A cost-benefit analysis of Air Malta joining a global airline alliance

Abstract

This long essay sets out to investigate the phenomenon of Global Airline Alliances and what it entails for an airline such as Air Malta to join. It also sets out to investigate the respective costs and benefits that would come along with such a venture and how this may benefit the airline in terms of profitability and passenger traffic. To accomplish this, a mixed method form of research was carried out by utilizing both quantitative as well as qualitative research methods in order to draw upon their respective strengths and triangulate the findings. A series of interviews with persons involved in the supply side of the airline business were conducted as well as a survey circulated amongst a sample of the passenger population who fly with and are familiar with Air Malta. Inherently, the interviews provided insight regarding the costs and benefits that would be involved in Air Malta conducting such a venture while the surveys provided the passengers’ perceptions, thus giving insight from the demand side. With the results obtained, it was found that although the benefits to Air Malta joining a Global Airline Alliance exceed the costs in terms of number, the costs exceed the benefits in terms of value. The results were also put into context of Air Malta’s current financial position in order to properly deduce a rational verdict. With all that in mind, it was concluded that joining a Global Airline Alliance at this point of time would not be a viable act for Air Malta as the costs incurred would be too significant considering it is in the midst of a rigorous restructuring programme. However, that is not to say that joining a Global Airline Alliance would not be a viable option for Air Malta in the future.