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Abstract:
The evolution of the airlines industry was influenced by national defence policies and industrial growth in many countries. The industry remained nationally clustered, allowing no global player to emerge. Alliances were the first co-operative strategy airlines experimented with, allowing them to broaden their presence across borders and oceans. Air France and KLM were two national leaders of France and the Netherlands. Competitors, each had its own alliances and partners. The merger of the two could influence not only the northern European market but the entire industry business model. This trend of mergers and alliances was in response to changes in the European Union regulations that limited operating margins and increased competition. The strategic goal was to benefit both more than from traditional competitive advantages achieved through alliances. The merged entity was not only a larger company with optimised occupancy rates and access to new skies, but it also generated synergies only accessible with mergers, such as improved bargaining power or economies of scale in maintenance and commercial teams. The objective of the case is: (1) to analyse the global airline industry and the challenges it is facing; (2) to describe and evaluate the different co-operative strategies available for airliners in a global market; (3) to study the Air France - KLM deal; and (4) to examine the results of this merger for airlines, customers, suppliers and competitors.
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