Air Transport World

GETTING THEIR ACTS TOGETHER.

Alliances create force multipliers-the whole is greater than the sum of the parts- through increased economies of scale, revenue enhancement and market access, It's all good stuff-combined efforts designed to improve the lot of each of the partners-until it comes to the part where it's presented to the customer. Then it gets tough. The natural cost-benefit of joint marketing efforts-putting marketing dollars into a large pot and getting a much bigger bang for the bucks-faces increased customer resistance that offsets much of the leverage size brings.

First and foremost, alliances are formed to gain market share and reduce costs, thus increasing the bottom line (ATW 2/99, p. 24). Serving the customer is not the reason for alliances, but because the goal of capturing a greater market share is to get more passengers, service and the use of that service to gain market leverage are implicit in the alliance movement. The trick is getting the customer to realize that.

"The airlines have to get the message across that service levels will improve under the alliance," says Lou Hammond, veteran airline public relations specialist who heads New York-based Lou Hammond Assoc. "To ensure that the customers realize service is going to be better you have to tie it to value, because the alliance is supposed to save money, allow better scheduling and increase ease of travel."

The means of getting that message across depend on the nature of the alliance. Northwest and KLM virtually have merged their marketing operations, including sales, allowing them to develop reciprocal marketing efforts that Increase their service at lesser cost.

The level of complexity increases with the number of partners for reasons other than the sheer multiplying permutations. First, the amount of equity owned by partner airlines, U.S. antitrust laws and a nebulous Treaty of Rome mean varying degrees of joint market planning are permitted. …

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