Aviation in the Global Context Essay Example | Topics and Well Written Essays - 2000 words

Aviation in the Global Context - Essay Example The first contemporary alliance took place in 1975 when Middle East Airlines went on to form a code sharing agreement with Iberia (Madrid to Beirut). FFP or the first frequent flier program started back in 1980 with Air UK and KLM Royal Dutch Airlines joining hands. The earlier alliances were marked by â€Å"joint flights, maintenance consortia, schedule coordination, ground handling, through fares, management contracts and catering joint ventures. Over time, with the development of computer reservation system (CRSs), early alliances involving joint flights evolved into code-sharing, a popular form of alliance agreement in the 1990s.† (Li, 2000, p. 65) Merger and Acquisition on the other hand was mostly seen in domestic airlines where several small domestic airlines generally came together to form a single body that owing to its size managed to reap of the economies of scale, scope and density. Merger and Acquisition on International scale was not so common owing to the fact t hat in most of the cases cross border ownership is restricted (Giovanni, 2002); as mentioned by Evans (2001) â€Å"non-European Union investors cannot hold a majority stake in any European Union airline.† (Evans, 2001, 234). However in recent times the merger of KLM and Air France with the later taking the main role might be an example that such type of business ventures in not far away (EMCC, 2008, p.1). Furthermore any alliance is incomplete if it fails to get the antitrust immunity (ATI) from the government of the respective country that will enable the cooperation on the financial issues. This paper takes a two way approach to discuss the rationale of airlines adopting a global alliance or Merger and Acquisition strategy (including cross border M&A) with a critical analysis of the strengths and weaknesses of the two approaches. The second part of the paper provides a close and critical view of antitrust immunity that is a culmination of freedom, which is provided to vario us