, we aim to provide essential insights into the revenue dynamics of Indian airlines through the application of various econometric models including instrumental variables (IV) regression and generalised method of moments (GMM) models for improving causality and addressing endogeneity. Our findings reveal a positive correlation between unit revenue and factors such as unit expenditure, staff numbers, and passenger volume, while also highlighting the positive impacts of airline alliances and regional connectivity schemes. This research not only sheds light on industry intricacies but also underscores the imperative to address key variables to enhance the sector's sustainability and resilience in the face of ongoing challenges, offering valuable contributions to both academia and industry stakeholders for informed decision-making and strategic planning.

Research Based on The Passenger’s Perspective to Airline Alliances, The Case of Turkish Airlines, A member of Star Alliance

There is a substantial degree of cooperation between two or more airlines in an alliance. Strategic alliances are formed for a variety of reasons. As a result of airline alliances (e.g., Star Alliance, Oneworld, Skyteam), airlines are able to increase profitability, reduce costs, and expand their flight networks. As part of its commitment to passengers, Turkish Airlines (hereinafter referred to as 'THY') offers flight check-in, baggage handling, a broad network, high-quality catering, in-flight comfort, and on-time departures and arrivals. An assessment of customer perceptions of THY's alliance was conducted to determine whether alliance strategies affected perceived service quality. Travelers who have flown with Turkish Airlines, the flag carrier of Turkey and a Star Alliance member, were surveyed to compare the impact of alliance strategies on service quality before and after joining the alliance. The survey was completed by 147 participants and analyzed using SPSS.

Role of Alliance Brand Awareness on Customer’s Behavioral Response and Satisfaction: Case of “Sky Team” Global Airline Alliance.

Role of Alliance Brand Awareness on Customer’s Behavioral Response and Satisfaction: Case of “Sky Team” Global Airline Alliance.

Hybrid-within-hybrid: governance issues within international airline alliances

Hybrid-within-hybrid: governance issues within international airline alliances

Role of alliance brand awareness on customer's behavioural response and satisfaction: case of 'sky team' global airline alliance

Role of alliance brand awareness on customer's behavioural response and satisfaction: case of 'sky team' global airline alliance

Unit Root Tests of Airline’s Stock Returns Considering Alliances

The purpose of this study is to make a unit root analysis of the stock return time series of 18 air carrier companies due to alliance membership in this paper because of the importance of the unit roots in the detection of time-related matters. Five important unit root tests, which can be classified as Fourier or classical utilized. According to the findings, there is no unit root in the stock return series regardless of airline alliances but there are differences on a regional basis depending on the test and test power, specific Asian airlines stocks’ return series show linearity. These results will shed more light on the efficient market hypothesis on aviation management in the next research.

Strategic Analyses of Applying an Option-Based Hedging Mechanism in Parallel Airline Alliances

The extant literature proposes an option-based hedging mechanism for airlines in a parallel alliance to transfer bumped passengers to their alliance partner's flight. This paper extends this literature by conducting strategic analyses and developing a two-stage simulation-based algorithm to identify the best strategy for applying the hedging mechanism. Specifically, the best strategy refers to the best number of options for the allied carriers to transact. The authors show that there exists a robust result of the best number of options, and it is obtained under the objective of maximizing alliance-wide revenue. The result of this paper can provide direct guidance to the management of airlines on the best practice of hedging ex-post overbooking risks and matching supply with demand.

Can parallel airline alliances be welfare improving? The case of airline–airport vertical agreement

Parallel airline alliances have negative effects on consumers a priori; however, they can be counteracted if airports may modify the behavior of airlines. In particular, vertical airport–airline agreements allow the airport to influence the competition downstream market, changing the effects of parallel alliances. In this paper, we analyze the effects of parallel alliances in the context of competition between vertical airport–airline pairs competition. We show that under the influence of airports, parallel alliances are welfare improving, and the number of passengers increases, against former studies. These results offer a new brand of analyses to be considered by authorities that evaluate parallel alliances.

COVID-19 KRİZİ ÖNCESİ VE SIRASINDA KÜRESEL HAVAYOLU İTTİFAKLARI: CRITIC-CoCoSo YÖNTEMLERİ ARACILIĞIYLA KRİTİK BAŞARI FAKTÖRLERİNİN BELİRLENMESİ

This study aims to reveal the critical success factors that provide global airline alliances success by making a comparative analysis of the performances of global airline alliances for the period before and during the pandemic. To do this, the performance data of 35 airlines that are members of Star Alliance, SkyTeam, and Oneworld alliances were analyzed for the years between 2017 and 2020 by using CRITIC-CoCoSo methods. The study benefits 7 criteria including 3 financial and 4 operational. The results reveal that the operating result and the load factor are among the critical success factors for global airline alliances when considering all years analyzed. In addition, SkyTeam alliance is in the first place during the pandemic period, while it is in the last place after Oneworld and Star Alliance in the general ranking. The study is expected to contribute to the airline management literature, executives of global airline alliances and member airlines by exploring the critical success factors that global airline alliances must have to overcome negative effects of crisis periods and to be sustainable.

Regulatory Convergence Between U.S. Antitrust Law and Eu Competition Law in International Air Transport—Taking Stock

Abstract This article takes stock of the regulatory convergence between US antitrust law and EU competition law in the field of international air transport. The analysis draws a distinction between domestic aviation and international aviation and sets the boundaries of regulatory convergence in international air transportation. Through a comparative analysis of the decisional practice of the U.S. Department of Transportation and the European Commission, it identifies instances of regulatory convergence in: (i) the definition of the relevant market in international airline alliance cases, (ii) the remedies imposed to immunize international airline alliances, and (iii) the duration of the antitrust immunity. It further identifies an instance of legislative convergence in the area of fair competition in international air transport. The analysis addresses the future of regulatory convergence in the post-Covid 19 era and emphasizes the role of the competition authorities in safeguarding consumer welfare.

항공동맹의 브랜드 신뢰도가 의사결정 편의성, 브랜드 자산 및 구매의도에 미치는 영향

When purchasing airline tickets, consumers are confronted with numerous uncertainties. Airlines actively utilize brands to reduce consumers' opinions on this matter. The research model was presented in order to demonstrate that the brand credibility of the global airline alliance is a signal that reduces uncertainty in consumers' purchasing decisions and influences their purchase intentions. The relationship between brand credibility, decision convenience, brand equity, and purchase intention was validated using structural model analysis, and the indirect effects of brand credibility and decision convenience were validated using bootstrapping. First, brand credibility had a positive effect on brand equity by enhancing brand utility and demonstrated a positive relationship with decision convenience by reducing the effort and time spent by consumers during the purchasing process. Second, the brand credibility of the airline alliance did not have a direct impact on the purchase intentions of consumers. However, brand equity and decision convenience were found to have indirect effects. This study has academic value because it explains brand credibility in the context of brand alliance using signal theory. Even in brand alliances, brands' consistent and clear signals served to reduce consumer uncertainty. Moreover, joint promotional activities between the airline alliance and its member airlines will be a differentiating strategy for enhancing brand competitiveness in the market. Differentiated services in the market include marketing activities such as frequent flyer benefits and price discounts promoted by individual airlines, as well as the integrated frequent flyer benefits provided by airline alliances, the convenience of connecting flights, and their members' lounge use. It will be a strategy with the potential to enhance the cross-brand advantage.

A systematic review of the literature on air transport networks (1973-2021)

This research provides a systematic literature review on air transportation. Three periods are analysed: 1973–1999 (120 papers), 2000–2019 (742 papers), and 2020–2021 (177 papers), with the period 2000–2019 being the focus. A computer-assisted thematic analysis was conducted using Reinert's method to quantify thematic classes and their prevalence statistically. The evolution of class predominance over time was also analysed. The results highlighted six major thematic classes in 2000–2019, with three reflecting methodologies (i.e., parameter estimation, time-based problems, and optimisation) and the remaining three characterising underlying applications (i.e., co-opetition, business models, and external stakeholder/social view). Classes found for 1973–1999 also discuss optimisation and co-opetition, with the remaining classes focusing on aviation developments in Europe and transportation systems in general. Classes found for 2020–2021 agreed largely to the period 2000–2019, albeit with more well-delineated classes on the COVID-19 pandemic and the connectivity and accessibility of air networks. A correlation of methodologies and applications (2000–2019) identified the ubiquitous use of regression analysis throughout applications and the underrepresentation of complex network analysis and economic modelling in applications associated with the business models and external stakeholder/social view classes. Temporal trends suggest a steady increase in discussions of the parameter estimation class and subclasses related to low-cost carriers in Europe, regional airports, and high-speed rail co-opetition, and a decrease in investigations of airline alliances, deregulation, and privatisation.

Baking and slicing the pie: An application to the airline alliance's profit-sharing based on cooperative game theory

Cooperating with competitors can be a mutually beneficial strategy for companies. To achieve continuous gains from the partnership, profit-sharing rules for the collective benefits are critical. This paper proposes a new allocation scheme that focuses on sustainable relationships based on cooperative game theory. Our min-variance solution deploys joint profits by minimizing the intent to form sub-groups, thus ensuring the alliance's stability. The min-variance is reasonable in a network collaboration where the preservation of the network itself is essential. By application to a numerical example of an airline joint venture, we examine the validity of the proposed distribution rule in the cooperation-allocation problem. The collective surplus of logistics collaboration is suggested by a mixed-integer programming model to solve the optimal value of combinations of the multi-commodity flow problem under the network shared. In addition, the results are interpreted by comparison with other solutions in cooperation game theory, such as the Shapley value, the τ–value, and the nucleolus. We offer further insights into changes in profit-sharing using a sensitivity analysis considering efficiency abatement.

Coopetition effects among global airline alliances for selected Asian airports

In a highly competitive environment, airlines tend to participate in global airline alliances (GAAs) to become more advantageous. This study employs IATA MarketIS data to examine the coopetition effects of three GAAs for ten selected airports. Each airport is a main gateway or hub in Asia with at least one based airline. The analysis in this paper focused on round-trip and transferred passengers for the international markets in 2018. The Herfindahl-Hirschman index (HHI) and Entropy Index (EI) were used to express the internal competition of round-trip markets for each GAA. A quartile separation with the calculation results of various traffic shares presented another coopetition status. These airports all had higher internal cooperation on transfer markets. Part of them appeared stronger internal competition on round-trip markets or external competition on transfer traffic. The airport-based airlines significantly developed home-ground advantages for their attributed GAAs.

Hybrid-within-hybrid: governance issues within international airline alliances

Hybrid-within-hybrid: governance issues within international airline alliances

Exclusivity in concession revenue sharing contracts

Our paper studies the effects of concession revenue sharing contracts by endogenizing the choice of the signatory airline. It is shown that an airport finds it profitable to share concession revenues with airlines and this increases both consumer surplus and social welfare. The airport prefers an exclusive agreement when the net per passenger revenue generated on non-aeronautical services at the airport is sufficiently low; it extracts higher payments by exploiting the competition between airlines to become the sole signatory. The level of aeronautical charges, that are regulated, influences the airport’s decision and, consequently, the intensity of airline competition. Welfare is higher under a non-exclusive arrangement, which may be in conflict with the airport’s decision. The incentive to use these contracts remains under airport competition and revenue sharing increases. With an airline alliance, revenue sharing increases traffic for a large enough degree of cooperation between airlines.

Airline cooperation effects on airfare distribution: An auction-model-based approach

Airline alliances have a long history yet there is no academic consensus on how they affect price levels and their impact on price dispersion has not yet been studied. We address this question using a novel methodology motivated by the service homogenization and increased price competition in this industry in the recent years. Establishing an equivalence between the online sales process and a reverse English auction, we use methods from auction econometrics to work in a new way with the standard industry data set: using individual ticket sales where only aggregated prices have been used in the past. Applicable to other industries where sellers compete in prices, this approach allows us to reconsider the effect of airline alliances on the distribution of airfares in the US domestic market. We find lower price mean and dispersion in markets where airlines belong to an alliance as a result of the lower variability of costs. The methodology we apply here can be used to study any distribution of individualized prices, which are now prevalent since the advent of the digital economy.

Collaborative airline revenue sharing game with grey demand data.

Airline alliances provide more flights, include different destinations, and maximize revenues. In an alliance, collaborating airlines can offer tickets for an identical flight plan, unlike the traditional single airline approach. In particular, due to epidemic/pandemic events, such as COVID-19, the available customer demands become highly uncertain across many real airline alliance problems, and maintaining stable revenue is as important as maximizing the revenue in the alliance. A critical question is how the independent airline companies of an alliance should collaborate to maintain reliable maximum revenue. Therefore, this question was studied using a grey mathematical programming model for small-sized airline alliances under grey demand data. Some cooperative game theoretical solution concepts, such as Shapley, equal revenue, Nucleolus, and minimax core, are presented. A numerical study of a small-sized alliance with three airline companies was used to interpret the results of the cooperative game theory concepts. Three cases were considered based on the grey passenger demand structure of airline collaborations to share extra revenues and maintain stable revenue distribution that would maximize the expected revenue. Based on the obtained results, the synergy of collaboration increased with the increase in the size coalition in all of the cases, except for the cases of lower (L) and upper (U) demand levels.

How do global airline alliances affect flight frequency? Evidence from Russia

This paper analyzes the effects on flight frequency of two alliances that came about in the Russian airline market in recent years: between Aeroflot and SkyTeam in 2006, and between S7 and oneworld in 2010. We use a difference-in-differences (DID) model to identify the effects of these alliances on flight frequencies. The integration of S7 into oneworld provides evidence that the alliance resulted in reduced flight frequencies on routes where S7 overlapped with its new partners, but that it resulted in increased frequencies on routes where there was no overlap, especially in the case of so-called thin routes. Regarding the integration of Aeroflot into SkyTeam, we find that the alliance led to increased flight frequencies on routes where Aeroflot and its new partners had previously been competing. The fact that Aeroflot is a state-owned airline with a strong position in the Russian market might explain this expansion after the alliance. We also find that the alliance increased the frequencies on thin routes where there was no overlap.