Analysis of airline alliance member’s code-sharing cooperation

Abstract

Strategic alliance is an important cooperation approach in which firms share resources to obtain strategic advantages while remaining separate entities. In the airline industry, there exist two kinds of common strategic alliance, namely airline alliance, and code-sharing. The airline alliance is the most popular form of multilateral strategic alliance while the code-sharing is commonly adopted for bilateral strategic alliance. This thesis focuses on airline alliance member’s code-sharing partnership. To be more specific, we explore factors that influence airline alliance member’s choice of code-sharing pattern (codeshare with an airline inside the airline alliance or with an airline outside the airline alliance) and the relationships among contingency factors (firm size, operating scope and duration of alliance membership), code-sharing, and airline performance. To achieve the aims, we first examine the factors that influence the number of airline alliance members’ code-sharing inside and outside the airline alliance by employing multivariate multiple regression. The empirical results indicate that the duration of airline alliance membership and the number of destinations are significant factors. The results also identify that the three airline alliances are not statistically different in terms of the number of their members’ code-sharing partnerships inside the alliance. Second, based on contingency theory, structural equation modeling is used to verify the hypothetical relationships among contingency factors, code-sharing and airline performance proposed in this study. The results show that firm size and the duration of airline alliance membership positively influence the number of code-sharing partners and airline performance. Code-sharing also has a positive influence on airline performance. Furthermore, the results reveal that partial mediation effects of code-sharing occur from firm size to airline performance and duration of airline alliance membership to airline performance.