Airline industry is quite competitive, even for the flights operating out of Kathmandu, Nepal.

UNAs and UNA lites top destinations, India, Middle Easts, Europe, and China, all has competitions meaning, there is possibility for the monopoly of UNA in the KTM-Dubai route or KTM-Shanghai route. In addition, it would be quite difficult for UNA, a start up of Nepal, to go on an active price war with the competitors, as we are strapped on resources. Hence, it would be very wise for UNA to take the cooperative strategy, in which the company would be able to gain a competitive advantage by working with the other companies within the industry. Since UNA is a young company, lacking resources to compete with giants like Etihad or Thai Airways, such strategy would provide them the opportunity to work with other giants in the industry, and dominate over the competitors. First and foremost, collusion should not be an option. In collusion, our goal would be to turn the market into more of an oligopolistic nature with pricing strategy yearning for the monopolistic status. It is essential an effort of the companies to reduce the output within the industry and raise the price. This strategy would land the company into several legal pitfalls, if not in Nepal then definitely in the western countries. There are many laws including Anti-Trust law, which prevents the companies from forming such collusive alliance. Hence, I recommend UNA to go for a strategic alliance. It is essentially a long-term cooperative alliance between two or more independent businesses for mutual economic gains. Now, here are some of the direct benefits that strategic alliance would provide for UNA: Technology and skill transfer: Airlines industry, from sales of ticket to the operation of the aircrafts, is all very high tech and demands of high level of skill in several parts. UNA would be able to incorporate such knowledge into their operation by having a strategic alliance with some of the foreign airlines. For example, Emirates, Dubai based airlines, is world renowned for its use of Airbus 380. It has hangers and staffs who are the best in managing and making the best use of Airbus 380. Alliance with Emirates would give them insights into managing the Airbus 380 aircraft at a far cheaper cost than if UNA were to do it on their own. Gain access into the specific markets: Since UNA is still at the starting phase, UNA would not be the first choice even for customers flying out of Nepal, let alone those flying into Nepal from foreign cities. For example, a passenger living in UAE may not be tempted to use UNA and decide to fly to Kathmandu with flyDubai or even drive 1 hour to go to Abu Dhabi and fly in with Etihad, or drive 30 minutes to go to Sharjha and fly with Air Arabia. However, by having an alliance with Emirates, it would be a good marketing in the new market to increase the customers traveling with UNA. For Emirates, it would be a gain as well, as success of UNA would hinder its main competitor, Etihads business. And since Emirates does not have a flight to Kathmandu, it should not be a problem for them.

In addition, UNA may not be able to operate the flight from Kathmandu to Madrid or Milan directly because of lack of demand. However, by using Dubai as the hub, UNA can carry passengers from Kathmandu to Dubai and from there, Emirates can carry those passengers from Dubai to Madrid or Milan, as there is a daily scheduled flights in those segments for Emirates. By doing this, UNA and Emirates alliance would be able to attract customers who used to travel with Qatar or Etihad, both which required at least one stop. Reduce the financial risks: UNA, unlike some of its potential competitors, is strapped on resources. Hence, for UNA, one Airbus 320 aircraft would be a significant portion of their assets. Whereas, for Emirates, one Airbus 320 aircraft would not be as significant as it would be for UNA. Hence, with strategic alliance, it would be possible for UNA to lease some aircrafts in the Emirates inventory of aircrafts at a cheaper rate than the market price. Hence, it would make it possible for UNA to expand further at a relatively cheaper cost. Reduce the political risks: From Nepal, Nepal Airlines Corporation (NAC) already operates a flight from Kathmandu to Dubai. Hence, UNA could face regulatory problems when starting a flight into Dubai, which is a very creamy segment for UNA. However, by having an alliance with Emirates, it would be easier to lobby in the UAEs aviation regulatory body or, even win the slot for landing in Dubai over the NAC, which has a very bad reputation for delays and cancellation of flights. With these advantages, it is quite evident that UNA can make the best use of such strategic alliance while expanding its operation worldwide. And specifically, it would be mutual service consortia that UNA should be forming with other Airlines (in which Emirates was used as an example). This is because, for Emirates flying to Kathmandu is not profitable. At the same time, for UNA flying to areas such as Madrid or Milan is not at all profitable. Hence, these two, both in the same industry, can form an alliance and use each others resources for their mutual gain. However, we must realize that UNA would have to be able to grow as a respectable company in order to be able to seek for some alliance with other airlines. Hence, UNA needs to adopt the strategies mentioned in the previous sections to be able to grow to the stage where they can seek for the strategic alliance. Otherwise, no company would be willing to form such an alliance with a company that is already in the verge of failing.