The impact of external growth strategies on airline corporate branding

Résumé du document

The deregulation and the overcapacity of many industries have led to a record level in external growth operations in the late 1990s (Doyle 2000). Nevertheless, development by acquisition tends to be selective in terms of industry sectors. In banking, insurance, pharmaceutical, airline and automotive industries, the number of mergers, acquisitions and alliances is particularly high compared to other sectors (MANDA 2007). The airline sector, in particular, has been very dynamic in terms of external development strategies over the past years. The airline market has been fragmented for a long time but the number of players in the air transport sector is now shrinking and has entered a phase of consolidation (Euromonitor 2007). In order to face this phenomenon, more airlines were tempted to achieve the critical mass needed to meet the high capital requirements of the industry. Similarly other industries, mergers, acquisitions and strategic alliances allow airlines to lower costs through rationalization and reduce competition and enhance market power. All these advantages are often viewed as strategic to face the new forms of competition, especially those coming from low cost airlines.

Extraits

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[...] On that account, the industry was characterized by a high level of protectionism. Each airline was a ‘flag carrier'. Airline corporate brands were in fact nation brands. The trend towards liberalisation slowly changed the rules. It explains why until recently, many airlines managed their brands in a way that could be qualified as basic, relying greatly on associations rising from their country of origin (Grannell 2002). If this observation remains true nowadays for a number of airlines, it is currently changing because of the liberalisation and the consolidation of the market. [...]

[...] The creation of Oneworld at the end of the 1990s helped the brand to take a global dimension while keeping its “Britishness” as a means of differentiation. The relationships that British Airways has with its stakeholders have not been really altered by the creation of Oneworld. Oneworld did not change the nature of the relationships between British Airways and its shareholders. The alliance communicates only directly with customers and airline members. With its customers, British Airways kept its own independent frequent flyer programme so it did not dramatically change the nature of the relationship. [...]

[...] The rising market share and profitability, as well as over expected cost-saving synergies, improved investor's confidence. The union of the strengths of the two companies balanced the forces of the distributors, like travel agents. However, as each brand kept its personality and operating systems, there have been few changes in the relationships with customers. Check-in and lounges at airports all over the world have been merged in order to shorter distances and lower costs. And the frequent flyer programme of Swiss has been fully incorporated into the Miles & More loyalty programme of Lufthansa, the latter offering enhanced services to members thanks to this integration CASE British Airways and Oneworld Alliance Created in 1999, the Oneworld Alliance serves nowadays more than 700 destinations all over the world. [...]