Acquisitions in the airline industry have mostly been acquisitions of regional airlines by major airline operators. In particular, the major airlines that use the H&S network structure acquire regional airlines that feed in traffic to their own hub airports, aiming to become more effective and dominant in this market. This strategy is frequently seen in the US domestic airline market since deregulation.
Mergers and acquisitions in the EU are seen among airlines that follow a differentiation strategy. Airlines that follow a cost leadership strategy on the other hand, may sometimes go for a mergers or acquisitions strategy as well. This strategy is re-shaping the scale of national airlines and the competition among carriers. The marketing cube
Alliances in airlines, which is yet another strategic practice, requires coordination among carriers on topics such as fares, flight schedules, seat capacity, and marketing activities, so this is actually a model close to mergers. Thanks to strategic alliances, network structures complement one another; the operator has a larger and wider market and thus has more market dominance.
What mergers, acquisitions and alliances give as the greatest advantage is entry new markets. By these strategies, airlines will be able to enter the markets that are not easy to enter, gain slots, and have access to airport slots and gate positions which are valuable resources at airports that have capacity issues and merge their flight networks. Thus, the market grows and expands and airlines become more effective in their marketing strategies. This is why these above-mentioned strategies are presented as significant competitive strategies in the airline transportation market.
Travel Agencies’ Commission: As a result of the freedom in marketing brought to airline transportation by deregulation, travel agencies have become the main tool airlines use to sell their services. Thus, the increasing competition between airlines gave travel agencies the power to seek more commission than they could have asked during the regulatory period. In addition to the commission airline operators pay to travel agencies, they also make special deals with them to give bonus commissions. As a result, major airlines gain more competitive advantage over smaller airlines because travel agencies that are willing to earn more commission convince their customers to purchase tickets from the major airlines with which they make bonus commission deals.
Frequent Flyer Programs (FFP): When frequent flyer programs were first used by American Airlines in 1980, they were regarded as an artificial tool added to attract more attention to advertisements. However, they are nowadays seen as key for airlines to remain competitive in this market The main reason for this is that in the competitive environment following deregulation, it was difficult for airlines to retain customers. FFP encourage passengers to travel with a single carrier for each trip with the miles that it rewards passengers. All airlines that follow a differentiation strategy have FFP.