Class Activity 19

The One-world Airline Alliance

Professor Ignacio Hernández Medina MCP & MID

Instructions
A) Form teams of five to six members, each one with a laptop.
B) Answer each of the questions that follow in a clear and justified manner.
C) At the end of the class you must upload the activity in Moodle: week 12,
Class Activity 19.
D) Team that does not deliver the activity BEFORE TUESDAY will lose the
participation points of the class.
(EACH DAY OF DELAY YOU WILL LOOSE 10% OF THE GRADE)
Please read the Case and answer the questions:

I. The One-world Airline Alliance

In 2011, American Airlines and Japan Airlines began sharing routes that connected
mainland North American to East Asia. It was similar to other joint ventures. In 2008,
American Airlines, British Airways, and Iberia sought approval for a nonequity joint
venture. These types of relationships are not new but have increased in recent years
due to profit pressures. The major reasons airlines enter into these agreements are to
better control capacity, avoid price competition, and improve gate utilization. No single
airline has the capacity to serve the whole world, yet passengers want to travel the
whole world with a seamless experience. Although deregulation of the airline industry
occurred in the U.S., the government continues to play a large role in oversight and
intervention in the airline industry. These three airlines already belong to the Oneworld
Alliance but want to enter into this joint venture so they can overcome antitrust
provisions that prevent them from discussing and coordinating schedules, fares, and
routes.

QUESTIONS

1) Companies within One-world, Star and Sky Team alliances have also engaged
in major mergers and acquisitions (M&A): Frontier and USAIR (Star), Delta and
Northwest (SkyTeam), and Continental and United (Star). What are the
advantages of M&A versus non-equity alliances in the industry?

2) Some airlines, such as Southwest, have survived as niche players without

extensive international connections. Can they continue this strategy?

3) Why should an airline not be able to establish service anywhere in the world
simply by demonstrating that it can and will comply with the local labor and
business laws of the host country?
4) The U.S. law limiting foreign ownership of U.S. airlines to no more than 25
percent of voting shares was enacted in 1938. Is this law an anachronism, or are
their valid reasons for having it today?

5) What will be the consequences if a few large airlines or networks dominate

global air service?

6) Many airlines have recently been no more than marginally profitable. Is this
such a vital industry that governments should intervene to guarantee their
survival? If so, how?

7) What methods could the three joint-venture partners use to divide revenue and
expenses on the North Atlantic routes?

II. Please answer the 5 following questions, this section must have a
pharagraph of 400 words minimum:

1) Search in internet and find the rules to export avocado to the State of California.

2) Search in internet and find the rules to export berries to London in UK.

3) Search in internet and find the rules to import Gouda Cheese from Holland.

4) Search in internet and find the rules to import Red Wine from France.

5) Visit www.alibaba.com and www.europages.com compare and contrast these

Web sites.

DO NOT FORGET TO INCLUDE BIBLIOGRAPHY PLEASE

Internet bibliographic citations must have these 4 items:

1. Title: “Globalization 4.0 – what it means and how it could benefit us all”.
2. Organization: “World Economic Forum”.
3. Date of retrieve: “Retrieved 22 August 2020”.
4. Link: https://www.weforum.org/agenda/2018/11/globalization-4-what-
does-it-mean-how-it-will-benefit-everyone/

EXAMPLE:
“Globalization 4.0 – what it means and how it could benefit us all”. World Economic
Forum. Retrieved 22 August 2020.
https://www.weforum.org/agenda/2018/11/globalization-4-what-does-it-mean-how-
it-will-benefit-everyone/