Swissair's Alliances

Swissair's Alliances Issues and Key Issue In my opinion, there are several issues, the most important ones having been emphasized at the end of the case study. First of all, the creation, with the Maastricht Treaty signed in 1992, of the common market in Europe, corroborated with the fact that Switzerland is not member of the EU, would be leading to the renegotiation of the Aviation Service Agreements (ASA) to which Swissair is part.

Additionally, the common market would mean a much larger market than the Swiss: 350 million compared to 7 million and we may assume that the support from the European Commission and Council of Europe, coordinating bodies of the EU would have been much stronger. A second issues that needed to worry Swissair is obviously related to deregulation, but not only on the European level, but globally. Global deregulation affects Swissair especially in terms of prices.

Until now, Swissair had been strongly relying on its premium strategy and on the fact that it was able to charge extra while giving the impression of better services. Deregulation means a serious and dramatic price competition, especially if we consider the costs involved in the airline industry as well. This may, in my opinion, be considered the key issue. Finally, a third issue may be considered the alliance strategy that Swissair has been adopting. In my opinion, two such alliances are relevant.

The European Quality Alliance, for once, allowed Swissair to maintain its premium levels, while splitting some of the fixed costs, including maintenance and purchase, with some of the other European companies that sold at premium levels. The alliance with Delta and Singapore International Airlines was the second important alliance, equivalent with the presence on the European and Asian markets. 2.

Why is the Key Issue Key? The key issue is key mainly because a business is judged depending on its profitability, according to the fact that the primary goal is profit maximization. The fact that Swissair's price policy may be seriously affected because of the market deregulation may seriously influence Swissair's activity, as it is clear that it needs to make some changes in order to adapt. These changes include, for example, adopting a new long-term strategy where Swissair will no longer be associated with quality.

This needs to be considered as well. 3. Alternative options for key issue The first alternative options would be to go along with the general trend and reduce prices to the levels practiced by other companies. However, such a solution would have several impediments, most important the fact that it would mean that Swissair is no longer offering premium products. The influence on the general customer perception may be rather negative. The second alternative option would be to turn more to cargo transportation.

This may have the advantage of having smaller overall costs. On the other hand, I am not convinced that the profits would necessarily rise, as I would expect revenues from cargo transportation to be much smaller. Finally, a third alternative option would be to continue the present alliance strategy, so as.