Airline
Airline alliances

The first airline alliance was formed in the 1930s when Pan Am and its subsidiary, Panair do Brasil, agreed to codeshare routes in Latin America when they overlapped with each other.

Codesharing involves one airline selling tickets for another airline's flights under its own airline code. An early example of this was Japan Airlines' (JAL) codesharing partnership with Aeroflot in the 1960s on Tokyo – Moscow flights; Aeroflot operated the flights using Aeroflot aircraft, but JAL sold tickets for the flights as if they were JAL flights. Another example was the Austrian – Sabena partnership on the Vienna – Brussels – New York /JFK route during the late '60s, using a Sabena Boeing 707 with Austrian livery.

Since airline reservation requests are often made by city-pair (such as "show me flights from Chicago to Düsseldorf"), an airline that can codeshare with another airline for a variety of routes might be able to be listed as indeed offering a Chicago– Düsseldorf flight. The passenger is advised however, that airline no. 1 operates the flight from say Chicago to Amsterdam (for example), and airline no. 2 operates the continuing flight (on a different airplane, sometimes from another terminal) to Düsseldorf. Thus the primary rationale for code sharing is to expand one's service offerings in city-pair terms to increase sales.

A more recent development is the airline alliance, which became prevalent in the late 1990s. These alliances can act as virtual mergers to get around government restrictions. The largest are Star Alliance, SkyTeam and Oneworld, and these accounted for over 60% of global commercial air traffic as of 2015. Alliances of airlines coordinate their passenger service programs (such as lounges and frequent-flyer programs), offer special interline tickets and often engage in extensive codesharing (sometimes systemwide). These are increasingly integrated business combinations—sometimes including cross-equity arrangements—in which products, service standards, schedules, and airport facilities are standardized and combined for higher efficiency. One of the first airlines to start an alliance with another airline was KLM, who partnered with Northwest Airlines. Both airlines later entered the SkyTeam alliance after the fusion of KLM and Air France in 2004.

Often the companies combine IT operations, or purchase fuel and aircraft as a bloc to achieve higher bargaining power. However, the alliances have been most successful at purchasing invisible supplies and services, such as fuel. Airlines usually prefer to purchase items visible to their passengers to differentiate themselves from local competitors. If an airline's main domestic competitor flies Boeing airliners, then the airline may prefer to use Airbus aircraft regardless of what the rest of the alliance chooses.
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