Strategic Alliances in the Aviation Industry

This report discusses the case study of strategic alliances in the aviation industry, analyzing the benefits and challenges they bring. It explores the internal and external factors affecting the industry and evaluates the impact of strategic alliances using various tools.

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Introduction
Strategic alliance is an agreement between two or more companies or parties to help each
other in order to grow and attain the objectives. The agreement is also followed by the
aviation industry due to which they get many benefits with some challenges. In this report,
the discussion is made on the case study of strategic alliances in the aviation industry.
Aviation industry is one of the major drivers behind the rapid globalisation of the world
business. The alliance also helps to grow and attain the high success in the economy
(Thompson, 2019).
In this report, the internal and external analysis will be done with the help of strategic tools in
order to evaluate the effect of strategic alliance in aviation industry.
Analysis
PESTLE Analysis
Political
It has been seen that there are strict rules and
regulation in the countries regarding the
aviation industry. Every country has their
own rules and regulation regarding the
industry due to it is also difficult to follow
the rules and regulation of different country
while travelling to other country.
Several policies are developed to protect the
passengers from incident in the aviation
industry. That is necessary for the industry to
Economical
As per the case study, it has been seen that
economic factors have a deep influence on
the airline industry. The economic recession
and inflation have a great impact on the
industry.
Economic disagreement is a worldwide
movement for the privatisation of state
owned airlines.
It is observed that the aviation industry also

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follow those rules and regulation.
Insecurities or war factors always affects
the industry. The decisions of government
and the political decision affect the
industry negatively that is why; the
industry has high risk (Equity Master,
2007).
struggled with the increasing labour demand
in the part of employees.
Social
The aviation industry also creates the social
values. The culture follows and shown by
the aviation industry as per the nation creates
the social values.
Demand of consumer is change with the
developing time. The industry also
satisfied the consumers demand (Aviation
benefits, 2018).
Technological
The aviation industry is totally relies on the
technology. The industry also meets the
consumer’s requirement by adopting the
advance technology.
The online booking system and check-in
services through their hand held devices or
electronic doors are the example of advance
technology adopted by the industry.
Legal
Laws are developed foe air traffic and the
safety and security of passengers.
There are many regulations for the industry
in order to travel safe along with the high-
quality of services.
There are many crashers incidents are happen
due to which the government put the rules
Environmental
Ecological factors have a positive impact in
the airline industry. Fuel is a major
environmental factor that affects the industry
because it is the main expenditure source.
The airline has to invest more in develop the
environment environmentally friendly and
fuel efficient aircraft.

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and regulation.
Porters Five Forces
The threat of new entrants
The aviation industry has low threat of new entrants just because of high capital require to
enter the industry. Different rules and regulation is also a big barrier for the industry because
taking the permission to enter the industry creates the situation of difficulty (MIT, 2019).
Bargaining power of consumers
The bargaining power of consumers is high as there are limited companies in the aviation
industry due to which they attract the passengers by providing them the high quality of
services. The government also develops the rules and regulation for the consumer rights
which helps to arise the bargaining power of consumers.
Bargaining power of suppliers
The bargaining power of suppliers is high as the inputs is used by the industry are totally
relies on the economy such as fuel, craft, technology and skilled labour. The prices of fuel are
based on economic and political reasons (Uniting Aviation, 2014).
The threat of competitors
The industry is highly competitive as there is limited companies but they competition
between the companies is high. The existing companies have high brand image such as
Indianair, qatars and many others.
The threat of substitute

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The threat of substitute is also high because there are many people always prefer to travel by
train, car and buses instead of flights. Although, the services of both the industries have huge
difference but they are considered as the substitute services of aviation industry.
SWOT
Strength
It helps to improve the current operation of
the industry
Develop the competitive environment with
the high growth
Creating tacit collusion
The companies can enter the industries with
low cost (CFI, 2019)
Weakness
Conflict issues are arises due to partners
misrepresent or different opinions
Partners fail to meet the complementary
resources effectively (Skift, 2018).
Opportunity
Strategic appliances creates the opportunity
to grab the high market share
Attract the large consumers towards the
industry and to gain the competitive
advantage (IATA, 2019)
Threat
High threat of substitutes
Breach of agreement due to conflict arises
between the partnership
The chance of fraud is high
Conclusion
From the above analysis, it is concluded the aviation industry have the benefit to implement
the strategic appliances. It has many benefits for the existing companies as well as for new

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entrants. But there are some risk factors arise that affects the social image of the industry as
well. The aviation industry has the opportunity to grab the market share by implementing the
strategic appliances. It reduces the many challenges for the industry such as threat of new
entrants, threat of substitute and many others. As per the analysis, it can be said that the
industry can grow with the high rate by implementing strategic appliances.

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References
Aviation benefits. (2018) Value to the economy. [online] Available from:
https://aviationbenefits.org/economic-growth/value-to-the-economy [Accessed 14/05/12].
CFI. (2019) What are Strategic Alliances?. [online] Available from:
https://corporatefinanceinstitute.com/resources/knowledge/strategy/strategic-alliances/
[Accessed 14/05/12].
Equity Master. (2007) Global aviation industry: An overview. [online] Available from:
https://www.equitymaster.com/detail.asp?date=03/26/2007&story=4&title=Global-aviation-
industry-An-overview [Accessed 14/05/12].
IATA. (2019)Futureof The Airline Industry 2035. [online] Available from:
https://www.iata.org/policy/Documents/iata-future-airline-industry.pdf [Accessed 14/05/12].
MIT (2019) Airline Industry Overview. [online] Available from:
http://web.mit.edu/airlines/analysis/analysis_airline_industry.html [Accessed 14/05/12].
Skift. (2018) 3 Biggest Challenges Facing the Global Aviation Industry. [online] Available
from: https://skift.com/2014/10/14/3-biggest-challenges-facing-the-global-aviation-industry/
[Accessed 14/05/12].
Thompson, J. (2019) What Are Strategic Alliances?. [online] Available from:
https://smallbusiness.chron.com/strategic-alliances-23997.html [Accessed 14/05/12].
Uniting Aviation. (2014) Aviation Benefits: contributing to global economic prosperity.
[online] Available from: https://www.unitingaviation.com/strategic-objective/economic-
development/aviation-benefits-for-a-better-future/ [Accessed 14/05/12].