Strategic Alliance - the Case of Etihad and Jet

Simon Heuer

B2B Marketing

2/04/2014

Strategic alliances

The case of Etihad Airways investing in Jet Airways to form a strategic alliance (conducted in October 2013) 1.Objective of the alliance: The alliance was made in order to stand up against the mighty influence of star alliance. Etihad initiated the deal by buying 24% of Jet Airways stakes for an price of 379 million US$. This deal is not the first for Etihad, which forms a strategic alliance in order to increase revenue gross and a bigger field of operation. The business with Jet Airways will open them the profitable Indian market, which was formerly hard to approach due to legal boundaries for foreign direct investment. Furthermore both companies seek cost advantages through economies of scale and increased traffic at their own airports which will be a result of this enormous deal.

!

2.Benefits for each company As priorly said, Etihad gains access to the Indian air travel markets while widening their set of destinations from 88 to (after eliminating the duplicates) 140 destinations. Jet Airways gets the opportunity to set a foot in the US Europe, Middle east and Africa, increasing their destination portfolio from 77 to the 140. The cost advantages will result in millions of dollars of revenue increase for both companies of the course of the upcoming decades. The penetration of a broader array of markets hold great opportunity to succeed in the hard Airfare market. Additionally, with this alliance, both airline will have a better positing against the mighty star alliance

! ! ! ! ! !

"1

Simon Heuer

3.Risks for each company

B2B Marketing

2/04/2014

Speaking from a marketing point of view the obvious risk for both airlines is to loose their competitive edge in their field of business. For Etihad, being known for excellent service (entertaining systems and power outlet for every seat, diamond first class offering lockable cabin for paying customers) and premium air travels,...