Chapter 6 Marketing Airline Alliances: The Branded Alliance

INTRODUCTION
Marketing function of an airline is the core of alliance arrangements. Having global reach appears to be the most major airlines strategic plans. Past researches found that most of the co-operative arrangement have been related to marketing and improvement of product offering, rather than enhancing efficiency or reducing costs in production. The ways in which the relationship between partners evolves are hard to predict and the playing field is very unstable or turbulent todays partners may be tomorrows rivals

Marketing- driven objectives for alliances

Manufacturing industries has two primary categories of objectives in alliance agreements
Product objectives Knowledge objectives

Product objectives Two goals

1. enhancement of product offering 2. Reduction of production cost

Knowledge objectives Goal is to learn new technology or process from a partner

 A key objective for airlines joining alliances is to enhance the value of service offering in the eye of customer and this value enhancement can be done for either defensive or offensive purposes. Larger airlines seek market power and consequently enhanced value for customers by pursuing larger network coverage higher frequencies more extensive loyalty programmes and dominance of hub airports.

For Medium-sized and small carriers: The purpose appears to have been mostly defensive; They appear to have been more interested in market coverage rather than outright market power in responding to the challenge by expanding larger airlines. Smaller carriers also seem to consider participation in alliances essential. Overall, the primary motivation for international alliances has so far been the need to secure and extensive catchment area or a larger onward connection network.

 Past research on airline alliances has split value enhancement into more specific objectives, which can be tactical or strategic in nature and are mostly product objectives. Eg : larger route n/w , higher load factors , larger market share , joint fare setting and sales efforts and shared loyalty programmes. According to Rhoades and Lush (1997) marketing related alliance arrangements can be split into three types
1. Code-sharing and schedule co-ordination 2. Joint frequency flyer programmes and facility sharing 3. Broad marketing co-operation

Determinants of alliance image

In the marketing of services like air transport, images in the eyes of customers and identities as seen by the organizations themselves are of outmost importance. Image means how one appears to others, whereas identity means what one is in reality. Apart from point A to B at a certain time, customers are buying other dimensions of services too: Quality , dependability , punctuality , attention , friendliness , safety , life-style , nationality , prestige etc.. And these are the dimensions which make the image of an airline.

 Eg: Lufthansa is often seen as punctual, clean, efficient, of high technical quality and perhaps a bit formal in terms of service. In other words attributes quite typically associated with German goods and German people. Brand identity can be seen in four perspectives:
Brand as a product Brand as a organization Brand as a person Brand as a symbol

 Historically, airline brand identities have always been closely associated with national cultures, symbols of nations and personalities of executives, and the starting point for creating a successful alliance brand to replace member carrier brands is not an easy one Another challenge is to position an alliance brand against other alliance brands. Single carrier brands have at least their national backgrounds as premises..