When the Network Strategy Is Not Enough -The Case of European Full-Service Airlines
Social sciencesCompetitive AdvantageNetwork StrategyAirlinesScandinavian AirlinesFinnairEuropean Airline IndustrySAMHÄLLSVETENSKAP
The 1990s were one of the most profitable periods for European airline companies, mainly because of development of world economy and increasing globalisation trends. However, towards the end of the decade, a global economic downturn, high oil prices and new forms of competition turned the industry towards troubled times. The European air-travel industry had to face and accept the new airline business concept, called low-cost or no-frill airlines. In these conditions, traditional airlines had to rethink their strategies and question the old business model. As a response to the competition, European traditional full-service airlines formed alliances or networks to expand the route network and to increase efficiency. Although joint actions of airlines within alliances started to grow, full-service airlines continued to report losses in the weak business environment, in which the low-cost airlines were growing. This thesis aims at identifying the strategic decisions the European traditional airlines have made during the recent downturn in the industry and how the case companies perceive customer value in the alliance they are members of. In order to conduct this study, the authors have chosen two airline companies from two large European alliances. Interviews have been used as a main information source. Interviews were conducted with managers of companies, which at the same time were representatives of companies in the respective alliances. The secondary material such as previous interviews, annual reports of companies, recent studies in thefield, were used as complementary data. Findings and analysis at the end are introduced in response to general market situation, and as a company - alliance information.