The Development of Airline Alliances: An Alternative to Mergers

The International Airport Minneapolis-St. Paul is a main for center Delta airlines. Actually, a major fraction of whole flights and Delta and/or different code share followers are operated beyond MSP. This is significant in evaluating the impact local environment of this airline. “On fuel conservation Delta considered as a leader, containing enhanced fuel effectiveness with 35% while percentage of 2000 and 10 from 2005.” The airline is extensively reduced fuel use, by 1.4 billion some gallon fuel in 2008 as in 2000. Delta Airlines challenges to decrease its local impact by various strategies, as like aircraft retirement, fleet renewal and establishing new equipment’s of ground handling.

                 The policy that the Delta Airlines is attempting to decrease the impact the local environment is through fleet renewal and the retirement of aircraft. An example of this renewal is “changing 757 hub faction tanks to safely remove the requirement for a fuel of 1,000 pounds, 1 million an investment fuel gallons yearly” and “on 737s installing winglets, 767s increases fuel effectiveness by 3-4 %”.“Northwest Airlines also started flying 757-200 airliners reconfigured Boeing on a fewer of its European flights taking some passengers.” DC-10s were exchanges through the newer, additionally A330s fuel-efficient, that are normally utilized on transatlantic flights. “Trans-Atlantic Delta A330s take 25 new passengers than of a DC-10 however using 13,000 some fuel gallons per flight” 727-200s and DC-9s is also been changed with Airbus 320s and 319s, where “more capable of 25 percent”.

                         Using third policy is another equipment of ground handling. This having towbarless tractors “more than 7 million gallons fuel saving per annul”, motorless carts “gates location to transport fuel to the aircraft from the alternative hydrant system, approximately gallons of fuel saving 250,000 per annum also decreasing travel interruptions and making a secure work area.”, and also lighter cargo containers, “that can save more than gallons of fuel1.3 million per annum.”
Finally, Delta Airlines, a major provider to flights into and beyond an International Airport Minneapolis-St. Paul, will be a possible source of huge pollution. Though, the airline has been carried environmental actions seriously and asks for to decrease its environmental impact by multiple strategies, as like fleet renewal, equipment of newer ground handling and aircraft retirement.


  • The development of airline alliances

                  As said by the professor Oum (1997), the primary international alliance was created among British Island Airways and Air Florida in the year 1986. On the path of London-Amsterdam, the originating traffic of US was fed towards the code-share flights of British Island by means of Air Florida. For international alliances of code sharing no strict approval was required by the US DOT during that time. But, on international alliances the US DOT in March 1988 has simplified its position representing that no approval will be provided to alliance unless and until the alliance brought advantages to the US, or else it was covered in a bilateral agreement, and until the code sharing rights of US carriers were also permitted in its markets by the foreign country. For instance, the antitrust immunity was granted for KLM as well as Northwest in November 1992 by the US DOT. In May 1996, antitrust immunity was granted to United States and Lufthansa.

          Results of the 1998 as well as 1995 studies of Boston Consulting Group regarding the Airline alliances durability were shown in the table given below. The most significant finding is that for each and every alliance category the success rate has increased substantially in the period 1995-98 over the previous three-year period 1992-95. 

  1992-92 (%) 1995-98 (%)
Overall alliances 38 68
Equity alliances 73 81
Non-equity alliances 26 62
Domestic alliances 65 93
Alliances within a continent 59 68
Intercontinental alliances 33 58

 Table: Percentage (%) of alliances having endured in a specified time.


  • Alliance objective

         As said by Bissesseur (1996), based on two perspectives such as demand (marketing) and supply (production) the airline alliance’s objective can be analyzed. The objectives on the supply side are to improve efficiency as well as to reduce production. The main approach is to join definite operations of partner so as to improve the use of resources containing labor sharing, joint purchasing, facility sharing, and capacity rationalization and also it reduce the costs of unit production as shown in the table below. The objectives on the demand side include improving market power, accessing new markets and profiting from traffic feed. This method also consists of block-sharing, fare co-ordination, code-sharing, and franchising. 

    Strategy Advantages
Objectives Demand side
  • Code-sharing
  • Block-spacing
  • Franchising
  • Fare co-ordination and schedule
  • Co-ordination of FTP
  • International hubbing
  • Scope economies
  • Density economies
  • Power of market
Supply side
  • Facility Sharing
  • Labour sharing
  • Rationalization of capacity
  • Activities of non-core
  • Mutual purchasing
  • Integration economy
  • Scope economy

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