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Questions being answered:What is the value to each of the competing alliances skyteam and oneworld having JAL on board What difference in net transfer would make JAL indifferent between belonging to either alliance?
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1 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Strategy Case Study: JAL‘s choice between skyteam and oneworld
Tuebingen, 2010/12/21
University of Tuebingen
A case study in the context of the masters seminar
Competitive Strategies
Winter semester 2010/2011
Prof. Dr. Wilhelm Rall
Torsten Arnold
2 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Purpose and Organization of the Research
3 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Questions to be answered
1. What is the value to each of the competing
alliances skyteam and oneworld having JAL on
board
2. What difference in net transfer would make JAL
indifferent between belonging to either alliance?
4 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Outline
1. Understanding the context
1.1 Why alliances
1.2 Economics of Airline Industry
1.3 Modelling Competing Strategic Alliances
1.4 JAL‘s restructuring plans
1.5 JAL‘s alliance decision
2. Airline valuation: value for alliances having JAL on board
3. Alliance valuation: value for JAL beloning to either alliance
5 Torsten Arnold – JAL‘s choice between skyteam and oneworld
1. Understanding the context
1.1 Why alliances?
6 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Why alliances… …instead of fusions?
• Because of economies of scope, scale and their specific network structure leading airlines cooperate in alliances
• In joint ventures (if approved by authorities) they can optimize as a single business unit and share their revenues
• In this setting intense price wars make no sense for the alliance partners
• Customer side: improve product quality and customer service
• Aviation is a strategic
industry national
interests and legal
restrictions are
correspondingly high
• One of the most
restrictive and regulated
industries
• Example: maximum limit
on foreign ownership for
Japanese Airlines is 1/3.
7 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Alliances: solution of basic carrier problems
• Quite simply, empty seats translate into lost profits
• Emergence of Budget Carriers One of the major faults that big airlines were faced with was that of overcapacity
• During the late 90s there was a rather large boom in the procurement of new aircraft.
• Strong demand pushed this trend to extreme limits. It reached a point where there was just too many aircrafts out there with too few passengers to fulfill maximum capacity.
• A most critical time came after 9/11 when consumers dramatically limited their travel habits, which in turn adversely affected the entire aviation industry.
8 Torsten Arnold – JAL‘s choice between skyteam and oneworld
• „The pressure of global competition has brought
us together“BA-Chef Bob Ayling
• External growth (M&A) nearly impossible
• Airline alliances emerged to one of the most
important competitive factors / advantages
Finding the right strategic alliance partners is crucial
Alliances: a managerial standpoint
9 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Alliances: Decision for anti trust immunity approval
by U.S. Department of Transportation
• To assess the competitive effects of a given
alliance, competition authorities look at
• the structure,
• scope,
• and overlap
created by each transaction
• and the likely competitive effects
10 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Scope of Alliance cooperation
+ complexity
+ resources
+ duration
Revenue, cost & benefit
Sharing joint ventures
Direct coordination (incl. prices, routes,
Scheduling, facilities, etc.)
Code sharing
FFP / Lounge Access
Interlining
HIGH
LOW
Merger-like integration
Expanded cooperation to
Develop joint network
Limited cooperation on
specific routes
Figure 1: Spectrum of Alliance Cooperation [Adapted from: Transatlantic Airline Alliances: Competitive issues and regulatory
approaches, A report by the European Commission and the United States Department of Transportation, 16 November 2010]
11 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Benefits and Risks of an Alliance
Figure 2: Benefits and risks of an alliance [Adapted from: Kleymann B., Seristö H. 2001. Levels of airline alliance membership: balancing
risks and benefits, Journal of Air Transport Management , Vol.7, Issue 5, p.308].
Lost flexibility
and sovereignty
Foregone
opportunities
Tighter Integration
Bond
RISKS
Alliance – specific
investments
Economies and
enhanced value
Pledge
Trust
BENEFITS
dete
rren
ce
12 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Degree of overlapping of JAL with either alliance
Network Overlappings
(International Routes)
Cost reduction effects
(through dropping routes)
High degree of
overlapping
low overlapping /
better complementarity
Figure 3: Degree of overlapping of JAL with either alliance. Own illustration
13 Torsten Arnold – JAL‘s choice between skyteam and oneworld
1. Understanding the context
1.2 Economics of Airline Industry
14 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Economics of Airline Industry: Industry Dynamics (1/2)
Pricing
Levels
(Yields)
Profitability
level
Orders
Deliveries
Capacity
adjustments
Supply/Demand
Balance
(Load factor)
Demand
1 year
delay
2 year
delay
Figure 4: Economics if Airline Industry: Industry Dynamics [Adapted from: Philippe d’ARVISENET, Chief Economist, World airline industry:
overcapacities in question. Economic Research Department BNP Paribas, McKinsey & Co, 2004].
15 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Economics of Airline Industry: In a nutshell (2/2)
• Airline industry is cyclical
• Airlines are not only particularly sensitive to external shocks but also to the economic growth.
• During cycle troughs, passenger traffic collapses, load factors display modest performances leading to the mothballing of numerous aircraft and to major declines in airlines’ profitability
• High risk if load factors are too low: high aircraft order cancellation fees limit the possibilities of cancelling the delivery of aircraft ordered in previous years. At best, deliveries are postponed and pay for aircraft at a time when air transportation demand is low
Alliances can reduce correlation effect through world wide diversification „alliances as world market portfolios“: decoupling effect
16 Torsten Arnold – JAL‘s choice between skyteam and oneworld
1. Understanding the context
1.3 Modelling Competing Strategic Alliances
17 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Alliance Modelling: A brief overview
• Park (1997) Transportation Research
• Park, Zhang (1998) Transportation Research
• Brueckner, J.K. (2001) International Journal of Industrial Organization
• Brueckner, J.K. (2002) Journal of Air Transport Management
• Most fundamental potential benefits from consolidation or cooperation
arises from economies of scale, or lower per-unit costs from an
increased level of output
• Alliance tends to lead to higher traffic
• Cooperative pricing can internalize part of the double-marginalization
externality („vertical integration“: Tirole, 1988)
• Welfare tends to increases in complementary networks; parallel
alliances/networks tend to decrease welfare
18 Torsten Arnold – JAL‘s choice between skyteam and oneworld
• Rivalry between strategic alliances where each alliance member maximizes its own profit and some share of ist partner‘s profit
• Two firms link up their complementary products in the context of competing strategic alliances Within-alliance complementarities
• Cross-alliance substitutabilities („peanut butter / jelly alliance pairs“)
• Two-stage alliance game: • stage 1: level of cooperation, α or β chosen
• stage 2: output level decision
Modelling Strategic Alliances (1/3)
Figure 5: Basic Model Structure [Source: Zhang, A., Zhang Y., (2006). Rivalry between strategic alliances. International
Journal of Industrial Organization 24, 287-301]
(eq. 1)
(eq. 2)
(eq. 3)
(eq. 4)
19 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Modelling Strategic Alliances (2/3)
• Greater output levels possible and also alliance creation can
deter entry for rivals
• Strengthening of one of the alliances increases the output
of both member firms‘ products and decreases that of their
rival firms
• Complementary alliance
• improves the alliance‘s own profit, given the alliance
structure of the rival firms
• It defends the allied firms when the rival firms intnsify their
cooperation
„agressive“
20 Torsten Arnold – JAL‘s choice between skyteam and oneworld
• Rivalry between multiple alliances, may, owing to the
strategic effect, result in a higher degree of inner-alliance
cooperation than would be in the absence of rivalry
• But Prisoners dilemma possible
• cooperation on a given route gives the parties market
power that they can exercise
• sustainably by raising prices, lowering capacity and/or
degrading quality of service
Modelling Strategic Alliances (3/3)
21 Torsten Arnold – JAL‘s choice between skyteam and oneworld
1. Understanding the context
1.4 JAL‘s restructuring plans
22 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Corporate structure of the JAL-Group
JAL Group
International
Passengers
Domestic
Passengers
Cargo
Airline-related
business
Hotel and
resort
business
Credit card
and leasing
business
Commercial,
distribution
and other
business
Travel Service
Air transportation business Other business subsidies
Figure 6: Corporate structure of JAL Group 2010. Own illustration. Data Source: JAL Website
• JAL International
• JAL Domestic
• Japan Asia Airways Co., Ltd.
• Japan Trans Ocean Air Co., Ltd.
• JALways Co., Ltd.
• JAL Express Co., Ltd.
• Japan Air Commuter Co., Ltd.
• J Air Co., Ltd.
• Harlequin Air Co., Ltd.
• Hokkaido Air System Co., Ltd.
23 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Figure 7: International and domestic passenger traffic and income of JAL Group, including: JAL,JAPAN TRANSOCEAN AIR, JAL
EXPRESS, J-AIR, Japan Air Commuter, Hokkaido Air System, & RYUKYU. Own illustration. Data Source: JAL Website
0
100.000
200.000
300.000
400.000
500.000
600.000
700.000
800.000
0
5.000.000
10.000.000
15.000.000
20.000.000
25.000.000
30.000.000
35.000.000
40.000.000
45.000.000
50.000.000
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009
Domestic passengers International passengers
Domestic passenger income (Mio. of Yen) International passenger income (Mio. of Yen)
Domestic vs. International passenger income of JAL
24 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Reasons for the insolvency of JAL
• High Fixed and Variable Costs (very expensive pieces of equipment, large labor forces, high fuel costs) Cost Factor
• Decreasing overall demand (9/11, Iraq War, SARS)
• Decreasing number of business travelers (global recession in fall 2008)
• Decreasing tourism demand (high fuel surcharge)
Decreasing
Demand
• JAL was moving too slow on the opportunities in the low cost carrier (LCC) business
• Traffic was still dominated by business travel and freight both of which were more sensitive to global fluctuations
Strategic Failures
Figure 8: Main reasons for the insolvency of JAL. Own illustration
25 Torsten Arnold – JAL‘s choice between skyteam and oneworld
The restructuring plan of JAL
“Create a solid business model that can withstand the
fluctuations in economic conditions and generating
profits without overly relying on future traffic demand”
Main Restructuring Target:
Cost
Reduction
• Lay-off around 16.000 employees by 01.03.2011 (1/3 of the staff)
• Discharge of Boing 747-400 and Airbus 300-600
• Adjustment of the corporate pension fund
• Suspenion of 28 international and 50 domestic routes, closure of 11 overseas bases and 8
offices
• Liquidating and selling subsidiaries including hotel businesses (sell 79.6% stake in JAL Hotels)
Financial
Support
• New credit lines of about € 4,6 billion
• Enterprise Turnaround Initiative Corp (Etic) will invest about € 2,3 billion in JAL
• The creditors (e.g. Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ) will dsclaim about €
5.6 billion of debts
• The JAL stock will be delisted from the market
• Example should be General Motors in the U.S.
• Enterprise Turnaround Intiative Corp. (Etic), will take responsibility of the restructuring
• From 1.02.2010 Kazuo Inamori, the founder of Kyocera will be the new CEO
• On 1st of December JAL received permission from Tokyo's District Court to go ahead with its
rehabilitation plan.
Important
Measures
26 Torsten Arnold – JAL‘s choice between skyteam and oneworld
However the restructuring plan also effects the
passenger figures -> Load Factor is crucial
69
64,6
69,3 69,4
71,1 71,8
65,6
69,4
60
62
64
66
68
70
72
74
0
2.000.000
4.000.000
6.000.000
8.000.000
10.000.000
12.000.000
14.000.000
16.000.000
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009
International passengers International Load Factor
65,3
63,9 63,7 64 64 63,4 63,7
59,2
56
58
60
62
64
66
0
10.000.000
20.000.000
30.000.000
40.000.000
50.000.000
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009
Domestic passengers Domestic Load Factor
Decreasing load
factor only on
domestic routes!
Inte
rnati
on
al
Do
mesti
c
Figure 9: Passengers and load factors: Domestic and International, Own illustration and adapted from given material McKinsey & Co.
27 Torsten Arnold – JAL‘s choice between skyteam and oneworld
1. Understanding the context
1.5 JAL‘s alliance decision
28 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Two equal forces?
Oneworld Skyteam
Members: 14 *
* including Kingfisher TBA, Airberlin 2012
Members: 13
Destinations: 701
Countries: 136
Destinations: 898
Countries: 169
Daily Departures: 8,244 Daily Departures: 12,597
Annual Passengers: 291.1 m Annual Passengers: 385 m
Frequent Flyer members: 100 m Frequent Flyer members: 148 m
Lounges: 506 Lounges: 420+
Fleet (operated): 2203 Fleet (operated): 2225+
Formation: 1999 Formation: 2000
Players directly interested in JAL:
American Airlines, British Airways, Cathay Pacific
Players directly interested in JAL:
Delta
Transatlantic Passengers: 5.36 m Transatlantic Passengers: 6.66 m
Transatlantic Market Share: 22.7% Transatlantic Market Share: 28.3%
29 Torsten Arnold – JAL‘s choice between skyteam and oneworld
JAL‘s outline for decisions making: Should I
stay or should I go? Stay with AA (oneworld):
• Familiar partner, knowledge of each others’ business ways
• According to JAL management, to remain with the same alliance will be more cost-effective
• Highest quality partners at oneworld to pass on valued customers
• Less confusing for JAL customers
• Complementary – rather then overlapping – networks (in DELTA: competition with
Delta/Northwest, Korean and China Southern)
• Delta/Northwest operation at Tokyo Narita would most likely not fit alongside JAL‘s operations
• Regulatory risk in case of change in alliance strategy when moving to Skyteam
• Most likely the only opportunity to gain ATI between USA and Japan with a US partner
Switch to DELTA (skyteam):
• Delta has a more robust trans-Pacific flight network
• Delta has a stronger Asian network than American Airlines
• Delta offers access to their large global network of passengers and routes. Delta is the world's
biggest airline
• Larger direct equity investment
• Easier for JAL to implement the restructuring plan (suspension of routes)
30 Torsten Arnold – JAL‘s choice between skyteam and oneworld
The chaotic chronicle of events in bidding for JAL
End of 2009
January 15th
• Open skies agreement USA - Japan
• Information globally echoed by press agencies: JAL had reached
an agreement over a tie-up with Delta Air Lines. Delta Air Lines
would inject 1 Bn USD to JAL to help it switch alliances
• JAL filed in the meantime for bankruptcy protection and entered into
a restructuring process with the support of the Japanese
government
To counterstate this, AA and oneworld announced to raise their
offer to 1.4 Bn USD
January 18th
• Delta and KLM reached an agreement and Air France KLM would
contribute to the financial package
End of January • New president at JAL
February 8th • JAL Decision to stay with oneworld
31 Torsten Arnold – JAL‘s choice between skyteam and oneworld
2. Airline valuation
What is the value to each of the
competing alliances skyteam and
oneworld having JAL on board ?
32 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Asian flight market: Facts and figures
• Growing markets • Overall passenger volume between North America and the
Asia/Pacific region is expected to rise 3.8 percent in 2010 and 5.6 percent in 2011, according to a survey of airlines conducted by IATA
• Between Europe and the Asia/Pacific region, it is expected to rise 4.4 percent in 2010 and 6.1 percent in 2011
• High margin premium travellers • Travel from North America to the Mid-Pacific region, which
includes Japan and South Korea, represented 5.8 percent of total premium international air traffic in November 2009, but 12 percent of all the premium revenue, according to the International Air Transport Association (IATA) data
• "It's really where the money is these days," Charles River Associates aviation consultant Mark Kiefer said of Asia.
33 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Valuation of JAL – Three scenario world (1/2)
Basic assumptions: • JAL passenger figures from FY2008 including restructuring plan
• Domestic flights are taken into account with 1/3 of the volume
• Regional dynamic growth rates over five years
• Varying ticket costs (low economy class – high business class)
• Discount factor (risk premium)
• Net income margin 1% of revenues
• Revenue stream of JAL respectively the profit is the benefit to
OneWorld / SkyTeam
Criticism: • Very high leverage on the ticket price variable, in addition highly
imprecise figure
• Net income margin of 1% unrealistic, since 1995 only 6 times
positive net income by JAL
• Growth rates in reality highly unpredictable
• NPV tool can be criticized (e.g. perfectly competitive capital
market, credit/debit interest equal, subjective target rate)
34 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Estimated Value of JAL for the alliances
Valuation of JAL – Three scenario world (2/2)
Low level
scenario Medium level
scenario
High level
Scenario
• Low economy class ticket
prices
• Moderate growth rates,
especially in the Asia
region
• Average ticket prices
• Medium growth rates
• High level business class
ticket prices
• High dynamic growth rates
$ 1.440 Mn $ 760 Mn $ 420 Mn
~ $ 871.460.682 $ 417.782.429 $ 1.440.884.780
35 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Ex-ante conclusion for players of both alliances
• An open-skies treaty and ATI for (Star and) Oneworld will give
Delta more competition than now
• Delta is not a huge loser
• They still have Tokyo and an immunized alliance with Korean
Airlines
• They remain a most formidable competitor across the North Pacific
(AA) (DAL)
Alliance with positive (strategic+)
clear negative (strategic - -)
mild negative (more competition -)
modest positive (strategic ++, high costs -)
Figure 10: Ex-ante conclusion for players of both alliances. Own illustration , adapted from „ S&P's Ratings Services” analysis (*)
No alliance with
36 Torsten Arnold – JAL‘s choice between skyteam and oneworld
3. Alliance valuation
What difference in net transfer would
make JAL indifferent between belonging
to either alliance?
37 Torsten Arnold – JAL‘s choice between skyteam and oneworld
General advantages for potential JAL investor:
Reasons for Delta and AA to opt for JAL
• JAL's Asian routes and the premium passengers that come with them
• Access to the Japanese market, especially with regards to business travellers and access to JAL's network to the rest of Asia (cornerstone hubs) • Access to higher fares for seats to Asia because international business
travelers tend to spend more than leisure fliers
• Business travelers fly more and often at the last minute, which means paying higher walk-up fares
• More power to help shape overseas customer options and ticket prices
• Potential to fly its own aircraft and passengers on JAL's routes
• Bigger revenue stream: Potential additional revenue of 340 Mn EUR*
• Synergy effects yield significant cost advantages • Joint usage of lounges and transfer centers
• Comparison: Est. 17 Bn USD in cost savings achieved at Star Alliance (2008)
qu
alita
tive
q
uan
tita
tive
*Source:Handelsblatt, 2010: „ Japan Airlines: Luftfahrt-Bündnisse reißen sich um die angeschlagene Braut”
38 Torsten Arnold – JAL‘s choice between skyteam and oneworld
ATI application: Scenarios and market shares
30% 35%
35%
US-Japan market share (in %): Scenario JAL at oneworld
skyteam
oneworld
other
54%
6%
40%
US-Japan market share (in %): Scenario JAL at skyteam
• JAL/oneworld continuation is most likely procompetitive
• JAL/SkyTeam switch could be anti-competitive
• US regulators (DTO) could block closer ties between Delta and JAL because the two would dominate US-Japan traffic
Figure 11: US-Japan market share in % depending on JAL at Oneworld or JAL at SkyTeam. Own illustration
39 Torsten Arnold – JAL‘s choice between skyteam and oneworld
1100
500
300
200
500
300
810
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Value of alliances for JAL:
A net transfer of ~ 200 - 400 Mn USD would make JAL indifferent
Direct Capital
Investment (2)
Present Value of
potential Trans-Pacific
ATI for JAL (1)
- 200
1,400
Enhanced offer
by oneworld
Figure 12: Total value propositions at stake as of February 2010. Own illustration (1) Based on 100 Mn USD incremental revenue over four years at present value; Discount factor = 10%, Expected annual growth = 2%
(2) Collateralized debt: Near-term cash, adds to debt burden of JAL
(3) Direct capital investmemt from AA/TPG (oneworld) and Delta/France KLM (skyteam)
(4) Switiching costs due to change of alliance membership (
(5) Due to cost reductions and network overlapping (ETIC estimate = 189 Mn USD p.a.; over first 4 years:, Discount factor = 10%, Expected annual growth = 2%)
Present Value of
additional
annual benefits
compared to
oneworld alliance (5)
1,000
Total one-time
switching costs (4)
Alliance
revenue
guarantee
Asset-backed
funding (3)
40 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Thank you for your attention!
41 Torsten Arnold – JAL‘s choice between skyteam and oneworld
List of figures
42 Torsten Arnold – JAL‘s choice between skyteam and oneworld
List of figures
Figure 1: Spectrum of Alliance Cooperation [Adapted from: Transatlantic Airline Alliances: Competitive issues and regulatory approaches, A report by the European Commission and the United States Department of Transportation, 16 November 2010]
Figure 2: Benefits and risks of an alliance [Adapted from: Kleymann B., Seristö H. 2001. Levels of airline alliance membership: balancing risks and benefits, Journal of Air Transport Management , Vol.7, Issue 5, p.308].
Figure 3: Degree of overlapping of JAL with either alliance. Own illustration
Figure 4: Economics if Airline Industry: Industry Dynamics [Adapted from: Philippe d’ARVISENET, Chief Economist, World airline industry: overcapacities in question. Economic Research Department BNP Paribas, McKinsey & Co, 2004].
Figure 5: Basic Model Structure [Source: Zhang, A., Zhang Y., (2006). Rivalry between strategic alliances. International Journal of Industrial Organization 24, 287-301]
Figure 6: Corporate structure of JAL Group 2010. Own illustration. Data Source: JAL Website
Figure 7: International and domestic passenger traffic and income of JAL Group, including: JAL,JAPAN TRANSOCEAN AIR, JAL EXPRESS, J-AIR, Japan Air Commuter, Hokkaido Air System, & RYUKYU. Own illustration. Data Source: JAL Website
Figure 8: Main reasons for the insolvency of JAL. Own illustration
Figure 9: Passengers and load factors: Domestic and International, Own illustration and adapted from given material McKinsey & Co.
Figure 10: Ex-ante conclusion for players of both alliances. Own illustration , adapted from „ S&P's Ratings Services” analysis (*)
Figure 11: US-Japan market share in % depending on JAL at Oneworld or JAL at SkyTeam. Own illustration
Figure 12: Total value propositions at stake as of February 2010. Own illustration
43 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Appendix: Quantitative Analysis
44 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – Low level scenario (1/3)
45 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – Low level scenario (2/3)
46 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – Low level scenario (3/3)
47 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – Medium level scenario (1/3)
48 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – Medium level scenario (2/3)
49 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – Medium level scenario (3/3)
50 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – High level scenario (1/3)
51 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – High level scenario (2/3)
52 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Question 1 – High level scenario (3/3)
53 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Backup
54 Torsten Arnold – JAL‘s choice between skyteam and oneworld
Scope of Alliance cooperation
+ complexity
+ resources
+ duration
Revenue, cost & benefit
Sharing joint ventures
Direct coordination (incl. prices, routes,
Scheduling, facilities, etc.)
Code sharing
FFP / Lounge Access
Interlining
HIGH
LOW
Merger-like integration
Expanded cooperation to
Develop joint network
Limited cooperation on
specific routes
Figure X: Spectrum of Alliance Cooperation [Adapted from: Transatlantic Airline Alliances: Competitive issues and regulatory
approaches, A report by the European Commission and the United States Department of Transportation, 16 November 2010]