Capacity Performance Measures in International Airline Alliances : The case of Star Alliance

Abstract: Background Strategic alliances have become increasingly popular within the business world, they can be seen as a way to improve the total output of the firm. Over the last 10 years, the industry endured trying times, the most notable being the events of September 11, 2001. That event drastically changed airline traveling all across the world. It also showed the importance of collaborations in order to stay competitive. Star Alliance began in 1997 and has since then grown into the world’s largest airline alliance with a total market share of 25.1%. Purpose The raison d’être of this study is to quantify and analyze the augmentation of load factors over time, in terms of distribution, as they pertain to capacity performance of allied carriers within Star Alliance. Method In order to fulfill the purpose, a deductive approach to the research has been taken. Furthermore, due to the nature of the data, a quantitative approach has been used within. Two hypotheses will be stated and several research questions as well. Result It can be clearly seen that distribution of load factors has transformed during the years. There is a shift in both the skewness and the kurtosis of the distributions that can be seen when examining the frequency distribution charts. The kurtosis increases and the skew decreases, measures that are positive for the airlines, while the anomalies of 0% and 100% load factor have remained stable throughout the years. A general increase in the average load factors has also been seen. Conclusion By analyzing the empirical findings, it is clear that the load factor of the allied members has increased and that the proportion of the denied boardings decreased in relation to the average load factor. This means that the alternative hypothesis was accepted in the first hypothesis and that the second alternative hypothesis was accepted in the second hypothesis. The research also reveals a generally increased mean which together with the changes in the skew and kurtosis lead to an acceptance of the beta distribution. Furthermore, higher load factors were shown to have a strong correlation with the increase in efficiency and decrease in overselling.