The airline sector is a viable and fast changing industry. This became evident especially after the announcement of the fusion between the insolvent company American Airlines and US Airways in February 2013. This begs for the question, how Lufthansa will be affected, as a member of Star Alliance, after the exit of US Airways.
The thesis will analyse Lufthansa’s competitive advantage within the dynamic airline industry based on a strategic analysis of its internal and external environment. Furthermore, with the help of a scenario analysis, potential future situations will be examined and underlined by a management interview given by a CEO from the airline industry. Summing up, even if US Airways exited Star Alliance, it has no substantial influence on the competitive advantage of Lufthansa as a member of Star Alliance.
The study concludes it is very important to find a new partner in order to gain access to the growing emerging markets especially in the Middle East where demand and hubs will grow significantly over the next decades.
Table of Contents
1. Introduction: Changes in the Airline Industry
2. Theoretical Framework
2.1. Strategic Management Analysis in a Hypercompetitive Industry
2.1.1. Hypercompetition
2.1.2. External Analysis
2.1.3. Internal Analysis
2.2. Building Competitive Advantage
2.2.1. Business Level Strategy
2.2.2. Corporate Level Strategy
2.3. Scenario Analysis with the TAIDA Model
2.3.1. Scope and Dimensions
2.3.2. Scenario Planning with the TAIDA Model
2.4. Summary
3. Empirical Case – Lufthansa’s Competitive Advantage
3.1. Strategic Management Analysis in the Hypercompetitive Airline Industry
3.1.1. Deregulation of Markets
3.1.2. External Analysis of the Airline Industry
3.1.3. Internal Analysis of Lufthansa
3.2. Building Competitive Advantage
3.2.1. Business Level Strategy of Lufthansa
3.2.2. Corporate Level Strategy of Star Alliance as a Strategic Alliance
3.3. Summary
4. Scenario Analysis
4.1. Defining Scenarios
4.2. Analysing the Four Different Scenarios
4.3. Summary
5. Conclusion
Research Objectives and Themes
The primary objective of this thesis is to analyze the sources of Lufthansa’s competitive advantage within the dynamic, hypercompetitive airline industry. It explores the potential strategic implications for Lufthansa following the departure of US Airways from the Star Alliance, providing a scenario-based forecast of potential future industry challenges.
- Strategic management in hypercompetitive airline markets
- Internal and external analysis of Lufthansa’s competitive positioning
- The role of strategic alliances and network integration
- Application of the TAIDA model for scenario planning
- Impact assessment of member exits within global airline alliances
Excerpt from the Book
1. Introduction: Changes in the Airline Industry
The airline industry is a highly competitive market which was already applicable in the beginning in the 1970s where the industry was described as nearly ‘perfectly competitive’ (Sheth, 2007, p. 25).
Since 1938, the U.S. governmental organization Civil Aeronautics Board (CAB) has controlled the airline industry with the aim to achieve an average rate of return. They have regulated prices which were fairly high, routes and additional services for existing and new carriers to protect the railway system for a drop in customer numbers. This was very time consuming for companies due to the fact, that the CAB mostly denied inquiries or restricted them entirely. However, after the World War II, individuals demanded a safer, cheaper and faster transport system (Fischer, 1997, pp. 38-39) / (Robson, 1998, pp. 17-22).
Significant changes took place after the nomination of the economic professor and also known as the ‘father of deregulation’, Alfred E. Kahn as the new chairman of the CAB (Rakowski & Bejou, 1992, pp. 15-29) / (Ben-Yosef, 2005, pp. 1-8). He had the opinion that in a competitive environment “CAB is simply not capable, to make business decisions” and that businesses will best regulate it on their own (Sheth, 2007, p. 27). In 1978 the CAB implemented the airline deregulation act to remove governmental control over routes, fares and market entry which led to a greater flexibility. This resulted in a rapid increase in competition due to an aggressive entering strategy of airlines which caused falling fare prices (Rakowski & Bejou, 1992, pp. 15-29) / (Fischer, 1997, pp. 38-42) / (Robson, 1998, pp. 17-22). To defend their current market position, low cost carriers (LCC) and hub-and-space (HS) networks were established in the 1980s (see appendix A) (Fischer, 1997, pp. 38-42) / (Robson, 1998, pp. 17-22).
Summary of Chapters
1. Introduction: Changes in the Airline Industry: Provides an overview of the regulatory history and market shifts in the aviation sector, establishing the context for the thesis.
2. Theoretical Framework: Outlines the strategic management tools and models, including hypercompetition, VRIO, and the TAIDA model, used to assess competitive advantage.
3. Empirical Case – Lufthansa’s Competitive Advantage: Applies the theoretical concepts to analyze Lufthansa’s specific internal and external environment and strategic positioning.
4. Scenario Analysis: Explores potential future developments for Lufthansa through four distinct scenarios based on economic and competitive uncertainties.
5. Conclusion: Synthesizes the findings and answers the research questions regarding Lufthansa's competitive strength and alliance strategy.
Keywords
Lufthansa, Star Alliance, Hypercompetition, Competitive Advantage, Airline Industry, Deregulation, Strategic Alliance, Scenario Analysis, TAIDA Model, Market Liberalization, Resource-Based View, Network Strategy, Porter's Five Forces, Aviation Management, Business Strategy.
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis focuses on analyzing the sources of competitive advantage for Lufthansa and how the exit of an alliance member, specifically US Airways, impacts its strategic position within the global aviation market.
Which theoretical models are used for the analysis?
The study utilizes several strategic frameworks including D’Aveni’s Hypercompetition theory, Porter’s Five Forces, the Resource-Based View (RBV) with VRIO analysis, and the TAIDA model for scenario planning.
What is the core research question?
The core research addresses the sources of Lufthansa’s competitive advantage and assesses the extent to which its competitive edge is influenced by the exit of a Star Alliance member following the American Airlines and US Airways merger.
What research methodology is employed?
The methodology is qualitative, based on an extensive review of academic literature, industry reports from organizations like IATA and EUROCONTROL, and supplementary insights from a management interview with an airline industry expert.
What does the main body of the work cover?
The main body covers the history and strategic environment of the airline industry, an internal and external strategic analysis of Lufthansa, and a comprehensive scenario analysis forecasting potential competitive outcomes until 2031.
Which keywords best characterize the research?
The research is best characterized by terms such as Hypercompetition, Strategic Alliance, Competitive Advantage, Airline Industry, and Scenario Analysis.
How does the author view the departure of US Airways?
The author concludes that the exit of US Airways has no substantial negative impact on Lufthansa's competitive advantage, given that US Airways' global market share was not central to the Star Alliance's success.
What role does the 'SCORE' program play for Lufthansa?
The 'SCORE' program is Lufthansa's internal strategy designed to create synergies, reduce costs, and improve revenue across all business areas, serving as a pillar for maintaining competitiveness.
Why are strategic alliances essential for airlines according to the thesis?
Strategic alliances allow airlines to broaden their route networks, share infrastructure costs, and access new emerging markets, which is crucial for gaining competitive power in a hypercompetitive environment.
- Arbeit zitieren
- Andrea Utz (Autor:in), 2013, Lufthansa’s Strategic Challenges when a Star Alliance Member Exits, München, GRIN Verlag, https://www.grin.com/document/292605
