This article is part of Lufthansa Consulting’s ongoing series: Shaping flexible organizations: how to deal with COVID-19-induced uncertainties.
Airlines are yet to fully come to grips with a COVID-19-affected reality, over six months since the industry was upended. As they seek to manage short term challenges and build resilience for the long term, airlines are increasingly finding that there is strength in numbers. Hence, among a range of actions to preserve cash and plot their future, they are turning to partnerships and cooperation agreements – even with erstwhile rivals.
Partnerships bring mutual benefit in a time of uncertainty and financial strain, and allow airlines to balance the desire for expansion with the risk of overcapacity. Higher load factors can be achieved by two (or more) cooperating airlines observing mutual capacity discipline. Partnerships could also deliver deeper market access, generate additional revenue streams or drive higher efficiency in sourcing and operations.
The industry was already inching towards partnerships and consolidation in recent years, but COVID-19 has served – and will continue to serve - to significantly accelerate this in order to provide a lifeline to airlines and ensure sustainable recovery.
In this article, Lufthansa Consulting lays out three key types of partnerships one is likely to see emerge through the pandemic
• Erstwhile competitors in a domestic market
• International operators and regional/domestic champions
• Two or more international airlines
We are certain to see more announcements in this context in the coming months – from simple codeshares through to acquisitions – as airlines evaluate opportunities and strategies in the light of a disastrous 2020 and the prognosis for a slow recovery over the next three years.
To learn more and discuss how your organization could benefit from Lufthansa Consulting’s expertise on Airline Strategy and Crisis Recovery, please get in touch.