Why do Alliances Become Lead to Acquisition? Under what Circumstances the Relationship move to Marriage? When does Alliance become more? The case study of Airline Industry

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ACKNOWLEDGEMENT

I would first like to express my gratitude for my research coordinator, colleagues, and peers and family whose immense and constant support has been a source of continuous guidance and inspiration.

DECLARATION

I [type your full name here], declare that the following dissertation/thesis and its entire content has been an individual, unaided effort and have not been submitted or published before. Furthermore, it reflects my opinion and take on the topic and is does not represent the opinion of the University.

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ABSTRACT

Airline industry has been dominated by latest transformations and strategic alternatives that are responsible to make the industry competitive and dynamic. This paper assesses the need, motivations and implications of mergers and alliances between the airlines in a sense that the study applies useful theoretical concepts from the available secondary research and case study analysis. We have reviewed specific examples relating to the phenomenon in order to address the topic and study the background. Airline alliances have realized potential benefits to the parties, also posing certain challenges in the recent times. We will study the specific examples of KLM-Air France alliances, together with American airlines-British Airways, and KLM and Northwest in order to relate to the study and draw significant conclusions.

TABLE OF CONTENT

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Outline of the Study1

Background of the Research1

Rationale2

Problem Statement3

Research Questions3

Significance of the Paper and Contribution for Readers3

Summary4

CHAPTER 2: LITERATURE REVIEW5

Overview of Services Sector5

Service Industry and Services in Airlines5

Comparisons between Manufacturing and Services Sector6

What is an Alliance?8

Alliances found in Services Sector9

Theories underlying the formation of Alliances10

Differences between Equity and Non-Equity based Alliances11

Difference Between Alliances and Acquisitions12

What Drives Alliances?13

Formation of Mergers and Acquisitions from Alliances15

Trends that lead to the formation of Mergers from Alliances18

Historic Examples of Strategic Alliances in Airline Industry20

Motivations behind Alliance Formation in Airline Industry21

Reasons for failing Alliances23

Summary24

CHAPTER 3: METHODOLOGY25

Research Design25

Data Analysis25

Summary25

CHAPTER 4: DISCUSSION AND ANALYSIS26

KLM and Northwest26

Assessments from this Case26

Air France and KLM29

Arguments Supporting the Merger of AF-KLM30

Arguments against the Merger31

Evaluation and Future Implications of Merger31

American Airlines and British Airways31

Assessments from this Case33

Summary33

CHAPTER 5: CONCLUSION35

Recommendations36

Summary36

REFERENCES37

CHAPTER 1: INTRODUCTION

Outline of the Study

This research is based on the service industry, particularly in the Airlines sector where different alliances are made and can also lead to mergers. This chapter will discuss the background of the research topic along with discussing the rationale of our study and the objectives that need to be covered through the analysis. We will emphasize on a particular sector of services industry i.e. the Airline Industry. The study will be conducted in a systematic manner initialing from the purpose of research, discussion on its background, analyzing the case study to finally making conclusions. There will be different cases of Airline industry that will be analyzed in the research for further developing an understanding and provides the reader with an authentic orientation about the research topic.

Background of the Research

Air travel remains a substantial service sector that caters to the traveling requirements ...