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STAR ALLIANCE

A GLOBAL
NETWORK
Group 1
Lavanya Thota PGP/20/153
Manju Murali PGP/20/154
Sruthi Bindu Suresh PGP/20/185
Swati Nimje PGP/20/187
Suganya PGP/20/384
Camille Biojoux
AIRLINE INDUSTRY

Bilateral Agreement Code Sharing Gulf War Star Alliance


Chicago Convention by few Spike in fuel formed
airlines price

1991-92
1944

1980

1997
1992
1978

1995

2011
US Deregulation Act was Open Skies Airline Budget Crisis
signed Agreement industry
spiked

2 4 6 7
STAR ALLIANCE

Objectives Vision and Mission


Efficiently expand geographical Vision: Facilitate the growth of
network long term results well beyond the
Increased scope of service means of individual airlines
Code sharing agreement led to capabilities
flexibility and rationalization in Mission: Seamless integration of
route decision making airlines
Build networks market presence
by leveraging carriers local
strength
Competing and Collaborating Culture Coping with crisis

Star Alliance had the right


Joint effort to fight crisis:
blend of competition and
Star Alliance formed a Consolidation of projects,
collaboration
Consensus driven model joint purchasing, avoiding
Fair play: Members within
Benefit: All members had a duplication of processes at
the alliance were
say in establishing/ airports and call centres
prohibited from executing
altering strategic vision for Eg : 9/11 incident made the
hostile takeovers on fellow
the alliance members lean on each
members
Deficiency: Bringing other
The alliance members had
consensus among 14 Alliance was an important
same sense of vision not
members is time reason for many members
neglecting their individual
consuming and at times to survive after the tragic
aim to increase their value.
proves to be futile incident.
Eg: Singapore Airlines
Compromise and Lufthansa, Synergies were
Not all alliance members
sensitivity was the broad utilised well during the
realised immediate
theme. Eg. Air Canada dark months
benefits. Eg. Lufthansa
Lounge access
STRENGHT WEAKNESS
Large geographic network Seamless travel experience is inconsistent
Cost savings via joint purchasing, marketing, planning, etc Non coordination in certain instances. (i.e. lounge access
Higher number of flights offered. (increases potential # of sales) availability, baggage issues)
Relatively seamless travel experience IT systems (incompatibility of systems).
Code sharing. (Increased route rationalization.) Lack of innovation. Alliance is essentially a facilitator, not an
Increased opportunity to reach economies of scale innovator
Assist in elevating brand awareness (i.e. Thai airlines, much greater Poor metrics in determining how effective the alliance really is
exposure) Inconsistent synergies in purchasing. (I.e. Canadians
Increased sale synergies disappointed in failure of cost effective purchasing of cups
Waitlist priority and napkins.)
Additional checked-in luggage allowances Facilities in airports & Services in regions.
SWOT
ANALYSIS
OPPORTUNITIES THREAT
Further integration of services (i.e. Facilities in airports, Airline industry is fragile which poses many uncertainties
services in regions, IT systems, etc) Too many alliance members. Can lead to conflicts of interest,
Development of tools to measure effectiveness of alliance which in turn can lead to dwindling competitive advantage
(metrics). i.e. Measure which passengers were brought in as Poor integration can lead to lose of consumer confidence in the
a result of alliance. Also, measure the intangible benefits that alliance. (i.e. Ansett Australia went bankrupt in 2001 causes a
the alliance exudes across the board. huge disruption in baggage transportation resulting in negative
Expand on joint purchasing initiatives. publicity for the entire alliance.)
Pursue activities that could bolster economies of scale. An abrupt departure of a large alliance member that is weighed
Consolidation of alliance members, where applicable, as upon heavily may cause massive disruptions in the flow and
current large number increases the complexity of operations. effectiveness of the alliance. Such an event could bring about the
quick collapse of such an alliance
Rise in popularity of low cost travel carriers.
RECOMMENDATIONS

Improving Service by consistent integration of the alliance


Approaches
1. Create a centralized infrastructure that integrates all systems to manage
operations efficiently and create a good travel experience
2. Developing a metric system which should be developed internally to access
the absolute value of the alliances formed to estimate their worth and health
of association