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Competing Through Alliances in the Airline Industry: the Air France- Klm/Delta Air Lines Joint Venture

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Competing through alliances in the airline industry: The AIR FRANCE- KLM/DELTA AIR LINES JOINT VENTURE

In less than twenty years, the global industry has gone through tremendous change. Several airlines had gone out of business that had been on top of the industry for years. One of the remarkable changes had been airline alliances. The case focuses on the airline industry and how airlines are forming alliances and joint ventures. It then introduces the partner firms Air France KLM , and Delta . Air France KLM had over 25 collaborative agreements with other carriers and was a founding member of Skyteam, one of the leading airline groups. Air France KLM and Delta Airlines formed revenue and cost sharing joint ventures that include all transatlantic routes of the two airlines. The alliance formed sales over 12 billion euros, and accounted for about 30% of all North Atlantic passenger business. The case also provides information on joint ventures, and how alliances are used strategically to enhance revenues and reduce cost. The case also discuss how collaboration can be structured and governed to achieve outcomes, and how strategic decisions by one alliance partner can affect the stability of the alliance. The issue of the case is if whether Air France KLM should reconsider their alliance with Delta Airlines, due to some of the independent decisions made within the alliance.
Some of the external factors that affected the company had been regulations set on the industry, which restricted some airlines from operating in domestic flights in countries other than their country of origin. Other external factors include legal, political, and institutional constraints. Globalization also plays a factor and how it is increasing demand for international travel. There were also conflict of interest between the partners and...

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