Type of Thesis
Alliances are a key way through which airlines collaborate in search of profits. Competition from low-cost carriers necessitates cost reduction and drives legacy carriers to search for new sources of revenue. Legacy carriers find methods to compete with low-cost carriers through alliances with other carriers. This honors thesis will study how the competitive threat from low-cost carriers has driven the formation of alliances.
Low-cost carriers have disrupted the airline industry as a whole by creating an entirely new airline business model focused on “no-frills” and providing the customer with low fares. It is understood that legacy carriers ally with one another as a method of sharing resources, reducing costs, and finding opportunities for international expansion. I argue that these reasons for alliance stem from the competitive threat of low-cost carriers, which has necessitated collaboration among other airlines to continue to compete and provide a valuable service to customers.
To turn a consistent profit, airlines need to cut costs like labor, fuel, and passenger service to compete with low-cost carriers. Although some may perceive that low-cost carriers are directing the airline industry, legacy carriers continue to have the advantage over low-cost carriers in long-haul, intercontinental flights. While the source of alliance formation stems from a competitive environment, legacy carriers have a new opportunity for revenue in the international aviation market.
McLaughlin, Emma, "The Threat of Low-Cost Competition as a Driver of Airline Alliance Formation" (2018). Undergraduate Honors Theses. 1656.