Strategic alliance . In Airline industry . Definition .
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A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. This form of cooperation lies between Mergers & Acquisition M&A and organic growth.
Strategic alliances are not necessarily involved foreign ownership, example:
Air Asia is a Malaysia based company, engaged in alliances by serving their international routes, and these services are operated by Air Asia Thailand, thus foreign equity is involved in Air Asia Berhad.
Malaysia Airline is a member of One World but own solely by Malaysian equity.
Air Asia and Malaysia Airlines, once wanted to do share swap but finally pull out from getting allined
Direct reduction of competition and market is moving towards monopoly. When not many airlines serving an airport due to airline partnership, consumers have less choices of schedule and types of airlines. Reduction of airfares, therefore only at minimal.
Cross booking issue- Customers booked Airline A, but automatically given to take Airline B to reach their destination.
Mutual benefits among partners should be carefully assessed