The carriers plying the Trans –Atlantic route formed immunized joint venture alliances; Sky Team (Delta, Air France and Alitalia), One World (British Airways, Iberia and American Airlines) and Star alliance, in a bid to reduce operating costs heightened by the global rise in jet fuel prices and deal with the challenge of the reducing demand for their services all while maximizing profits. (Russell, 31)
The hallmark of these joint ventures has been the capacity cuts by various airlines like Delta at 7%, and American at 9.6%, these airlines anticipate further cuts in capacity in the future occasioned by harsh economic times that have turned flying to a luxury which cannot be afforded by many. This situation has forced airlines to reduce capacities and even wind up routes that are performing dismally. (Russell, 31)
Yet despite these cuts airlines in joint alliance ventures have reported annual profits, but just how? (Russell, 32)These joint ventures have provided a wider array of services and routes to customers while reducing the operating costs of the airlines. The airlines are able to use the hubs of their partners and also take use their competitive advantage and connections in their strongholds to start plying those routes. Russell gives the example of British Airways taking advantage of the strategic position of its partner American Airways in San Diego to re-launch the San Diego –London route. (32)
Joint ventures have enabled partner airlines to increase their routes at cheaper costs through using the hubs of their already established partners and outsourcing services from them. The quality of the yields produced has increased due to advertising various brands as a group while increasing the speed of response to customer demands due to increased industry control as 87% of the Trans –Atlantic airline business is controlled by Joint venture alliances.
REFERENCES
Russell, Edward. “Strategic Partners”. Airline Business. September 2012.
