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The airline industry

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Problem Identification "The airline industry is facing the worst crisis in its history," Jaan Albrecht, CEO of Star Alliance, said after looking back at the events in 2001 (p. 618). The terrorist attacks on September 11th, 2001 and the economic recession had the airline industry face a sharp downturn for the second time since the beginning of the Gulf War in 1991-1992. Many airline companies had to think on how to get customers back and moreover how to keep their current customers. Furthermore the airlines are facing a new threat from low-cost carriers, which are emerging and succeeding, especially in Europe, in an incredible pace. Causes of Problem Star Alliance launched in May 1997 with renowned airlines as Lufthansa, United Airlines, Air Canada, SAS and Thai Airways. This alliance came to life shortly after the last phase of the "Third Package" (p. 619) was put to an end by the European Commission in 1997, in which they terminated constraints on European carriers from working only domestic routes beyond their national borders. Many other airlines got into strong alliances, such as American Airlines and British Airways, KLM and Northwest, Delta Airlines and Air France. Alliances in the airline business are powerful ones and more and more frequent flyers choose one of these above-mentioned alliances, in order to obtain miles, an expanded international network and business lounge access in airports worldwide. ...read more.


Varig, who is one of the biggest airline for the South Americas could not be an active member and express their wishes and thoughts of what needs to be done in order to gain more market share. Start an own low-cost carrier airline. As mentioned before, low-cost carriers come up almost every few months. Why not start an own low-cost carrier, or better said enforce the already existing sister carriers, as Condor for Lufthansa, or bmibaby of bmi, to become low-cost flights within their countries. Hapag Lloyd, which is a German airline started with Hapag Lloyd Express to fight against Ryanair with flights as low as $19 from Frankfurt to London. Why should not a big company like Lufthansa be able to start up something like that and maybe even introduce new shorter routes, they didn't fly before. This would not only open up new jobs, but also put the name Lufthansa in the right spot. Ryanair and Easyjet are flying to and from airports, which are sometimes more than two hours away from the main city they are flying to. Oslo Torp, where Ryanair is flying to is 2.5hrs away from downtown Oslo. Lufthansa, Austrian or Span Air would have the chance then, by being in the Star Alliance Group or by building their own carrier to fly into the main airports such as Heathrow or Frankfurt/Main airport and not Stansted and Hahn, respectively. ...read more.


These companies would not hurt each other or take customers away from each other; in contrast, they would complement each other by keeping the trip planner within the Star Alliance Program. A tourist, who wants to fly to South America and sees that Singapore Airlines does not go there, will be just one click away from Varig, where he can book his flight to his desired destination. Another idea to implement this alternative is to let the people know on board that they are on a Star Alliance flight. Before departure and/ or before landing, the purser can announce and thank the passengers for flying Airline X, which is part of the Star Alliance Group and that the same good service and customer care will be performed on board any other Star Alliance Group. This includes as well the business lounges, that they can use any of the Star Alliances members lounge, no matter what class they are flying in as long as they have the status with their main airline. Here, as also mentioned in the text, airlines could/ should unify by having some parts of the lounges in the same color or even same setup, so frequent travelers, will feel just like as if they are with their own airline and recognize that they are in a Star Alliance Lounge. Advertising, service and customer care are important aspects, to keep a passenger coming back and stay the number one Alliance of all. ...read more.

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