Executive summary
This thesis is a study of how alliance formation in the airline industry affects the passengers. One might suspect that the alliances are ‘producer oriented’ rather than ‘consumer oriented’. The problem statement is therefore the question whether the passengers have won or lost due to these alliances.
The purpose of the thesis is to identify those factors of the alliances that affect the passengers, and once identified to find out if they have meant advantages or disadvantages for passengers.
With this purpose in mind; the logic behind alliance formation is examined. At the same time as cutting costs, the participating airlines can offer better service to their passengers and thereby gain competitive advantages. Using the ‘customer decision process’ as theoretical framework, the alliance factors having direct impact on passengers are identified. These ‘alliance factors’ are the frequent flyer programs (FFP), seamless travel, computer reservation systems (CRS), compatibility, and competition. A model is then derived illustrating the relationship between airline, alliance factors, and the customer decision process.
These factors are then studied in more detail using empirical research in the form of a passenger questionnaire and by interviewing travel agents. The questionnaire was answered by 162 persons at Arlanda airport. Since most passengers departing from Arlanda fly with one alliance in particular; the ‘Star alliance’, the questionnaire put special focus on this alliance. The interviews were carried out asking four employees at different travel agents about their experiences of passengers and air travel. They were done in order to get a deeper understanding of the subject as travel agents often have deep insight into the passengers’ behavior; their needs, wants, and preferences.
The results of the questionnaire are then analyzed quantitatively in excel, and conclusions are drawn in conjunction with the interview answers.
From the analysis the conclusions are drawn that out of the five alliance factors; two have mainly positive impact. These factors are the FFP, seamless travel. One factor; compatibility showed neither any conclusive negative nor positive impact. The impact of CRS that can be attributed to the alliances is not significant, but there is great potential for improvements in this field. When it comes to the final factor; competition, the impact is harder to estimate. Although the results from the questionnaire suggest that the alliances have not limited competition to any larger extent, there are warning signs that they might in the future, with increased price levels as a result.
After the conclusions drawn from empirical research follows a concluding discussion where the impacts of alliance formation are put into a larger context, and also others than the passengers themselves are considered.