Global alliances in airlines industry and its impacts on tourism :Global alliances in airlines industry and its impacts on tourism


Introduction :Introduction 1950 – introduction of Jet airplanes for commercial use 1970- development of wide body “jumbo jets” Airlines are heavily regulated throughout the world. Today airline industry consist of 2000 airlines,23000 aircrafts and providing service to over 3700 airports.


Slide 3:In 2006 World’s airlines operated 28 million scheduled flight departures. 2 billion passengers are carried over it. Growth- 5% per year over the past 30 years. Examples- U.S airline industry 100 certified passenger airlines 11 million flight departures per year. 1/3 of the worlds air traffic (745 million passengers in 2006) Revenue 160 billion dollar


Econmic impact of airline industry :Econmic impact of airline industry Airline employment Company profitability Networth building Airports Tourism industry


How airlines alliance started :How airlines alliance started Cost management Productivity


How airlines alliance are supported and operated :How airlines alliance are supported and operated By gateway hub (gateway to gateway) Behind gateway city (behind gate way feeder routes)


Important reasons to form strategic alliances :Important reasons to form strategic alliances Reach of seamless service networks Enhanced traffic feed Cost reduction Traveler benefits Service quality improvement Marketing advantages


Classifying Alliances :Classifying Alliances Simple route by route alliance Broad commercial alliance Equity alliance


Another classification on the basis of Geographic scope :Another classification on the basis of Geographic scope Regional alliance Global alliance


Perception of Airlines about Alliance :Perception of Airlines about Alliance


Alliance Integration :Alliance Integration Revenue + + cost + + Code share agreement Combine Revenu Management Integrated Operating Company Combine Schedule Coordinate routes Joint frequent Flyer program Shared profit center Coordinated yield management Block space sales Treat Revenue as one network Full (One Brand) Co-ordinated Marketing And ground handling Joint use of ground facilities Joint maintenance joint system Software,joint Sales & fleet rationalisation Exchange of fight crews joint purchase of fuel, aircrafts Full One operation


Profitability depend on which factor :Profitability depend on which factor Yield (average revenue) Load factor Capacity Fuel price (ATF) Foreign exchange Labour cost


Major alliance in airline industry.Star alliance :Major alliance in airline industry.Star alliance Launch date 14 may 1997 World’s first largest airline alliances. It’s name and logo represent the five founding airlines aircanada, lufthansa,scandinavianairlines system,thai airways international & united airlines. Star alliance member now fly 18000 daily flights to 975 airports in 162 countries with a fleet of 3359 aircrafts.


Slide 14:Its member carried a total of 501.34 million passenger world wide with a turnover US$ 123.4 billion as dec 2007 Market share 29.3% 21 full and 3 regional member


Sky team :Sky team Second largest airline alliance in the world Sky team also operate a Cargo alliance called ‘Sky Team Cargo’ Started in 2000 Pending member 2 Total destination airports- 905 Countries -169 Annual passengers-462 million Fleet size – 2971 (1255 related carriers) It holds 20.6%


One world :One world Third largest airline alliance Established 1999 Management company based on Vancouer, British Columbia, canada Operates 9000 daily flights 700 destinations 140 countries 330 million passengers per annum 2200 aircraft


THE EFFECTS OF ALLIANCES :THE EFFECTS OF ALLIANCES Economies of scale • Market power • Globalisation • Network integration • Access to partner’s hub • Access to technology and other resources • Resource sharing • Operational flexibility • Reducing competition • Product/service diversification


Airline industry’s impact on tourism :Airline industry’s impact on tourism Provide better facility for travel Control tourist flow(due to high or low price) Improve convenience and service quality for passenger Help stimulate demand for airtravel and benefit other areas of the economy


Challenge in the airline industry impacting tourism growth :Challenge in the airline industry impacting tourism growth Decling yields, rising costs and lack of profitability Restrictive bilaterial agreements Slow liberalisation process Lack of education


Thank Youforcooperation :Thank Youforcooperation