Strategy and interorganizational relations

The airline industry has become characterised by a high level of competition. Despite the fact that it is relatively capital-intensive and has a considerable level of regulation, it is a highly dynamic sector in which the wrong strategic decision can drive firms out of business over night. Numerous new market entrants have appeared in recent years and seemingly established firms went out of business with little warning. Against this background it is not surprising that many firms place particular emphasis on how to gain strategic advantages vis-à-vis their rivals, not least by means of cooperative arrangements across organizational boundaries. This is why the big global alliances (One World, Star Alliance and SkyTeam) were created about a decade ago. Meanwhile, this strategic paradigm is exhausted and there are no potentials to be exploited in this way any longer. Currently, we witness the next step in consolidating the global market: mergers and acquisition are the currency of the day. Lufthansa has taken over SWISS and Austrian Airlines; BA has merged with Iberia and that is just the beginning of a process which will probably leave not more than 2 or 3 big full service carriers in Europe while the same is likely to happen in North America, the Gulf Region and in the Far East. These are developments that change the airline industry dramatically. What research needs to find out now (rather than when these changes have been accomplished) is whether this will lead to more sustainability in the sector and how customers will be effected by these developments.

Prof. Reinhard Bachmann, University of Surrey

Comments are closed.