Managing Strategic Airline Alliances by Birgit Kleymann and Hannu Seristo

Managing Strategic Airline Alliances was written with the attempt to explain the new strategies taken by the worlds airlines leading into the 21st century. The authors, Dr. Birgit Kleymann and Dr. Hannu Seristo, explain factors that led to the need for airlines to form alliances. A few of these factors were deregulation, technology changes and globalization which forced the airline industry, around the globe, to reevaluate there normal independent thinking and realize that mutual cooperation was in the best interest of the industry as a whole. Deregulation removed the umbrella of protection once offered by the state and it opened up new markets there-by significantly increasing competition. Technology made the world smaller and globalization created markets that no one carrier dare try to incur alone. International laws governing foreign ownership of airlines have prevented multiple mergers of airlines. Instead, airline executives have found new ways of establishing alliances by mutual agreements between these airlines. These alliances create a risk sharing theology and in many cases, lower the operating costs for all parties. Some countries encouraged this by signing multilateral Open Skies agreements opening the door to foreign carriers with virtually unrestricted use of the host countries airspace. The book goes on to explain several objectives of forming alliances. Defensive objectives; where an airline could seek the inclusion into an alliance group, providing a more stable entrance into that market. Market-offensive objectives, Efficiency-seeking and Environmental control objectives are

but a few more. I found chapter 4 to be most interesting as the authors interviewed 10 airlines CEOs. In all the interviews, all were in concurrence that if the airlines were to survive, alliances between them were required. Business was moving on into the 21st century and the airlines must move with it. The author also described how alliances also created new challenges and problems. Alliances are now in competition with alliances rather than airline to airline. The markets have dramatically changed; they are now global in reach hence global marketing functions are now at the core of the alliance arrangement. Communication technology has played a factor in marketing as well. Airline alliances must look at demographics more so than geography in terms of reason for travel hence segmenting the markets in new ways. Market-presence isnt the only benefit to forming alliances; resource-utilization and learning of new and improved practices have also been realized by forming alliances. Airlines literally share resources and learn from each other. But, the ultimate goal for forming alliances is still the same survival. Managing Strategic Airline Alliances is an excellent resource for information concerning the history, payoffs, problems and recommended solutions associated with airline alliances as the airline and air cargo industry moves into the 21st century.