Star Alliance in the field of Marketing - Essay Example

Alliances were an appropriate response to the market change by the leading airlines. Star Alliance is the largest with a market share of 23.6 percent followed by Sky Team, Oneworld and Wings (Czipura & Jolly, 2007). This paper will discuss how at Star, the benefits are reaped both by the customers and the airlines, the route setup and the basis, the problems and pitfalls encountered and how Star Alliance differentiates itself from other airline alliances. The Star Alliance started as a joint marketing effort between United Airlines and Air Canada in 1992 and was formed on the premise that each could derive benefits from expanding the range of cooperation.

They wanted to increase the membership and devolve authority towards a more centralized and independent organization structure (Anslinger & Jenk, 2004). By 1997 Scandinavian Air System (SAS), Deutsche Lufthansa, Thai Airways International had joined the alliance. These five members signed bilateral agreements regarding code sharing, joint marketing activities, and flight schedule coordination (Czipura & Jolly, 2007). The alliance wanted to exploit the benefits of a worldwide network. By 2006, there were 18 full members in addition to several regional members and member candidates.

Today it has 24 members and has a centralized set of activities and functions. The Star Alliance serves 855 airports in 155 (StarAlliance.com, 2007) countries and expects to achieve substantial savings through rationalizing their operations and in the process squeezing out competitors (Boyd, 2001). Airlines have little control over fixed expenditure like aircraft and equipments and the labor costs account for almost one-third expenses in the industry. As such most airlines are looking for saving expenditure in other areas.

In 2001, Star Alliance created a new and more stable management structure. Prior to this, the alliance was driven by the individual