The Case of Royal Jordanian Airlines in Oneworld Alli

322 Pages·2016·4.28 MB·English

The Impact of Strategic Airlines Alliances on
Brand Management Practices:
The Case of Royal Jordanian Airlines in Oneworld Alliance

Dana Fawzi Kakeesh

PhD

University of York
Management

February 2016
To my beloved father, Fawzi, and my grandmother, Nora, who passed
away just before witnessing this moment.

2
Abstract

The trend over several decades towards the creation of global brand alliances in the
highly competitive airline industry is likely to persist. However, few academic studies
consider how such horizontal brand alliances have been achieved and even fewer analyse
their creation and maintenance from an individual company’s perspective.
Furthermore, current studies are largely derived from a western management
perspective: little work has been done in the Arab world or the Arabian airlines apart from
recent studies of Gulf carriers. This thesis adds to this small body of work by examining
Royal Jordanian Airlines’ role within the Oneworld Alliance. In particular, it analyses
how the entry of a small airline into a large, well-established global organization affected
the airline’s branding practices. The thesis also explores in lesser detail the branding and
marketing strategies within the global alliances.
A qualitative approach was used; purposive and snowball-sampling techniques were
adopted to analyse 61 semi-structured interviews with senior managers and other actors
within the airline industry. Two main themes have emerged: the first theme, the Airlines
Industry’s Attitude towards Brand Alliances, examines the major challenges in the airlines
industry, demonstrates the main motivations behind forming strategic airline alliances and
explores the relationship between globalisation and the initiatives to formulate more
strategic airline alliances. The second theme, the key branding and marketing strategies,
investigates the alliances’ brand practices and marketing strategies and explains how a
small national airline company has responded to this trend and offers a set of potential
choices for future.
Also this study provides compelling evidences of how the Oneworld Alliance creates
branding value for the small airlines member and contributes toward understanding the
case of the Arab world and the interplay between global alliance brands and national
airlines companies. Finally, it demonstrates a number of issues that the alliance members
need to address in order to avoid any brand dilution or negative spillover effect.
3
List of Contents

Abstract 3
List of Contents 4
List of Tables 9
List of Figures 10
Acknowledgments 12
Author’s Declaration 14
Chapter One 16
Introduction and Scope of the Study 16
1.1 Background ........................................................................................................... 16
1.2 Scope of Research ............................................................................................... 20
1.3 Significance of the Problem ............................................................................. 23
1.4 Research Aim and Objectives ......................................................................... 25
1.5 Research Questions ............................................................................................ 26
1.6 Thesis Structure .................................................................................................. 26
1.7 Chapter Summary ............................................................................................... 28
Chapter Two 30
The Case of Royal Jordanian Airlines 30
2.1 Introduction .......................................................................................................... 30
2.2 The Hashemite Kingdom of Jordan and the Region ................................ 30
2.2.1 Tourism in Jordan .......................................................................................................... 34
2.3 The Civil Aviation Sector in Jordan ............................................................... 39
2.3.1 Airline Companies in Jordan ...................................................................................... 39
2.3.2 Air Services Agreements ............................................................................................. 42
2.4 The Case Study Profile ...................................................................................... 44
2.4.1 Background....................................................................................................................... 44
2.4.2 The Status Quo of Royal Jordanian Airlines ......................................................... 47
2.4.3 The Service Components of Royal Jordanian Airlines ..................................... 54
2.5 Oneworld Alliance .............................................................................................. 55
2.6 Conclusion ............................................................................................................. 64
4
Chapter Three 65
Brand Alliances in Airlines Industry Framework 65
3.1 Introduction .......................................................................................................... 65
3.2 Theme One: The Context of the Airlines Industry ................................... 65
3.2.1 Understanding Globalisation ..................................................................................... 66
3.2.2 Globalisation within the Airline Industry ............................................................. 67
3.2.3 Macro-Level Drivers Affecting the Airline Industry ......................................... 68
3.2.4 Definition of Strategic Alliances ............................................................................... 72
3.2.5 The Model of Strategic Alliances .............................................................................. 73
3.2.6 The History of Airline Alliances ................................................................................ 76
3.2.7 Driving Forces behind Airline Alliances' ............................................................... 78
3.2.8 Types of Strategic Airline Alliances ......................................................................... 83
3.3 Theme Two: Branding and Marketing Strategies .................................... 86
3.2.1 Brand Definition ............................................................................................................. 88
3.3.2 Services Branding .......................................................................................................... 89
3.3.3 Brand Alliances ............................................................................................................... 92
3.3.4 Brand Management .................................................................................................... 101
3.3.5 The Potential Future Impact on Allied Brands ................................................ 106
3.4 Chapter Summary ............................................................................................. 108
Chapter Four 112
Research Design and Methodology 112
4.1 Introduction ........................................................................................................ 112
4.2 The Methodological Approach ..................................................................... 113
4.2.1 The Interpretative Research Approach .............................................................. 114
4.3 A Qualitative Approach, Its Limitations and Strengths ....................... 115
4.4 Research Methods ............................................................................................ 116
4.4.1 Case Study Approach ................................................................................................. 116
4.4.2 The Justification of the Case study Approach ................................................... 117
4.4.3 Validity and Generalizability .................................................................................. 118
4.5 Data Collection Methods................................................................................. 120
4.5.1 Interviews ...................................................................................................................... 120
5
4.5.2 Observation ................................................................................................................... 126
4.5.3 Archives .......................................................................................................................... 127
4.6 The Population and Sample Size ................................................................. 127
4.7 Gaining Access.................................................................................................... 131
4.8 The Pilot Study and Analysis ........................................................................ 133
4.8.1 Pilot Study ...................................................................................................................... 133
4.8.2 Summary of the Pilot Study ..................................................................................... 136
4.9 Interview Reviewing and Translation ....................................................... 136
4.10 Organization of Data ..................................................................................... 137
4.10.1 Data Protection .......................................................................................................... 137
4.10.2 Organising and Classifying the Data .................................................................. 138
4.11 Data Analysis ................................................................................................... 139
4.11.1 Coding Process ........................................................................................................... 139
4.12 Challenges of the Data Collections Stage ................................................ 157
4.13 Conclusion ........................................................................................................ 158
Chapter Five 159
Theme One: The Airlines Industry’s Attitude towards Brand 159
Alliances 159
5.1 Introduction ........................................................................................................ 159
5.2 Analytical framework ...................................................................................... 160
5.3 Environmental Pressure ................................................................................ 165
5.3.1 Fuel Prices ...................................................................................................................... 166
5.3.2 Political Unrest in the Middle East ....................................................................... 169
5.3.3 Globalisation of Competition and the Deregulation Effect .......................... 171
5.3.4 Consumer Preferences .............................................................................................. 175
5.3.5 Competition ................................................................................................................... 176
5.4 Strategic Motivation ......................................................................................... 177
5.4.1 Collaborating and Competition .............................................................................. 179
5.4.2 Designing a Global Service ....................................................................................... 180
5.4.3 Impact of Technological Changes.......................................................................... 183
5.4.4 Economies of Scale and Scope ................................................................................ 184
6
5.5 The Core Competencies of Royal Jordanian Airlines ........................... 186
5.5.1 The Niche Market of Royal Jordanian Airlines ................................................. 187
5.5.2 The Travel Experience and the Service Quality Standards ......................... 189
5.6 Inadequacies of Royal Jordanian Airlines ................................................ 191
5.6.1 Limited Budget ............................................................................................................. 191
5.6.2 Some Internal Policies/ Issues ............................................................................... 192
5.7 Conclusion ........................................................................................................... 196
Chapter Six 198
Theme Two: The Key Branding and Marketing Strategies and the Potential
Future Choices 198
6.1 Introduction ........................................................................................................ 198
6.2 Analytical Framework ..................................................................................... 198
6.3 The Brand Management Definition ............................................................ 205
6.4 The Branding Benefits of Joining the Alliance ........................................ 209
6.4.1 Brand Awareness ........................................................................................................ 210
6.4.2 Brand Loyalty ............................................................................................................... 215
6.4.3 Brand Association ....................................................................................................... 218
6.5 Managing the Alliance Brand ........................................................................ 222
6.6 The Brand Alliances Imperatives ................................................................ 227
6.6.1 The Internal Brand Vision ........................................................................................ 228
6.6.2 The Brand Promise ..................................................................................................... 231
6.6.3 Brand Identity .............................................................................................................. 234
6.7 Airlines Services Marketing Strategies ..................................................... 237
6.7.1 Product Strategies ....................................................................................................... 239
6.7.2 Pricing Strategies ........................................................................................................ 242
6.7.3 Distribution Strategies .............................................................................................. 246
6.7.4 Promotional Strategies ............................................................................................. 248
6.8 The Future of Airlines Global Alliances .................................................... 252
6.9 Conclusion ........................................................................................................... 261
Chapter Seven 264
Conclusions and Recommendations 264
7.1 Introduction ........................................................................................................ 264
7
7.2 Summary of the Findings ............................................................................... 265
7.3 Contribution to Knowledge ........................................................................... 274
7.4 Managerial Implications ................................................................................ 276
7.5 Limitations .......................................................................................................... 278
7.6 Avenues for Future Research ....................................................................... 280
Appendices 282
Appendix A – The Major Global Airlines Alliances ....................................... 282
Appendix B - Fleet of Royal Jordanian Airlines by 2015 ............................ 284
Appendix C - Interview Guide .............................................................................. 285
Appendix D – The Main Formal Letter .............................................................. 289
Appendix E – The Information Sheet ................................................................ 290
Appendix F – The Consent Form ......................................................................... 293
Appendix G – The Participants of the Pilot ..................................................... 294
Appendix H – Promotional Materials that Show some of the Possible
Integration between OWA and RJ....................................................................... 296
List of Abbreviations 298
List of References 300

8
List of Tables

Table 1 Number of the Tourism Activites by Location in 2015 ................................ 37
Table 2 Airlines Companies in Jordan ........................................................................ 41
Table 3 Differences between Bilateral Agreement and Open Skies Agreement ..... 42
Table 4 The Frequent Flyer Tier-Match between Royal Jordanian Airlines and
Oneworld Alliance ......................................................................................................... 51
Table 5 Royal Jordanian Airlines slogans .................................................................. 53
Table 6 SkyTrax Rating by Alliance ........................................................................... 57
Table 7 Cabin Update Percentage by Alliance ........................................................... 57
Table 8 the Network and Operations of Oneworld Alliance Members in 2015 ...... 62
Table 9 Alternative Terms for the Main Research Paradigms ............................... 113
Table 10 Five ‘misunderstandings’ of Using Case Study ........................................ 119
Table 11 Matching interview questions with the research questions ..................... 123
Table 12 Sample Distribution and Sampling Methods ............................................ 129
Table 13 Example on Coding a Quotes taken from the Pilot Study ....................... 135
Table 14 Summary of the Main Research Questions ............................................... 143
Table 15 The Parent and Child Nodes of the Second Cycle Coding ...................... 148
Table 16 The Interviewees’ Codes and Type ............................................................ 150
Table 17 The Main Factors of Theme One: the Airlines Industry’s Attitude toward
Brands Alliances .......................................................................................................... 162
Table 18 The Main Factors of Theme Two: The Key Branding and Marketing
Strategies and the Potential Future Choices ............................................................. 201
Table 19 The Main Research Questions ................................................................... 264

9
List of Figures

Figure 1 Thesis Structure ............................................................................................. 27
Figure 2 Middle East and MENA Maps ..................................................................... 31
Figure 3 Total Contribution of Travel and Tourism in MENA................................ 33
Figure 4 Jordan Touristic Map .................................................................................... 35
Figure 5 Royal Jordanian Airlines Network .............................................................. 45
Figure 6 Royal Jordanian Airlines Performace based on the Region in 2015 ... 46
Figure 7 Major Shareholders of Royal Jordanian Airlines in 2015 ........................ 47
Figure 8 The Financial Results of RJ 2001 - 2015 (US Dollar ‘000) ......................... 52
Figure 9 The Network of Oneworld Alliance ............................................................. 59
Figure 10 Types of Strategic Alliances ........................................................................ 74
Figure 11 The Spectrum of Airlines Co-operation..................................................... 77
Figure 12 The Ptotential Benefits Gained from Alliancing Membership ................ 84
Figure 13 Overview of Brand Management (1985-2006) ........................................ 103
Figure 14 Data Analysis and the Coding Process ..................................................... 142
Figure 15 Example Taken From the Model of the Study ........................................ 144
Figure 16 Example Number 1 on How to In Vivo the Transcript .......................... 145
Figure 17 Example Number 2 on How to In Vivo the Transcript .......................... 145
Figure 18 Sample Distribution Percentages ............................................................. 161
Figure 19 Representation of the Main Factors of Theme One: the Airlines Industry’s
Attitude towards Brand Alliances ............................................................................. 164
Figure 20 Representation of the Enviromental Pressure Factors .......................... 165
Figure 21 Jet fuel Price (US Dollar per gallon) ........................................................ 168
10