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INTRODUCTION

Strategic Alliance of Star Alliance

What is an Strategic Alliance ?
A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon
objectives needed while remaining independent organizations. This form of cooperation lies
between mergers and acquisitions and organic growth. Strategic alliances occurs when two or
more organizations join together to pursue mutual benefits.
Partners may provide the strategic alliance with resources such as products, distribution
channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or
intellectual property. The alliance is a cooperation or collaboration which aims for a synergy
where each partner hopes that the benefits from the alliance will be greater than those from
individual efforts. The alliance often involves technology transfer (access to knowledge and
expertise), economic specialization,[1] shared expenses and shared risk.
What is an Airline Alliance ?
An airline alliance is an aviation industry arrangement between two or more airlines agreeing to
cooperate on a substantial level. Alliances may provide marketing branding to facilitate travelers

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making inter-airline codeshare connections within countries. This branding may involve unified
aircraft liveries of member aircraft.
Emergence of Strategic Alliance In Airlines.
The mid-90s spawned a new level of competitive awareness in the airline arena as a made dash
into strategic alliances ensued. This paradigm shift was driven by the necessity to gain those
much desired competitive advantages. Code-sharing, as mentioned earlier, expanded within these
newly developed alliances. This practice allowed for an immediate virtual growth in market
share and thus brought about the rise of super-alliances around the world. More than 500
alliances were formed in the late 1990s. All of which were ultimately consolidated into five multi
carrier alliances that currently exist today. The 5 carriers were: The KLM.Northwest alliance,
Oneworld, the Qualiflyer Alliance, SkyTeam and the Star Alliance.
Airline History
World
The airline industry has grown and evolved by leaps and bounds since the early days of the
Wright Brothers. Its now layered with comprehensive alliances, strategic business models,
revolutionary information systems and much more.
The airline industry took flight and yielded its first signs of competition in the late 1970s with
deregulation. The US Airline Deregulation Act was signed into law on October 24, 1978 . This
act caused the slow reduction in the powers of the Civil Aeronautics Board, which up to that
point had strong control over pricing, market entry and most other airline functions. Deregulation
in Europe followed similar suit which essentially ended many of the existing constraints on
European carriers. As deregulation broke down, many international carriers entered into
arrangements with foreign partners to expand their network routes. This type of arrangement is
one of key reasons why the Star Alliance was formed which I will expand on thoroughly later in
this article. The 1944 Chicago Convention spawned some governance and control across the
international marketplace. Air routes, frequency and fares were all governed by this bilateral

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agreement. The industrys restrictions continued as a protectionist framework took precedent

in governing international air transport.
In the mid-1980s a few airlines began practicing a new joint effort called code sharing. This
allowed for airlines the ability to advertise other airlines as their own. The obvious benefit here is
to create a larger presence and increase the chances of generating additional sales. This practice
would also become common across the current alliances we see today in the airline industry.
Another noteworthy piece if airline history was that of the U.S Open Skies agreements of 1992.
This key bilateral air treaty granted KLM and Northwest full anti trust immunity. Its main
purpose was to bring about the liberalization of all global air routes. This allowed KLM and
Northwest the ability to act as one company with regards to most aspects of their business
functions. This key piece of legislation assisted in the growth and enhancement of business
worldwide.
The Gulf War of in 91-92 had a detrimental effect on the airline industry as it increased the price
of fuel and created a massive downturn in travel / tourism. Just as quickly the airline industry
spiked between the years of 95 and 98 just after the Gulf War. Yet again another major downturn
in the aviation industry was a result of the tragic events of September 11, 2001 .
Up to this point weve quickly traveled through the history of the airline industry which has now
taken us up to the year 2001. I will be overlapping some years in the late 90s to discuss the
formation of global alliances. This next section focuses on the emergence of the budget carrier
and speaks to its relevance in todays fiercely competitive aviation industry.
India
Civil Aviation in India traces back to 18 February 1911, when the first commercial civil aviation
flight took off from Allahabad for Naini over a distance of 6 miles (9.7 km). During the
Allahabad Exhibition, Henri Pequet, a French aviator, carried 6,500 pieces of mail on a Humber
biplane from the exhibition to the receiving office at Allahabad. This is the world's first official
airmail service.

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Pre-independence
In December 1912, the first domestic air route between Karachi and Delhi was opened by the
Indian Air Services in collaboration with the UK-based Imperial Airways as an extension of the
LondonKarachi flight of Imperial Airways. Tata Sons Ltd., the first Indian airline, started a
regular airmail service between Karachi and Madras three years later without any backing from
the Indian government. On October 15, 1932, J.R.D. Tata flew a consignment of mail from
Karachi to Juhu Airport. His airline later became Air India.

Post-independence
In 1948, the Government of India and Air India set up a joint sector company, Air India
International, to further strengthen the aviation industry of India. As part of nationalization, in
1953 Indian Airlines (IA) brought the domestic civil aviation sector under the purview of the
Indian government. Through the mid 1990s, government-owned airlines dominated Indian
aviation industry.

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Introduction to Star Alliance

Star Alliance is the world's largest global airline alliance. Founded on 14 May 1997, its current
CEO is Mark Schwab and its headquarters is in Frankfurt am Main, Germany. As of 31 March
2014 Star Alliance is the largest global alliance by passenger count with 637.6 million, ahead of

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SkyTeam (588 million) and Oneworld (512.8 million). Its slogan is "The Way The Earth
Connects".
As of March 2014 Star Alliance's 27 member airlines operate a fleet of about 4,000 aircraft, serve
more than 1,000 airports in 194 countries and carry 637.6 million passengers per year on more
than 18,000 daily departures. The alliance has a two-tier rewards program, Silver and Gold, with
incentives including priority boarding and upgrades. Like other airline alliances, Star Alliance
airlines share airport terminals (known as co-location) and many member planes are painted in
the alliance's livery.

Mission and Vision

At a high level, the Start Alliance vision or mission is to facilitate the growth of long term results
well beyond the means of individual airlines capabilities. A very interesting item in this section
of the case study was the research conducted by United. The driving questioning they posed to
customers was what customers would want from a global airline network. The results were
relatively logical and really spoke to relevance of why an alliance structure is necessary. The first
guiding principle was: customers want global access. The second: They want their status to
travel with them. Lastly: They want a seamless travel experience.
Global access speaks to the efficiency that affiliates can be leveraged. The alliance facilitates this
need by opening access to affiliate lounges, streamlining luggage transfers, etc. Travel status is
another important requirement that would allow frequent flyers the ability to utilize their miles
however they wish. This benefit is arguably one of the most valued from the customer
perspective. The last item of seamless integration speaks to the main purpose of the alliance
structure. Integration is the driving factor that allows for all of these other tangible and
intangibles benefits to be realized.

History
19971999: First alliance

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On 14 May 1997, an agreement was announced forming Star Alliance from five airlines on three
continents: Scandinavian Airlines, Thai Airways International, Air Canada, Lufthansa, and
United Airlines. The alliance chose Young & Rubicam for advertising, with a budget of
$25 million (18 million). The airlines shared the star logo from the beginning, with its five
points representing the founding airlines. The alliance adopted its first slogan, "The Airline
Network for Earth", with its goal "an alliance that will take passengers to every major city on
earth".
Additions
VARIG joined the Star Alliance network on 22 October 1997, extending the alliance into South
America. Also joining were Ansett Australia and Air New Zealand, expanding Star Alliance to
Australia and the Pacific. With the addition of the latter two carriers, the alliance served 720
destinations in 110 countries with a combined fleet of 1,650 aircraft. The next airline to join was
All Nippon Airways (ANA), the group's second Asian airline, on 15 October 1999.
2000-2006: Expansion
During the early 2000s a number of airlines joined Star Alliance; the Austrian Airlines Group
(Austrian Airlines, Tyrolean Airways and Lauda Air) joined on 26 March 2000 and Singapore
Airlines on 1 April. BMI (British Midland) and Mexicana Airlines joined on 1 July, bringing the
alliance's membership to 13. The addition of BMI made London Heathrow the only European
hub with two alliances. During the year Emirates considered joining Star Alliance, but decided
against it. That year the now-defunct BWIA West Indies Airways, which had entered an alliance
with United Airlines, considered becoming a member but did not. In 2000 the alliance also
opened its first three business centers (in Los Angeles, Frankfurt, and Bangkok) and announced
the formation of an Alliance Management Team (AMT), the partnership's executive body. In
September 2001 Ansett Australia (the alliance's only Australian member) left Star Alliance due to
bankruptcy, giving most of the Australian market to Qantas (a Oneworld member). That year Star
Alliance announced the appointment of a new CEO, Jaan Albrecht.
Asiana Airlines joined the alliance on 1 March 2003, Spanair on 1 May, and LOT Polish Airlines
(Poland's flag carrier) in October. Around this time Mexicana Airlines left the alliance after

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deciding not to renew a codeshare agreement with United Airlines, later joining Oneworld. US
Airways joined the alliance in May 2003, becoming its second US-based airline. In November
Adria Airways, Blue1 and Croatia Airlines joined the alliance as its first three regional members.
Although Star Alliance invited Lineas Aereas Azteca in 2005 to join in mid-2007, the airline filed
for bankruptcy. TAP Portugal joined on 14 March 2005, adding African destinations to the
network. In April 2006 Swiss International Air Lines, the alliance's sixth European airline, and
South African Airways (its first African carrier) became the 17th and 18th members.[25]
2007: Tenth anniversary
By May 2007, Star Alliance's 10th anniversary, its members had a combined 16,000 daily
departures to 855 destinations in 155 countries and served 406 million passengers annually. The
alliance introduced Biosphere Connections, a partnership with UNESCO, the International Union
for Conservation of Nature (IUCN), and the Ramsar Convention On Wetlands to promote
environmental sustainability.
Today, nearly 30% of global air travellers use the services of our member carriers or, looking at it
from an overall industry perspective, two thirds of world-wide air travellers use one of the three
airline alliances.
Jaan Albrecht, former Star Alliance CEO
VARIG left the alliance on 31 January 2007, and the two Chinese airlines Air China and
Shanghai Airlines joined on 12 December.
20082010: Second decade of operations
On 1 April 2008 Turkish Airlines joined the alliance after a 15-month integration process
beginning in December 2006, becoming its seventh European airline and 20th member.
EgyptAir, Egypt's national airline and Star Alliance's second African carrier, joined on 11 July
2008.

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On 27 October 2009, Continental Airlines became the 25th member of Star Alliance after leaving
SkyTeam three days earlier. According to alliance CEO Jaan Albrecht, "Bringing Continental
Airlines into Star Alliance has been a truly unique experience. This is the first time an airline has
moved directly from one alliance to another and I would like to thank all those involved in
ensuring a smooth switch". At the time, it was rumored that the switch was Continental's first
move in a planned United Airlines-Continental merge. Two months later, Brussels Airlines joined
the alliance.
Brazilian carrier TAM Airlines joined Star Alliance on 13 May 2010, increasing its foothold in
South America. Aegean Airlines, Greece's largest airline by number of passengers, joined on 30
June.
Shanghai Airlines left the alliance on 31 October 2010 when it merged with China Eastern
Airlines, a SkyTeam member. On 29 September, the chief executive board approved Ethiopian
Airlines as Star Alliance's 30th member. In 2010 the alliance flew to 1,172 airports in 181
countries, with about 21,200 daily departures.
2011-present: Further expansion
Since 2011 more airlines have joined, and others have left due to their collapse or restructuring.
In August 2011, after several delays, Air India was rejected for membership when it did not meet
alliance requirements. On 13 December 2011 Ethiopian Airlines joined, adding five countries
and 24 destinations to the alliance's map.
Star Alliance had a tumultuous 2012, with Spanair leaving early in the year when the carrier
ceased operations. In early March Continental merged with United Airlines, ending its
membership in the alliance. BMI left on 20 April after its acquisition by International Airlines
Group (IAG), parent company of Oneworld members Iberia and British Airways. On 21 June
Avianca, TACA Airlines and Copa Airlines joined the alliance, increasing its Latin American
presence. In November Blue1 left the alliance, becoming an affiliate of parent Scandinavian
Airlines. Shenzhen Airlines joined on 29 November, augmenting Air China's Chinese network.

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On 8 March 2013, TAM Airlines announced its departure due to its merger with LAN Airlines to
become LATAM Airlines Group. With the addition of EVA Air on 18 June and TACA's
integration into Avianca, the alliance now had 28 members and was the largest of the three major
airline alliances. On 13 December, Air India was again invited to begin an integration process
with Star Alliance. On 31 March 2014 TAM Airlines moved to Oneworld, and US Airways and
an American Airlines affiliate also left the alliance. That day, Avianca Brazil announced that it
would join Star Alliance in 2014 as an affiliate of Avianca. After TAM Airlines and US Airways
left, the alliance had 26 members. On 24 June, Air India was approved, joining the alliance on 11
July. Avianca Brazil then joined the alliance on 22 July 2015.

Objectives
It was clear that all airlines had different reasons for joining the alliance but the common thread
that linked them all was the desire to expand their geographic network in the most efficient way.
Star Alliance members agreed on this commonality and virtually overnight increased the scope
of their services. One of the reasons that the scope of services or the ability to cover every corner
of the world was so important was best summarized in the following quote by bmi airlines: So
that a customer can fly to any major city worldwide without ever flying any other airline outside
of the brand. A single ticket, one major frequent flyer plan, clubrooms at every major airport,
coordinated schedules and a product of consistent quality-these are the aims of the alliance
network,.
Code-share arrangements also allowed for flexibility and rationalization in terms of route
decision making. By having such a close arrangement and understanding of partner schedules,
airlines were able to lean on partner airlines to cover various routes that were a more logical fit
both logistically and financially.
Alliances were also a great way to leverage carriers local strengths to build up the entire
networks market presence. The structure also presented invaluable flexibility to alliance
members. Such flexibility could be seen in their opportunities to negotiate a broad range of
agreements with non-alliance members. An example of one of these agreements was the ability

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to share mileage points across both frequent flyer programs. This of course yielded a powerful
consumer benefit which widened their scope of travel destinations across multiple airlines.
The concept of alliances logically sounds like a great idea. It essentially creates many more
options and opportunities from the customer perspective. From the business perspective, it
allows a more seamless integration of offerings across alliance partners and increases the overall
scope of services. Alliances seem to be so firmly entrenched in this industries culture that it
would almost be a fruitless effort for new comers to venture out on their own. There is such an
allure to the potential overhead reductions and the ability to rapidly increase service offerings.
Its hard not to see the overwhelming opportunities an alliance may yield. I personally think its a
great structure and tool for airlines to run in a more efficient/effective manor. However, I do
foresee the further collapse of the current number of alliances in the future. If I were to venture a
guess, Id say it would reduce from the current number of five down to two or three. My
reasoning or logic behind this statement is really not rooted in any factual evidence. Its more or
less based on my general observations of the alliance concept from a birds eye perspective. I
think some of the smaller alliances such as Qualiflyer or KLM will one day succumb to the other
alliances shear scope and attempt to merge with the hopes of further increasing market share. I
get the feeling that there are a few too many alliances out there. I feel as the industry further
evolves and sheds its struggling airlines that its just a matter of time before a few of these
alliances fizzle out. Theres also the possibility that the Star Alliance itself could collapse if one
of their major airline members decides to venture off on their own. This might alter the entire
dynamic of the alliance for the worse and perhaps cause its entire existence to be called into
question.

Connections & Airlines

The member airlines include many of the worlds top aviation companies as well as smaller
regional airlines. Together, they offer easy connections to almost any destination in the world.

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Each airline maintains its own individual style and cultural identity, bringing the richness of
diversity and multiculturalism to the alliance. At the same time each airline shares a common
dedication to the highest standards of safety and customer service.

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Former members and affiliates

Former member

Joined

Exited

Affiliates
Aeropelican

Ansett Australia

3 May 1999

12 September 2001

Air

Services

Hazelton

Airlines

Kendell

Airlines

Skywest Airlines
Blue1
British

Midland

International

Continental Airlines

3 November
2004

1 November 2012

1 July 2000

20 April 2012

27 October 2009 3 March 2012

BMI

regional

Bmibaby
Continental

Connection

Continental

Express

Continental Micronesia
Mexicana
Shanghai Airlines

1 July 2000
12

December

2007

31 March 2004

Aerocaribe

31 October 2010

China United Airlines

Spanair

1 May 2003

27 January 2012

AeBal

TACA Airlines

21 June 2012

27 May 2013

TACA Regional

TAM Airlines

13 May 2010

30 March 2014

TAM Paraguay

US Airways

4 May 2004

30 March 2014

US

Airways

Express

US Airways Shuttle
Nordeste

VARIG

22 October 1997 31 January 2007

Rio

PLUNA

Star Alliance Hubs

Star Alliance gives its traveller more flexibility to get from A to B through a wide choice of
airport hubs across six continents.

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At selected airports, our member airlines come together to share common ticketing and check-in
counters, as well as lounges, baggage facilities and other convenient services.
1. US Airways: Charlotte, Philadelphia, Phoenix, Washington D.C
2. Adria: Ljubljana, Pristina
3. Aegean: Athens, Thessaloniki
4. Air Canada: Toronto, Montreal, Vancouver and Calgary
5. Air China: Beijing, Chengdu,Shanghai
6. Air India: IGI, New Delhi, India
7. Air New Zealand: Auckland, Los Angeles, Hong Kong
8. ANA: Tokyo (Haneda, Narita)
9. Asiana: Incheon, Seoul
10. Austrian: Vienna
11. Blue1: Helsinki
12. Brussels: Brussels
13. Copa: Panama City, Panama; Bogota, Colombia; San Salvador, El Salvador;
14. Croatia: Zagreb
15. Egypt Air: Cairo
16. LOT: Warsaw
17. Lufthansa: Frankfurt, Munich

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18. SAS: Copenhagen, Oslo, Stockholm

19. Singapore: Singapore Changi
20. South African: Johannesburg
21. Spanair: Barcelona, Madrid
22. Swiss: Zurich, Geneva, Basel
23. Taca: Lima, Peru; and San Jose, Costa Rica.
24. TAM: Sao Paulo, Rio de Janeiro and Brasilia
25. TAP: Lisbon, Porto
26. Thai: Bangkok, Chiang Mai, Phuket, Hat Yai
27. Turkish: Istanbul, Ankara

Customer service
Codeshare flights of Star Alliance airlines are consistent. This cooperation led to suspicions of
anti-competitive behavior; the alliance was suspected by the European Union of being a virtual
merger of its members, and speculation existed that if government regulations were relaxed the
members would merge into one corporation.
Star Alliance developed a "regional" concept in 2004, which helped it penetrate markets with
participation by smaller regional carriers. Regional Star Alliance members had to be sponsored
by an alliance member. The alliance no longer designates airlines as "regional" members, now
referring to its 27 airlines as "members".
In 2007, alliance members flew 18,521 daily flights to 1,321 airports in 193 countries with a fleet
of 4,025 aircraft. Its members carried a total of 627.52 million passengers, with revenue of
US$156.8 billion (145 billion). It had 28 percent of the global market based on revenue

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passenger kilometers (RPK), greater than the combined market share of all airlines not in one of
the three major alliances. All alliance carriers combined employed over 405,000 pilots, flight
attendants, and other staff. Star Alliance was voted best airline alliance in the Skytrax 2007
World Airline Awards.

Premiums

Star Alliance has two premium levels (Silver and Gold), based on a customer's status in a
member's frequent-flyer program. Member and regional airlines recognize Star Silver and Gold
status, with a few exceptions mostly pertaining to airport lounge access. Membership is based on
the frequent-flyer programs of the individual airlines. Many members have a premium status
beyond Gold, which is not recognized across the alliance.
Star Alliance Silver

Star Alliance Silver status is given to customers who have reached a premium level of a member
carrier's frequent-flyer program. Benefits are priority reservation wait-listing and airport standby. Some airlines also offer priority airport check-in, baggage handling and boarding; preferred
seating; an additional checked-luggage allowance, and waived fees for two checked bags.
Star Alliance Gold

Star Alliance Gold status is given to customers who have reached a higher level of a member
airline's frequent-flyer program. Benefits are priority reservations wait-listing, airport stand-by
and check-in and baggage handling; an additional checked luggage allowance of 20 kg (or one
extra piece, where the piece rule applies), and access to designated Star Alliance Gold lounges
the day and place of departure with the presentation of a Star Alliance boarding pass. Some
airlines also offer preferred seating (an exit seat or a special section of the plane); guaranteed
seating on fully booked flights, subject to the booking class code and notice period, and free
upgrades in the form of a voucher, certificate or automatic upgrade at check-in. United restricts
US lounge access for their Gold Members to long-haul international passengers; Gold members
from other carriers are welcome in US lounges run by United on all itineraries.

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Service to the Business Class : Corporate & Conventions

Corporate Travel Managers
Corporate Plus: - A multinational corporation that regularly flies colleagues around the world
needs a simple and cost-effective travel solution. Star Alliance Corporate Plus is your answer: a
single contract for all your corporate travel needs.
If you represent a multinational corporation that regularly flies colleagues around the world,
Corporate Plus will simplify your logistics, saving you both money and administration time.
Thats why we created Star Alliance Corporate Plus condensing numerous airline negotiations
into just one. This single contract gives you access to over 18500 daily flights operated by 28
member airlines, from 1300 airports in 192 countries. With designated point of contacts,
Corporate Plus ensures simplified negotiation process with multiple airlines under just one legal
platform.
Your Corporate Plus plan will be tailored to your specific travel needs for wherever you need to
fly on the Star Alliance network.
A company may be eligible for Corporate Plus if it has:

A dedicated travel management or procurement function

A mandated travel policy

The ability to consolidate travel spend and provide the appropriate data

Meeting Organisers
If you are organising a meeting in one place for 50 or more colleagues from a wide range of
countries then you need the simplest possible logistics. Star Alliance Meetings Plus is your
answer: one simple point of contact to set up all the necessary travel arrangements.

Convention Organiser

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Star Alliance Conventions Plus simplifies organising a convention, conference, exhibition,

sports, music or any other event which will involve more than 500 delegates. A single
agreement opens up the world of Star Alliance, allowing your delegates to book their
discounted fares directly through an online booking tool. You benefit by accruing organiser
credits when they book.

Convention Delegates
If the conference, convention, exhibition, sports, music or other event you are attending is
registered with Star Alliance Conventions Plus, booking your travel is easy through our
dedicated Online Booking Tool. As always, if you are a member of one of the Star Alliance
member airlines' frequent flyer programmes, you will also earn points, build status and enjoy
rewards with each flight you take.

Competing and Collaborating

The delicate blend of competition and collaboration was another aspect of the Star Alliance that I
felt was quite impressive. From the outside looking in I would think alliance members would be
scrambling for any and all routes to increase their own profits. There seemed to be some
jockeying for position in the early stages of the alliance but as the integration matured each
airline began to realize that they can be much more effective by leaning on affiliates for
assistance.
To ensure fair play and an effective culture, all members within the alliance were prohibited from
executing hostile takeovers on fellow members. This, I would imagine, was a pivotal piece of
governance that really set the stage for a more collaborative environment.
It was clear from the onset that each airline had a different perspective in terms of enhancing
internal processes. Each was united by the same sense of vision or benefits but just the same
members still had their own thoughts on increasing value. Several examples that illustrate this
are the following:

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1.) The Canadian carrier felt that it would be of great value in centralizing sales units of the
various Alliance members in the same cities.
2.) Singapore Airlines made London and Frankfurt its main European hubs where it could rely on
alliance members to serve onward destinations around Europe .
Not all alliance members derived immediate enhancements to their operations. A key example to
illustrate this point is that of Lufthansa and their lounge access services. Lufthansa found the
early stages of collaboration quite frustrating when it came to the sharing of lounge access. They
consider themselves as having the best lounge facilities in the industry. As they opened their
lounge access to gold card members, they had hoped other members would follow suit.
Apparently that has not been the case creating disappointment within the Lufthansa organization.
Currently they continue to work on remedying this concern.
This just points out that not all alliance members realized immediate benefits on every business
front. It simply speaks to the growing pains that many of the alliance members had to adapt to in
order to realize their own alliance benefits. The benefits mentioned earlier in the article are still
prevalent across the board but one thing is certain, there is clear room for improvement.
To speak further on the Lufthansa situation, this is exactly the type of head banging or issues I
would expect to see from an alliance of this magnitude. Where the early stages proved to be truly
painful on many levels, the upshot is that it could have only gotten better. I highly doubt it was
expected to have a flawless integration from the very beginning. The pros clearly outweighed the
cons as you can see in the tone of Lufthansas CEO, Thomas Sattelberger in some of his quotes.
He was clearly frustrated with the lounge access issue but was quoted as saying we are working
on it. This to me just speaks to the underlying power that the alliance itself has to offer. CEOs
dont generally put up with major disappointments in partnerships, especially when its their end
thats being taken advantage of. Lufthansa was providing additional lounge services to alliance
members and ultimately not being returned the same favor. For Mr. Sattelberger to simply state
We are working on it, indicates to me that the alliance is just too valuable for any member to
remove itself entirely when something goes wrong.

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Culture
The Star Alliance was founded on the premise of a consensus driven business model. The culture
presented both distinct benefits and deficiencies. The most obvious benefit being each member
had a voice in establishing or altering overarching strategic visions for the alliance. The most
obvious deficiency was the length of time it took to get total buy into a new idea. In theory, this
seems like a great idea to get everyones buy-in before finalizing directives but the logistics
behind this approach would make me skeptical from the start. A consensus driven model across 3
or 4 organizations might make sense in certain situations but a 14 member alliance seems as
though it would a futile exercise. The alliance has greatly improved their buy-in process over the
years but it was not without some pain and compromise along the way.
A great quote that caught my attention and spoke volumes about the cultural process was that of
Doreen Riley, a marketing coordinator for Air Canada . It felt like (the movie) Groundhog Day.
For the launch, we wanted an ad that would be simple, easy but with strong impact. Wed get
everyones approval one day, but it would all change the next. And then wed start for scratch.
This was only one of many similar quotes from alliance members. The process was a bit
convoluted but necessary from a leadership perspective. Every member had their own initiatives
whose feedback was vital in reaching one common resolution. Compromise and sensitivity were
common themes that were vigorously developed in order to enhance the alliances member wide
buy-in culture.

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Coping with Crisis

It is said that the greatest challenge any organization can face is an inconceivable disaster that
relates directly to ones industry. Theres no roadmap or guideline that would assist in coping or
adjusting to such a disaster. There is, quite simply, only so much preparation that can be done to
account for the endless number of disaster variables. One of our most catastrophic events of our
time, 9/11, would test the Star Alliance business model and push its boundaries to the limit.
The alliance members regrouped shortly after 9/11 as they quickly realized those tragic events of
September 11 would forever change the aviation industry. Immediately after 9/11, a taskforce
was formed which was geared towards cutting costs across the entire alliance. Some initiatives
included consolidation of projects, joint purchasing, and avoiding the duplication of processes at
airports and call centers. The main objective was to identity immediate cost reductions and laid
the foundation for long term cost savings.
A telling quote from the case that spoke to the alliances synergies during those tragic months was
from Lufthansa. A key issue with Star Alliance was, its a sunshine network but would it work
in crisis too? The answer is YES. Star Alliance enabled us to abandon low-density routes but
keep our global network healthy and intact,
A tragedy of unprecedented devastation forced alliance members to lean heavily on one another.
It allowed for most of its members to stay afloat during those difficult times which essentially
impacted the entire airline industry. If ever there was a question of the alliances purpose, I think
this event emphatically answered to those critics. Theres no telling how many airlines would
have survived a post 9/11 era if they did not have an alliance to support consolidation efforts.

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Air India and Star Alliance

Indias national airline, Air India provides domestic and international air transport services to
both passengers and cargo.
Air India pioneered the countrys aviation sector and its history is synonymous with the history
of civil aviation in India. Air India embodies the spirit of India by extending warm hospitality
and the urge to satisfy its guests, an inherent characteristic of the countrys culture.
Since the first flight on October 15, 1932, Air India has grown to become a mega international
airline connecting to 34 destinations in the USA, Europe, Australia, Far-East and South-East Asia
and the Gulf. The airlines domestic network covers 51 destinations, including all state capitals
and far-flung areas of Indias North-East, Ladakh, Andaman and Nicobar Islands. The airline
also provides ground handling and engineering & maintenance services, as well as low-cost
travel options, through its subsidiaries. Air Indias young fleet of 103 aircraft comprises a mix of
the latest state-of-the-art B787 Dreamliners (21 aircraft), B777s, B747s, Airbus A330s, A321s,
A320s and A319s.
Constantly adapting and re-inventing itself to stay ahead of competition, Air India has been and
will continue to be committed to providing superior service, supported by the latest technology,
to flyers worldwide.

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Full Facts & Figures

Joined Star Alliance

Jul 2014

Airports Served

85

Daily Departures

390

Aircraft

103

Frequent Flyer Programme

Flying Returns

Passengers Annually

16.87 m

Countries Served

24

Hub Airport(s)

Delhi, Mumbai

Revenue Passenger KM

35.91 bn

Sales Revenue (in US$)

3.20 BUSD

Employees

20,956

Aircraft Types

B777, B787, B747, A319, A320, A321,

A330

Updated As Of Aug 2015

Ashwani Lohani Chairman and Managing Director, Air India

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Mr. Ashwani Lohani is a well-known tourism professional and an acclaimed

bureaucrat. Mr. Lohani, a 1980-batch officer of the Indian Railways Service of
Mechanical Engineers, was until recently heading the Madhya Pradesh Tourism
Development Corporation. He is credited with bringing the Madhya Pradesh state
in the forefront of Indian tourism.

SWOT Analysis
Throughout the course of the paper I have already spoken to many of the Star Alliance strengths.
I have also touched on several weaknesses as well. However, I have not spoken to any Star
Alliance opportunities or threats. The SWOT analysis below will simply highlight key elements
in bulleted format. The most important items, from my perspective, for each section will be
highlighted with an asterisk. I will only briefly expand on certain strengths and weaknesses
whereas I will spend a bit more time discussing opportunities and threats.
Strengths:
*Large geographic network.
* Cost savings via joint purchasing, marketing, planning, etc.
* Higher number of flights offered. (increases potential # of sales)
* Relatively seamless travel experience.
* Code sharing. (Increased route rationalization.)
* Increased opportunity to reach economies of scale.
* Assist in elevating brand awareness (i.e. Thai airlines, much greater exposure)

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* Increased sale synergies.

* Top marks in Merrill Lynchs annual league table of airline industry alliances.
* Leadership is able to take control in home markets. (.i.e. bmi better understands business in the
Ireland market and is able to pass along opportunities to fellow members.)
* Ability to leverage position via strong association with other carriers.
* Creates a higher quality network.
* Mileage accruals on frequent flyer programs.
* Low value frequent flyer mileage redemption with quick turnaround time.
* Expanded lounge access.
* Waitlist priority.
* Additional checked-in luggage allowances.
Weaknesses
* Seamless travel experience is inconsistent.
* Non coordination in certain instances. (i.e. lounge access availability, baggage issues)
* IT systems (incompatibility of systems).
* Lack of innovation. Alliance is essentially a facilitator, not an innovator.
* Poor metrics in determining how effective the alliance really is.
* Inconsistent synergies in purchasing. (I.e. Canadians disappointed in failure of cost effective
purchasing of cups and napkins.)
* Facilities in airports.

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* Services in regions.
Opportunities
* Further integration of services (i.e. Facilities in airports, services in regions, IT systems, etc)
* Development of tools to measure effectiveness of alliance (metrics). i.e. Measure which
passengers were brought in as a result of alliance. Also, measure the intangible benefits that the
alliance exudes across the board.
* Expand on joint purchasing initiatives.
* Pursue activities that could bolster economies of scale.
* Consolidation of alliance members, where applicable, as current large number increases the
complexity of operations.
Threats
* Airline industry is fragile which poses many uncertainties.
* Too many alliance members. Can lead to conflicts of interest, which in turn can lead to
dwindling competitive advantage.
* Poor integration can lead to lose of consumer confidence in the alliance. (i.e. Ansett Australia
went bankrupt in 2001 causes a huge disruption in baggage transportation resulting in negative
publicity for the entire alliance.)
* An abrupt departure of a large alliance member that is weighed upon heavily may cause
massive disruptions in the flow and effectiveness of the alliance. Such an event could bring about
the quick collapse of such an alliance.

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Conclusion
The goal of the project was to give a brief idea about strategic alliance of Star Alliance.
Here in the project the reader gets brief knowledge about the Star Alliance and its working. Star
Alliance is the biggest and most successful airline alliance in the world. With its operations in
more than 100 countries across the globe it has helped, both, its customer and its alliance airlines
getting the maximum benefits in their regards. Also, we can conclude that this type of airlines
helps passenger getting leveled quality travel across the globe.

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Bibliography and Webiliography

www.mybusinessmusings.com
www.staralliance.com
www.scribd.com
www.noobtraveler.com
www.businesstoday.com
www.wikipedia.com
www.airindia.com
www.google.com