The year 2020 brought significant change to the airline industry. As airlines struggle to survive due to the COVID-19 pandemic and the resulting economic crisis, they are increasingly finding that there is strength in numbers and that it is better to join forces than to go it alone. To protect themselves from slack market conditions and ongoing financial challenges, they are turning to partnerships and cooperative agreements - even with former rivals.
However, in the case of traditional alliances - Star Alliance, SkyTeam or oneworld - which have already shown stagnant development over the past five years, this trend can be observed only to a limited extent. Instead, in many cases airlines are opting for cooperation on a bilateral basis, even with competitors from other alliances. This course has been significantly accelerated by the current situation, but is not necessarily permanent. For example, LATAM and Azul have been working more closely together in the Brazilian domestic market since August 2020 during the height of the crisis, but announced the agreement would expire after just one year.
Airlines will continue to find that unity makes them strong in the difficult years ahead
While the COVID-19 pandemic appears increasingly under control, the accompanying crisis will continue through the middle of the decade. Faced with this forecast of a slow recovery, airlines will evaluate and adopt different strategies. Many airlines have already opted to permanently downsize their fleets, demonstrating flexibility in their own business models and route networks. Therefore, in order to maintain connectivity, cooperations are essential, but not necessarily to be found within their own traditional alliances. Thus, we will see more partnerships in the near future - from simple codeshares to acquisitions within or outside the own alliance. Whether these collaborations are long-lasting depends on the individual market situation. Being able to rely on partners, whether through existing contracts and alliances or new agreements, will nevertheless be of great importance for the future in a post-COVID era.
Read the full article by Arvind Chandrasekhar, Johann Peter Gies and Luisa Grasshoff in German in airliners.de
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New technical possibilities, changing requirements, social change. Business models in aviation have always adapted to the general conditions - sometimes more slowly and sometimes suddenly and quickly. The airliners.de series "Airline Business Models" in cooperation with the German Aviation Research Society (GARS) analyzes the current changes against the background of climate change and Corona.
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