Strategic Airline Policy in the Globalizing Airline Networks

The airline industry in North America has changed dramatically over the last 15 years, due primarily to the deregulation of the US market in 1978 and the southern Canadian market in 1988. This deregulation allowed the airlines to set up efficient hub-and-spoke networks, and has led to organizational consolidation within the airline industry. A mega-carrier faces severe limitations in establishing networks on other continents through mergers and acquisitions. Instead, global airline networks will normally be developed through alliances between major continentally-based carriers. Two general forms of alliance are anticipated, and some alliances may be formed by a mixture of these 2 prototypes: 1. One mega-carrier creating an alliance network by aligning with several junior partners in each of the other continents. 2. An alliance among large senior partners, one from each continent, supplemented by regional feeder carriers within the continents as junior partners.