: Florian Smeritschnig
: WOW and SkyTeam Cargo: An In-depth Analysis of Strategic Alliances for Air Cargo Carriers and The Impact on Cargo Airlines' Operations and Success
: Anchor Academic Publishing
: 9783954895540
: 1
: CHF 31.20
:
: Wirtschaft
: English
: 83
: kein Kopierschutz/DRM
: PC/MAC/eReader/Tablet
: PDF
In the airline industry, the formation of highly integrated strategic alliances started during the 1990's. Thereby, Star Alliance became the first global player when passenger airlines faced deregulation, and wanted to support their growth and expansion in international markets. For cargo companies, this type of integration came around later, namely in the beginning of 2000. As a result of the increased co-operation, major alliances were formed with the launch of SkyTeam Cargo and WOW. In the dawn of the new century, these alliances should lay the cornerstone for the achievement of a long term success through synergy effects, and higher competitiveness in terms of the individual and the group. A decade later, WOW and SkyTeam Cargo have evolved in different directions but, not all members or ex-members are pleased about the results. Strategic alliances in air transport have been studied widely but, most of the recent publications only cover the passenger side in this business. There are a lot of information and statements about the benefits that alliances can bring to ist members. But, the review of the literature shows that research is very sparse when it comes down to the evaluation of the actual impact of alliance integration on air cargo carriers' standing. The objective of this book is to analyze and interpret the impact of a strategic alliance on cargo airlines' revenue-tonne-kilometres key figures (provided by Airline Business 1998-2010), and market share developments. The author's aim is on the one hand, to answer the question if air cargo operators did profit from alliance integration, and on the other hand, to give the reasons for this development. Besides, the book gives an overview about the market's environment, the characteristics of air freight, and the history of WOW and SkyTeam Cargo. Further, the additional questions are discussed in detail:•How did carriers react to the challenges and opportunities in the market?•What are the main benefits or disadvantages for alliance members?•What major challenges do (prospective) members face in an alliance?•What are the core arrangements and prerequisites for alliance integration?•Is there a common success, are there stability factors and why do alliances fail?•What alternatives are there to alliance formation

Florian Smeritschnig was born in Vienna, Austria in 1989. Among the top 10 students of his year (out of more than 5700), he obtained the bachelor degree in Business Administration at the Vienna University of Economics and Business, where he specialized in
Text Sample: Chapter 2.3.2.1, The Early Days: SkyTeam Cargo was founded in September 2000 as a separate arm of the passenger airline alliance SkyTeam which itself has just been incorporated three months earlier. The founding members Aeroméxico Cargo, Air France Cargo, Delta Air Logistics and Korean Air Cargo were soon to be followed by Czech Airlines Cargo and Alitalia Cargo in 2001. In the same year, Air France Cargo, Delta Air Logistics and Korean Air Cargo launched the US Cargo Sales Joint Venture in Atlanta. With even tighter integration, they hoped to offer customers the benefits of a combined sales force, a centralized reservation and service center, a comprehensive route network and a common product line for US export shipments. The joint venture used ist own IT system, revenue management and customer database. Both the wording and the appearance of the newly formed SkyTeam Cargo differed from the one and only competing alliance WOW. In 2002, Delta Air Logistics chief Anthony Charaf noted, that 'they'd rather be small and effective than large and ineffective.' On the other hand, unlike WOW, the Air France/Delta-led partnership intended to embrace all members of the SkyTeam passenger alliance, provided they agree to ist overall marketing and product philosophy. Over the coming years this strategic concept led to fast growth in terms of members and broad geographical presence. 2.3.2.2, Rapid Growth: Although the members, too, were forced to adapt capacity to meet demand in the post-September 11 environment, the alliance did not ground any freighter aircraft. In 2002, the six present airline members represented a fleet of 1,103 aircraft, including 31 dedicated freighters operated by Air France Cargo and Korean Air Cargo. Between 2002 and 2003, Air France Cargo took delivery of four 747-400ERF as the launch customer for Boeing. Similar to WOW, SkyTeam Cargo harmonized ist array of products with a few exceptions (such as Delta's Dash express offering within the U.S.) and additionally (in contrast to WOW) unified the brand names by adopting the ones already established by Air France Cargo. Coincidentally, with the joint venture in Atlanta that marketed capacity out of the United States and an already available joint express product (Equation) in Air France's European route network, efforts to harmonize information technology as well as the implementation of single roof airport handling were well under way. A particular focus was set on the increase of the higher-value joint time-definite products. Following the merger of Air France and KLM, KLM Cargo joined SkyTeam Cargo in 2004. Just one year later, Air France Cargo and KLM Cargo merged and started to operate under one single brand name AF-KL Cargo. As integration continued, SkyTeam Cargo was moving towards a'storefront strategy', the storefront being the SkyTeam Cargo brand. For international shipments, forwarders would contract business via 'the banner of SkyTeam Cargo' rather than through individual member carriers. With KLM's entrance into the alliance, the venture now had seven major cargo hubs, including Amsterdam, Mexico City, Rome, Seoul, Atlanta, Prague, and Paris-Charles de Gaulle as well as a total cargo network of more than 500 destinations in 100 countries. In 2005, Northwest Airlines Cargo joined the alliance and in 2008 Delta Air Lines acquired Northwest Airlines; both companies merged under the Delta Air Lines brand. In 2010, China Southern Cargo joined the alliance and recently in May 2011 Aeroflot joined SkyTeam Cargo as the 9th full member. Even though the integration process and the growth seemed to be happening at a higher pace than at WOW, SkyTeam Cargo encountered similar challenges. In 2005, Air France Cargo executive vice president Marc Boudier said that the member carriers do compete against each other in some markets. He added that member carriers sometimes have to engage into agreements with carriers outside SkyTeam, even with WOW alliance members, as a co-operation only in the manner of the respective passenger alliance is not entirely feasible for SkyTeam Cargo. 2.3.2.3, Status Quo and Outlook: At present, SkyTeam Cargo consists of nine full member airlines being the biggest air cargo alliance of the world. Together the cargo core carriers operate more than 50 dedicated freighter aircraft and can use the bellyhold capacity of more than 2100 passenger aircraft. With approximately 14.500 daily departures, the whole SkyTeam network spans 926 destinations in 174 countries. Major cargo hubs include Amsterdam Schipol, Anchorage Ted Stevens, Atlanta Hartsfield-Jackson, Mexico City, Paris-Charles de Gaulle, Seoul Incheon, Shanghai Pudong and Guangzhou Baiyun. China Airlines has entered into the SkyTeam alliance in September 2011 and it can be considered very likely that the flag carrier of Taiwan will enter into the cargo alliance as well. As for other possible candidates, the cargo subsidiaries of the other SkyTeam members are named as potential future members.
WOW and SkyTeam Cargo1
Table of Contents3
1 Introduction9
1.1 Research Questions9
1.2 Methodology10
1.3 Structure11
2 Research Background13
2.1 Market Environment13
2.1.1 Challenges13
2.1.2 Opportunities15
2.2 Idiosyncratic Economics of Air Cargo Operations21
2.3 Reactions of Air Cargo Carriers22
2.3.1 WOW23
2.3.2 SkyTeam Cargo26
2.4 Summary of WOW and SkyTeam Cargo28
3 Literature Review – State of the Field29
3.1 A Definition and Distinction of the Alliance Term29
3.2 State of the Field30
3.2.1 Strategic Alliances in General30
3.2.2 Strategic Alliances in Air Transportation31
3.3 The Concept of Strategic Alliances32
3.4 Alliances in the Air Cargo Business34
3.4.1 Driving Forces of the Alliance Decision34
3.4.2 Alliance Advantages38
3.4.3 Disadvantages43
3.5 Core Questions and Prerequisites for Alliance Integration45
3.5.1 Value Creation and Distribution45
3.5.2 Alliances as a Long Term Commitment46
3.5.3 Foreseeing of Conflicts46
3.5.4 Reciprocation in a Network of Alliances47
3.5.5 Prerequisites for Successful Alliance Creation 47
3.6 Alliance Criticism and Other Cooperation Strategies49
3.6.1 Criticism50
3.6.2 Other Co-operation Methods51
3.7 Challenges and Common Complications51
4 Transition to Analytical Part53
5 Analysis of Both Alliances’ Revenue-Tonne-Kilometres54
5.1 Assumptions54
5.2 Total Market and Peer Group55
5.3 WOW and SkyTeam Cargo56
5.3.1 WOW Alliance57
5.3.2 SkyTeam Cargo63
5.4 Comparison WOW and SkyTeam Cargo72
6 Conclusion and Further Research Opportunities73
6.1 Summary73
6.2 Further Research Opportunities77
References78