Net profitability of airline alliances, an empirical study

Abstract

This study examines the net return for airlines before and after joining an alliance. The research database was compiled from ICAOData, and comprised 15 international airlines as subjects and their net financial results for a period of 11 years as primary research variables. Two variables, the averages of five and three years net performance before joining an alliance, were tested against another variable, the average net performance five years after joining the alliance. Results show a deterioration of net profits after joining an alliance, although this trend was only significant when comparing performance over the short-term. However, the performance of American airlines accounted for most of this trend, which may have being partly affected by the consequences of September 11 2001.