why did dissolution of the global excellence alliance happen? what are the key issues and true problems?

Question

the global airlines industry has proved to be fertile ground for the formation of several strategic alliances. In 1989, Singapore Airlines, Swissair and Delta Airlines formed the Global Excellence Alliance. Since it brought together three of the world’s top 20 airlines, the alliance received much publicity; it was hailed as the first of its kind and expected to lead to significant benefits for the partner firms. However, by November 1997, Singapore Airlines had pulled out of the alliance, thus dissolving the trilateral venture. Interestingly, neither Swissair nor Delta seemed to express much regret at the dissolution of the trilateral alliance. This case illustrates the impact of three crucial factors, namely environmental developments, shifting internal priorities and strategies, and the congruence between the particular alliance and the overall alliance strategy, as well as corporate strategy, on the longevity of alliance. The case provides a concrete illustration of the benefits as well as drawbacks of alliances as well as the dynamic nature of alliance strategy.

Answer 1

Though main reason could be that all these three airlines earlier thought there territory is different and alliance will complement each other however as time passed, world became small enough to compete and it was not long that there territory started overlapping. This could be misjudgement of the compatibility of operations by the respective partners.

Immediate reason of collapse of alliance was SIngapore Airlines switching to Lufthansa which certainly was not acceptable to Delta and Swiss Air as Lufthansa was their direct competitor. Since Delta and SwissAir were already having alliance through European Alliance, Global Excellence Alliance was cancelled at this stage.