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Aviation in the Global Context - Essay Example

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The main idea of this essay under the title "Aviation in the Global Context" touches upon the information of Strategic Alliance and International Alliance. Apart from this, the author analyses the history of the development Air Traffic Association, the merger, and acquisition on the international scale. …
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Aviation in the Global Context
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Download file to see previous pages The first contemporary alliance took place in 1975 when Middle East Airlines went on to form a code-sharing agreement with Iberia (Madrid to Beirut). FFP or the first frequent flier program started back in 1980 with Air UK and KLM Royal Dutch Airlines joining hands. The earlier alliances were marked by “joint flights, maintenance consortia, schedule coordination, ground handling, through fares, management contracts and catering joint ventures. Over time, with the development of computer reservation systems (CRSs), early alliances involving joint flights evolved into code-sharing, a popular form of alliance agreement in the 1990s.” (Li, 2000, p. 65) Merger and Acquisition, on the other hand, was mostly seen in domestic airlines were several small domestic airlines generally came together to form a single body that owing to its size managed to reap of the economies of scale, scope, and density. Merger and Acquisition on the International scale were not so common owing to the fact that in most of the cases cross border ownership is restricted (Giovanni, 2002); as mentioned by Evans (2001) “non-European Union investors cannot hold a majority stake in any European Union airline.” (Evans, 2001, 234). However, in recent times the merger of KLM and Air France with the later taking the main role might be an example that such type of business ventures in not far away (EMCC, 2008, p.1). Furthermore, any alliance is incomplete if it fails to get the antitrust immunity (ATI) from the government of the respective country that will enable the cooperation on the financial issues. This paper takes a two-way approach to discuss the rationale of airlines adopting a global alliance or Merger and Acquisition strategy (including cross border M&A) with a critical analysis of the strengths and weaknesses of the two approaches. The second part of the paper provides a close and critical view of antitrust immunity that is a culmination of freedom, which is provided to various airline alliances and encompasses “scheduling and pricing decisions, as well as the right to form revenue-sharing joint ventures. ...Download file to see next pagesRead More
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