The formation of highly integrated strategic alliances in the airline industry started during the1990’s with Star Alliance as the first global player, as passenger airlines faced deregulation and wanted to support their growth and expansion in international markets. For cargo companies, this type of integration came around later at the beginning of 2000. As a result of this increased co-operation, major alliances were formed with the launch of SkyTeam Cargo and WOW. Beginning at the dawn of the new century, these alliances should mark a cornerstone that enables long term success and survival through synergy effects and higher competitiveness individually and as a group. Now, a decade later, WOW and SkyTeam Cargo have evolved, but in different directions and not all members or ex-members are content with the results.
Strategic alliances in air transport have been studied widely in recent publications, most of which just cover the passenger side of the business. There is a lot of information, statements and common knowledge about what benefits alliances can bring to its members, but a literature review leads to the fact that research is very sparse when it comes down to evaluating the actual impact of alliance integration on air cargo carriers’ standing.
Strategic Alliances (WOW, SkyTeam Cargo) in Air Cargo Operations: It is the purpose of this bachelor thesis to analyze and interpret the impact of a strategic alliance on cargo airlines‘ Revenue-Ton-Kilometers key figures (provided by Airline Business 1998-2010) and market share developments. The goal is to provide answers to the questions if air cargo operators did profit from alliance integration and why that was the case or not? Can alliances create value for their respective members by increasing their market share in terms of RTK?
Additional questions that will be addressed in the process of answering these core questions:
•What are the main benefits and disadvantages for alliance members
•What major challenges do (prospective) members face in an alliance
•Are there common success and stability factors and why do alliances fail
•What alternatives are there to alliance formation
Table of Contents
1. Introduction
1.1. Research Questions
1.2. Methodology
1.3. Structure
2. Research Background
2.1. Market Environment
2.1.1. Challenges
2.1.1.1. Liberalization and Regulatory Environment
2.1.1.2. Integrators and Competing Business Models
2.1.2. Opportunities
2.1.2.1. Innovation in Air Cargo Transport
2.1.2.2. Market Numbers
2.2. Idiosyncratic Economics of Air Cargo Operations
2.3. Reactions of Air Cargo Carriers
2.3.1. WOW
2.3.1.1. Taking Off with High Hopes
2.3.1.2. Difficulties Getting Off the Ground
2.3.1.3. The Recent Years
2.3.2. SkyTeam Cargo
2.3.2.1. The Early Days
2.3.2.2. Rapid Growth
2.3.2.3. Status Quo and Outlook
2.4. Summary of WOW and SkyTeam Cargo
3. Literature Review – State of the Field
3.1. A Definition and Distinction of the Alliance Term
3.2. State of the Field
3.2.1. Strategic Alliances in General
3.2.2. Strategic Alliances in Air Transportation
3.3. The Concept of Strategic Alliances
3.4. Alliances in the Air Cargo Business
3.4.1. Driving Forces of the Alliance Decision
3.4.1.1. Get Exposure to Growth
3.4.1.2. Fight for Market Share
3.4.1.3. Synergies and Complementary Assets
3.4.1.4. Others
3.4.2. Alliance Advantages
3.4.2.1. Access to Regional Knowledge and Established Relationships
3.4.2.2. Organisational Learning and Innovation
3.4.2.3. Counteract Market Uncertainties and Volatility
3.4.2.4. Economies of Scale, Density and Scope
3.4.2.5. Market Power and Presence
3.4.2.6. Usefulness for Professionals
3.4.2.7. Advantages for Customers
3.4.3. Disadvantages
3.4.3.1. Result of Economies of Scale, Scope and Density
3.4.3.2. High Requirements
3.4.3.3. High Dependance
3.4.3.4. Others
3.5. Core Questions and Prerequisites for Alliance Integration
3.5.1. Value Creation and Distribution
3.5.2. Alliances as a Long Term Commitment
3.5.3. Foreseeing of Conflicts
3.5.4. Reciprocation in a Network of Alliances
3.5.5. Prerequisites for Successful Alliance Creation
3.6. Alliance Criticism and Other Cooperation Strategies
3.6.1. Criticism
3.6.2. Other Co-operation Methods
3.7. Challenges and Common Complications
4. Transition to the Analytical Part
5. Analysis of Both Alliances’ Revenue-Ton-Kilometers
5.1. Assumptions
5.2. Total Market
5.3. WOW and SkyTeam Cargo
5.3.1. WOW Alliance
5.3.1.1. Lufthansa Cargo
5.3.1.2. Singapore Airlines Cargo
5.3.1.3. SAS Cargo
5.3.1.4. Japan Airlines Cargo
5.3.1.5. WOW Conclusion
5.3.2. SkyTeam Cargo
5.3.2.1. Approach
5.3.2.2. SkyTeam Cargo Founding Members
5.2.3.3. Korean Air Cargo
5.2.3.4. Air France and KLM
5.2.3.5. Delta Airlines and Northwest Airlines
5.2.3.6. Aeroméxico
5.2.3.7. Alitalia
5.2.3.8. SkyTeam Cargo Conclusion
5.3. Comparison WOW And SkyTeam Cargo
6. Conclusion and Further Research Opportunities
6.1. Summary
6.2. Further Research Opportunities
Objectives and Topics
This thesis examines the impact of strategic alliances on air cargo carriers by analyzing Revenue-Ton-Kilometers (RTK) data from 1998 to 2010. The primary research goal is to determine whether participation in alliances like WOW and SkyTeam Cargo has enabled air cargo operators to achieve higher market shares and profitability compared to non-alliance operations.
- Historical development and market environment of air cargo alliances.
- Driving forces behind the formation of strategic airline alliances.
- Benefits, challenges, and risks of alliance integration for member carriers.
- Critical analysis of RTK performance trends for members of WOW and SkyTeam Cargo.
- Success factors and alternatives to traditional alliance models.
Excerpt from the Book
2.1.1. Challenges
Air cargo carriers operating in a global market are faced with all different kinds of challenges, including rather recent developments like the liberalization of air transport markets, increasing competition through the growth of integrators, as well as inherent challenges like directional imbalance, marginal pricing of substantial volumes, the absence of new dedicated freighter aircraft, airport noise regulations and a dependence on belly cargo and therefore a schedule to please passengers. Adding to that, air cargo operations are highly dependent on the overall world economic situation and macroeconomic variables. It is not exclusively world trade activity that affects air cargo operators. Other factors, such as the development of the oil price can have a large impact on the demand for and the supply of air freight services as well. As fuel costs make up a large part of the variable costs, especially on long haul freighter aircraft operations, a high oil price can lead to freight forwarders substituting the higher priced air transport services with road or maritime transport. Although the demand for air freight services has increased over the decades, freight yields have been declining sharply since 1989. Growth over the last 60 years has been rapid, yet profitability has remained very low.
Summary of Chapters
1. Introduction: This chapter defines the scope of the thesis, presents the core research questions regarding the impact of strategic alliances on air cargo carriers, and outlines the methodology used for the subsequent data analysis.
2. Research Background: This section provides context on the current market environment, discussing the challenges and idiosyncratic economic characteristics that force air cargo operators to seek strategic cooperation.
3. Literature Review – State of the Field: This chapter reviews existing academic literature on strategic alliances, defining the concept, evaluating driving forces, and identifying the advantages and disadvantages associated with alliance integration.
4. Transition to the Analytical Part: Acts as a bridge, summarizing the theoretical framework before moving into the empirical analysis of specific airline performance data.
5. Analysis of Both Alliances’ Revenue-Ton-Kilometers: The core analytical section, examining RTK and market share developments for WOW and SkyTeam Cargo members, comparing their performance against the broader market.
6. Conclusion and Further Research Opportunities: The final chapter summarizes the findings regarding alliance performance and suggests directions for future research, including the need for more consistent yield data.
Keywords
Air Cargo, Strategic Alliances, Revenue-Ton-Kilometers, RTK, Market Share, Airline Industry, WOW Alliance, SkyTeam Cargo, Globalization, Freight Forwarding, Alliance Integration, Airline Economics, Market Volatility, Synergy, Competitive Strategy.
Frequently Asked Questions
What is the core focus of this research?
The work focuses on analyzing the impact of strategic alliances on the market standing of air cargo carriers, specifically by evaluating Revenue-Ton-Kilometers (RTK) data from 1998 to 2010.
What are the primary themes addressed?
Central themes include the market environment for air cargo, the motivations for forming alliances, the benefits and disadvantages of these partnerships, and empirical analysis of alliance performance trends.
What is the main research objective?
The primary goal is to determine if air cargo operators successfully profited from alliance integration and whether this integration led to measurable increases in market share for the member carriers.
Which methodology is applied in this thesis?
The research utilizes a combination of content analysis, literature review, and secondary data analysis, focusing specifically on yearly Airline Business Cargo Survey statistics.
What is treated in the analytical main part?
The main part analyzes the RTK development, market shares, and growth rates of the WOW and SkyTeam Cargo alliances and their individual core member carriers against the backdrop of the global cargo market.
Which keywords best characterize the work?
Key terms include Air Cargo, Strategic Alliances, Revenue-Ton-Kilometers, Market Share, Airline Industry, and Competitive Strategy.
Did the WOW Alliance successfully achieve its goals?
The analysis suggests that the WOW Alliance struggled, as its members generally faced a downward trend in market share throughout the period of their membership.
How did the SkyTeam Cargo alliance compare to WOW?
While SkyTeam Cargo grew significantly in terms of member count compared to WOW, the empirical analysis indicates that individual core members of SkyTeam Cargo also struggled to achieve lasting market share increases during their alliance participation.
- Citation du texte
- Florian Smeritschnig (Auteur), 2012, WOW and SkyTeam Cargo: Strategic Alliances and Their Impact on Air Cargo Operations from 1998 to 2010 (based on Airline Business Cargo Surveys), Munich, GRIN Verlag, https://www.grin.com/document/199184
