Alliance Short film

What are the main reasons of airline companies to form alliances and how the three negotiating parties of the film may benefit from this alliance according to the agreed catering arrangements? Alliance is one of the most popular forms of companies’ integration in the airline sphere. An airline alliance is an agreement between two or more airlines to cooperate on a substantial level. The special feature of alliance is that companies stay independent in their interests and strategy, in spite of the fact that they have signed an agreement. Making an alliance includes different pros and cons. Let’s consider a situation when two airline companies are planning to make an alliance.

What opportunities will such a transaction provide for them? Firstly, the creation of cooperative links with other airlines can maintain, protect and even improve the positions of a particular company in the market in the conditions of constantly growing competition. Secondly, both of them will benefit from cutting costs on sales offices. They can share this department with each other. Thirdly, they will benefit from reduction of costs on operational staff, like ground handling personnel at check-in and boarding desks. Moreover, they can share operational facilities, for example catering or computer systems. They can also outsource these functions to some third party, which can be included into alliance too as a result. We have watched a film about similar situation.

Two big airline companies – Trans West and Air Pacifica – and a catering company Omega are going to make an alliance. The film shows us different sides of negotiations, during which the three parties are trying to work out suitable terms of transaction. Of course each of the companies is seeking for the most beneficial variant for itself. However, they must make a compromise decision and they managed to do it finally. The alternative terms of trade were found in the end of the last meeting. The question is: what benefits did each party get from signing the alliance? I will start considering benefits with the catering company Omega. Firstly, subcontracting Air Pacifica’s catering in UK to Omega means developing and expanding of Omega. This new contract provides a new serious business partner for Omega and will increase its profit margins. Secondly, Omega is going to hire a new Head Chef from Air Pacifica to prepare Asian cuisine dishes. This is also a benefit for Omega, because they had serious troubles with their previous Chef. They will also widen the list of the services which they can offer, because their new Chef has new possibilities.

Thirdly, Trans West is going to increase its spend in catering for Business Class which means that the Omega will receive more money from this company too. However, I think that for Omega this alliance is a real challenge, because it will not be easy for it to deal with new needs of both companies – Trans West and Air Pacifica. The greatest benefit which Air Pacifica and Trans West get from making an alliance is that the passenger flow of both companies will increase as they are expanding their areas of activity. Trans West will get new opportunities in Asian region, Air Pacifica – in USA. Then, what other benefits will Air Pacifica get from participating in this alliance? First of all, it will reduce its catering costs by subcontracting it to Omega in UK. Moreover, it will not decrease the quality of food offering to clients and they will still have a great variety of different dishes to offer. Also, it got some new ideas for future development: the idea of introducing sleeping service.

Finally, what is beneficial for Trans West? After signing the alliance agreement Trans West is going to bring some innovations to its flights. They promised to think seriously about improving the quality of food in business class, also they were offered new ideas of combining First and Business Classes and introducing new sleeping service. These changes in the work of the company will definitely be appreciated by customers and they will choose Trans West more often. Thus, the company’s profit streams will increase. Moreover Trans West Company can benefit from Air Pacifica reputation, which is believed to be an airline which really cares about its clients. Thus, I have considered the potential benefits which air companies may get from signing an alliance on the particular example from the film. Making an alliance gives many opportunities: expanding the area of activity, cutting costs, benefits from partner’s reputation, new business ideas etc. Air Pacifica, Trans West and Omega have finally received signing an alliance, and it is supposed to have a great success in future, giving particular benefits to each party.