Competitive Airline China

Enhancing Competitive Abilities for Airline Companies in China

Case of Air China

Don’t waste time! Our writers will create an original "Competitive Airline China" essay for you

Create order


This study examines the strategic, performance and learning issues confronting the Air China, in the aftermath of the Open Skies agreement between China and the United States. It uses a comparative perspective of United Airlines to examine Air China and the Chinese airline industry in context of ‘open skies’, and in contrast to the wider global airlines industry. This is a questionnaire based study that uses both qualitative and quantitative data but relies more on the latter. The study is limited in its scope and implications primarily due to a small sample size, and the resulting inability to use inferential statistics. The study provides some focused recommendations on strategic thrusts and choices that could augment Air China’s growth and performance as an international player.

Chapter 1: Introduction

1.1 Background

In the year 2008 the aviation industry forecasts show that Air China is the only Chinese airline that is likely to make a profit. Even Air China – the Chinese flagship airline has been underperforming on international routes for some time now. While air travel is increasing on the backs of economic growth and the Olympic Games, fuel prices and competition under the ambits of international agreements like the ‘open skies’ between the US and China seem to have found Chinese airlines on the back foot for the moment. The fast expansion of the Chinese aviation market has seen investment flow in and international parties becoming interested as partners, investors and competitors in the sector. Chinese Airlines have responded with forays such as exploring alliancing, and strategic restructuring to respond to this duality of opportunity and threat.

The open skies agreement in general implies “unrestricted access by any carrier into the sovereign territory of a country without any written agreement specifying capacity, ports of call or schedule of services” (Murali, 2005). Thus, theoretically, when the skies are open, any foreign airline can land any aircraft at any airport, with no restrictions on frequency and seat capacity. The frame of reference for the US China open skies agreement is the central provinces of Anhui, Hunan, Hubei, Jiangxi, Henan, and Shanxi. As per the terms of the agreement they are completely open to US airlines. Being open to the American enterprise means generous funds flow but harnessing this implies capturing the air routes and the passenger traffic. Major US airlines including the United maneuver to do this with their greater experience, resources and air traffic exposure alongside Chinese airlines. The latter have the advantage of being domestic players and thus have the local advantages that come with the same (Ahmed et al, 2006). Coordination and configuration issues also affect highly transnational international airlines in both positive and negative ways (Porter, 1985, 1986). One is by having greater experience of reaching out to new markets and the other is inevitable increasing challenge of synthesis and adjustment as each fresh market is encountered. The domestic flagship carrier Air China also has the advantage of national prestige just like Lufthansa has for Germany and British airways for Great Britain: “Air China is the only airline company which carries the national flag to fly. It has the first rank of brand value among domestic airline companies (the world brand laboratory evaluated it in 2006 as 18.896 billion RMB), and it is among the leading position of air passenger transport, freight transport and related service” (, 2008). The advantage shows in it being at least better performing than other domestic airlines.

However, the international experience and resource strength of players like the United Airlines is considerable. United operates more than 3,700 flights a day on United, United Express and Ted SM to more than 210 U.S. domestic and international destinations from its hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C hubs (, 2007). With key global air rights in the Asia-Pacific region, Europe and Latin America, United is one of the largest international carriers based in the United States. United is also a founding member of Star Alliance

With the Star alliance, United is clearly in elite company where international code sharing, passenger traffic movements, innovations, and control of international hubs are the forte of a group of heavily resourced carriers. International alliancing is rather nascent as a strategy in the case of Chinese airlines with Air China having but recently joined the Star Alliance. Furthermore, within the Star Alliance also competition is not nullified among alliance partners. With the squabbling over alliances in domestic market viz. between Air China and China Eastern Airlines, the market seems dangerously susceptible to foreign takeovers unless either performance improves or government takes safety measures through anti-trust clamp down. The trust in a government safety net have often resulted in airlines facing major crisis like for instance, the German carrier Lufthansa in 1990s where a leadership change and strategic turnaround of a seminal nature were required to save it (Mintzberg et al, 2003). With the domestic carriers making a loss even for the flagship carrier Air China it is imperative to make sure that it does not sit easy on its asset of existing brand recognition that stems primarily from carrying the national flag.

It is reported, at present in the Chinese and American aviation routes, the domestic operators is relatively disadvantaged. Neither the passenger transportation nor freight transportation have been able to raise profits and even made losses, the situation being particularly acute in the Chinese context. Low occupancy in flights returning from the United Stated is just one reason among other operational and strategic aspects like fuel prices, customer preferences, quality perceptions, pricing, and alliancing effects, to name a few(ATKearney, 2008). Since the open skies agreement the need to strengthen the Chinese airlines competitive position has been seen as key to both the airline industry and to the validation of the strategic intent of China to successfully globalize its key industries.

1.2 Motivation

The aviation agreement between China and the US signals the intention of the Chinese Government to take on global competition for larger gains. With a five fold increase in airline frequency proposed over six years commencing the onset of the agreement in 2004 it is probably the right juncture to examine the state of the Chinese airline industry in the aftermath of this strategic drive. Air China being the flagship carrier makes for an ideal setting to be examined with a comparative frame of reference of United Airlines of the United States. The agenda is to look at strategies, performance, and impact across a range of indicators to reflect on competitive performance, and issues therein for the Chinese aviation industry. The perspective of the China US agreement is also a case that has implications for other open skies agreements that China has entered into like with the European Union in 2005. The consequences of China’s opening up and joining the World Trade Organization in 2001 are also implied in issues, challenges and performance related reflections that are to stem from this study. The motivation for this study in its chosen research site of Air China, in a comparative reference with united airlines in the main, and under the US-China open skies agreement is thus of great relevance to industry and economic scenario.

1.3 Research Questions

In light of the aforesaid the following research questions will deliver the examination of Chinese Airline industry. This in context of the open skies agreement using the case of Air China in the main, with a comparative reference to United Airlines, and with a view to generate implications for the Chinese aviation industry as a whole.

  • What has been Air China’s strategy in light of the open skies agreement?
  • What are the issues affecting the performance of Air China in particular and of the Chinese airlines in general, in the aftermath of the open skies agreement?
  • What are the issues affecting Air China’s global brand development and recognition?
  • What are the lessons that Air China can draw from United Airlines as a sample of what the Chinese airline industry can learn from more experienced international carriers?

The first two research question clearly relates to the examination of Air China’s strategic choices in light of the open skies agreement and how these have resulted in the realized performance. The next question relates to the idea of stretching of the domestically acquired- flagship status based, brand recognition into an internationally acclaimed brand. A key indicator for the same is quality and value that is associated with the brand. The final question is in the domain of lessons learned more-so strategic lessons in the aftermath of the open skies and with a comparative context of more experienced transnational carriers. This completes the loop by looking at learning in context of strategic choices and performance

1.4 Outline of the Dissertation

This dissertation presents a literature review in the next chapter. The chapter takes off by a review the global airline industry, open skies agreement and the airlines under purview with reference to past information and research. This is in addition to and an extension of the background presented here. The literature review then contextualizes extant research – broadly in the areas of strategy, organisation learning and transnational aspects as discussed under the discussion on research questions above. The methodology and approach chapter that follows the literature review moves forward to discuss how the indicators from a synthesis of the literature review are developed into an instrument, and associated, data, sampling, approach and methods in analyses aspects, among other aspects. The findings chapter provide an objective outlay of the analysis from a questionnaire study and then the discussions chapter provides and interpretative discussion on the same. Finally the conclusions reflect back on the aims of the research as operationalised under the research questions to also provide recommendations for strategy and for future research in the area.

Chapter 2: Literature Review

2.1 Global Airline Industry, Open Skies and Air China

The AT Kearney’s (2008) report on the global outlook for the airline industry presents several noteworthy points. It posits that returns are lower than the cost of capital, and that oil prices have caused a dramatic decline in US business conditions with consumer confidence at an all time low since 2001. It further argues that growth looks better in emerging markets like China, tight credit norms are affecting U.S and Europe while excess capacity is a big issue to tackle with efficiency lifts being very critical across the board. In addition the argument for open skies to intensify competition is also driven home. This comprehensive scenario suggests that there is an opportunity for airlines in the growing/emerging markets to usurp dominant international carriers if they pull their act together. The overall crisis scenario has more negatives for the bigger carriers that are outside emerging markets. However, experience, network and resource muscle are keeping them ahead. The Chinese airline market is probably the biggest opportunity to gain fresh turf and revenues given its relative robustness in recent times.

The Chinese flagship carrier ‘Air China’ today is the new generation of what was the “Air China” established on 1988. It has come together as a merger of the erstwhile Air China, National Aviation Company and China Southwest Airlines. With this strategic reshaping event in the aviation history of China that happened in 2002, air China has taken giant leaps in trying to become a globally recognized player in the airlines industry over a short time frame. Its sustained profitability is a matter of pride and a signifier of the potential in and of emerging markets. Despite global downturns in profitability which have been a concern for Air China also, its performance is much better than most other global and all domestic players (, 2008).

The company has strategic targets that indicate its ambitious designs despite its nascent lineage. However, these, that of competitive lead, continuous quality, service and profitability improvements with unique and memorable experiences for customers (, 2008) are but rather generic across airlines and also conjoint agendas. Operationalising this strategy has seen quality impetus that we will discuss later, trying to learn from and network with other airlines, among others. This national carrier of China has joined the Star alliance in 2007 and its cooperation with leading airlines around the globe has seen it expand massively to nearly nine hundred locations around the globe. It has its catch phrases to help keep strategy and performance feedback simple and translatable into new initiatives and improvements. One such aspect is to do with service and is called ‘four hearts- implying reassurance, satisfaction, easiness and sensation’ (, 2008). Other configuration aspects that link with the sales network expansion, working to fine tune the much used frequent flyer tactic, and using supplier and partner networks to improve capacity utilization and efficiency.

It has tried to outdo professional and technical capacities deployed by international airlines, whether it be pilot and staff training, motivating service operations and innovations through awards, and as aforesaid, using symbolic emblems for quality in general that can make the strategic intent transmittable through the organisation at all levels. Branding at a global level has always been a concern worked at audaciously with domestic dominance never being in question (Ahmed et al, 2006;, 2008).

In 2007, Air China reported an increase of about fourteen percent in its operating revenue. The growth in passenger and cargo services fuelled by economic growth and also the impending Olympics seem to have contributed. Managing efficiency to make sure that capacity utilization and efficiency in operations given the fuel crisis deliver to their best might have paid off to some degree. However, rising operating costs have taken hold given the oil price scenario. While hedging has helped counter fuel price impact it is not a stable measure (ATKearney, 2008). The current scenario is not bleak by far – the overtime trends are of concern given the uncertainties that prevail in the aviation market and the intensifying competition under the open skies agreement.

Air China has focused on transfer traffic to increase passenger uptake while opening up steadily on international routes. Nearly thirty five percent of its routes are now international operating across nearly thirty countries. The revenue chunk from domestic operations stills makes the bulk. Having joined the Star Alliance recently Air China has made path breaking improvements in quality, service and has upgraded both its fleet and support infrastructure like under the new terminus at Beijing also hosting the alliance. The operating performance of Air China is markedly higher than other Chinese airlines including Eastern China Airlines. Domestic competition had defeated efforts at alliances here but the climate of uncertainty that has had international airlines pitching for co-operation saw Air China enter the prestigious Star Alliance. The inclusion was also triggered by promise in the emerging markets as aforesaid.

Being the largest carrier in China with over 20000 employees and well trained crew who are more abreast with international service norms and issues holds Air China in good ground when making internationalization efforts. Domestic market is a stable resource mooring for the Airline that seeks to become a globally renowned brand in the industry. It makes for a perfect alliance partner for international majors given that at the onset of the decade China was recorded to have the highest percentage increase in passenger traffic of about 11.50%. US on the other hand had the lowest at -6.30% (Ahmed at al, 2008). Since 9/11 things have finally shaken the slumber in the U.S but fresh crisis of rising fuel prices and capital crunch have nullified the recovery.

2.2 United Airlines: The lineage and Chinese Context

United is one of the oldest airlines. It claims its genesis in W.T. Varney’s airmail operations in the later 1920s. United went with the fortunes of the times whether it be the Wars or the economic boom thereafter which saw rapid expansion on the one hand and monopolistic competition on the other. The 1970s were true crisis times for United as it went through several leadership hands and tried to remain afloat during turbulent economic times. The era of stability thereafter has seen United become the largest employee majority owned company in the world. While this has had positive implications on service quality, it is also not without its downsides. Arguably employee lobbies resulted in factionalism at times but overall the service philosophy due to this ownership has taken great leaps, and the ‘friendly skies’ slogan got replaced with a more ambitious slogan of ‘rising’. This was probably as much aspiration based as it was given deregulation across the World. New economies and markets beckoned with domestic competition being as intense as ever. The 9/11 crisis probably hit the United the hardest. However, with government support, employee cooperation and smart financial management United managed to stay afloat and recover as a strong player in the international market. While it shares the industry downturn of recent times, experience and employee ownership hold it in good grounds to face competition and explore new markets (, 2008).

In March 2008 United Airlines won the duel with other US based airlines like the Continental- to run daily flights between Washington D.C and Beijing. The implications for the United home – the Dulles airport is massive. This includes a boost through employment among other things much needed in the slumping economy. With the Beijing Olympics then just around the corner this meant even more money. Despite the open skies agreement the number of carriers from US in Chinese air space are limited by the government and the routes that open up thus draw fierce competition amongst prospective airlines (, 2007).

Besides increasing communication, this has special implications for international carriers that are facing the brunt of global oil price rise and uptake of luxury class travel (ATKearney, 2008). The forecast of emerging markets being the place to be discussed before has seen airline industries queue up for the Chinese airspace. The success is not only in winning amongst peers but also by getting a bulk of revenue off Chinese airlines like Air China who have local advantages but when it comes to international travel where the clientele is mixed they have less experience.

The bids draw great political clout that pitch in with one airline or the other. With nearly 90000 people moving between China and Washington the market is serious. Us airlines like Continental, American and Northwest are serious contenders for the overall Chinese air space and are carving out their own niche for instance the connection between Shanghai and New York that continental offers (Asia, 2007).

The star alliance connection between Air China and United comes to the fore here as this alliance allows United to access more routes around Beijing. Clearly the alliance has a cooperation agenda at the fore but competition remains within alliance partners also. On the one hand they rope in customers based on loyalty points, better cumulative resource strength, and wider route configurations, among others – while on the other they vie for getting more and more alliance passengers as primary to themselves.

2.3 Network effects, Quality and Service Value

Quality drives with an international value paradigm are a key indicator of aspirations to become a globally renowned brand. Network effects like that of prestigious alliances and by virtue of passenger traffic in the area given events such as the Olympics and generally favorable economic climate also augment the potential.

Air China identified key business activities to enhance service quality and by extension value perceptions in customers. These were: “flight service (including off flight), people management (employee satisfaction leading to better customer service); supplier network management; technology adoption and integration; passenger perception management; and customer satisfaction measurement and complaint handling” (Ahmed et al, 2006).

Under these, customizing services for individual customers is considered important. At the same times basic satisfying aspects are to be ensured before specialist and high order services are to be configured. This is in line with the ‘hygiene -motivators’ theory of Frederick Hertzberg (1959). Working to deliver a unique experience through incorporating attractive cultural aspects that are also internationally appealing has also been on the agenda fueling creative insights and challenges in the process. It has not been without innovation meeting efficiency and operational bottleneck for example to stretch customer choices by providing onboard menus that met with some embarrassing failures to keep adequate stock of items. This was reworked with considerable focus on database management to record past preferences. Employee satisfaction and involvement at this stage is pivotal as they are central to service and in the airline business front end employee interface is critical for repeat business and reputation building. The people management agenda at Air China is closely juxtaposed with quality, the role of the manager in tying together people, and productivity and excellence stemming from motivated employees are all key tenets practiced with the adage that performance and quality issues begin at the top (Ahmed et al, 2006).

As far as network effects are concerned the company seeks to establish long term relations with suppliers for stability, assuredness and cost effectiveness. The product life cycle of the key artifact the aircraft also merits such an approach. Improvement needs, maintenance needs and incorporating new technology are connected issues where in-house capabilities are also important. The excellence 2008 programme works to look at technology as a nonhuman aspect and emphasizes the need for connection with people as pivotal in realizing developing capabilities. Processes and initiatives are kept simple for easy of delivery and communication – from the staff and to the customer respectively. The network effects Air China seeks stretch out to the customer through loyalty programmes and horizontally to partners with exchange and amalgamation of routes, loyalty points and information among others (, 2008).

Brand image as a natural and desired culmination of the aforesaid efforts takes number one priority, followed by scheduling which is closely connect with capacity utilization and efficiency. Interestingly pricing is at number six preceded by on and off board services and plane model (Ahmed et al, 2006). Clearly the agenda is to drive on quality first and be realistic about the associated price. This is a model very distinct from low cost short haul airlines and also some airlines in other emerging markets like Russia. This is also a bold step that underlines the agenda for brand recognition through quality and service value with a close perspective on customer needs.

2.4 Organisational Learning: Strategic Choices and Performance feedback

Organisational learning is understood as learning within the organisation and is complimented by the idea of learning by organisations as a distinct concept (Cyert and March, 1963; Senge, 1990). Overall the literature on learning with reference to organisations has a rather expansive lineage that is outside the scope of this study. In context of this study it is important to keep in mind the context that of learning from competitors and partners, learning from the experience of initiatives like those related to quality within the organisation, and learning from past direct and indirect experiences to counter environmental threats. These three issues will be central to the main research site Air China in context of learning. Competitive, growth and recognition aspirations that we have broadly contextualized so far will be of concern

The literature on organisational learning and learning by organisations as distinguished above can be viewed from several lenses. The first is the human development lens which is at the heart of Air China’s people management orientation that drives everything else. The emphasis on simplifying inputs, delivery and adoption are all tied into the concern of this perspective. The individual’s orientation, capacities and motivation to learn are at the core of this lens. Also the stages and enablers that make learning effective are design issues to be implemented and monitored (e.g. Kolb, 1979; Argyris, 1978, 1986, 1992; Talbot and Harrow, 1993; Dixon, 1994).

The management science is essentially about information management. It is important to generate feedback from processes and operations again an important but not central issue. This is because while people management is supposed to motivate this automatically at Air China, the importance of effective processes to say generate employee and customer feedback cannot be ignored (e.g. Huber, 1991; Nonaka and Takeuchi, 1995).

There are other lenses like the one that looks at organisation as a societal being and another that considers organisation from a productivity perspective only as far as learning is concerned (Easterby Smith, 1997). Both have consequences for efficiency and performance but alone do not suffice to deliver the needed learning for sustaining performance (e.g. Pettigrew, 1973; Hedberg, 1981; Talbot and Harrow, 1987; Buzzell and Gale, 1987). Easterby Smith (1997) has generated other perspectives from his extensive review of the growth of body in learning with reference to organisations. These include cultural and strategic lenses that are critical to appreciate given the globalization agenda to hand. The cultural multiplicity within organisations and the areas they operate is juxtaposed with increasing competitiveness as globalization becomes the order of the day for design and configuration of organisations and their goals (e.g. Shibata et al, 1991; Hamel and Prahalad, 1989,1993).

While I explore these lenses here in context of the Chinese aviation industry and Air China in particular it is useful to refer back to the comparative frame of United Airlines being used. The context of learning also becomes important as experiences, the feedback and the realization of this feedback into improvements are not imitable but need to be adapted (Nickerson and Zenger, 2002; McDermott and O’Dell, 2001). With Air China drawing on conventional strategic and tactical threads used in the airline industry to fuel its mindset in this nascent stage of development care should be taken to recognize that it is a different organisation especially when indirect (experience of other airlines) are learned from (Schwab and Miner, 2001; Rogers, 1997).

This is important because learning needs to translate into fine tuning the strategic frame. Choices that work need to be distilled from choices that don’t. However there is the simplicity agenda to contend with here (Miller, 1993). Overtime this implies bracketing and focusing on an industry wide panacea or select aspects which are considered pivotal to performance while others are made dormant. A non-performing element whether it be pricing that takes a back seat to people management may be the cutting edge one is looking for when the aspect of employee management has been honed by all competitors to an extreme. Innovations lie in such dormant aspects and creativity within the organisation needs to be fuelled to encourage bouncing of new ideas outside the confines of what is taken as doing well in the present time (March, 1991; Miller, 1990, 1993).

The globalization agenda makes this even more crucial as performance feedback is subject to more ambiguity than ever before. Outside once domestic arena interpretation of performance is often more difficult and mistakes can be costly. For Air China its bold steps like alliancing, technology and excellence drive that seems to be driven around dominant features of what has worked in the Airline industry may be risky. The learning agenda from United that is decades older than it could be to examine the shocks it faced when threading a similar path rather than what works for it and other more experienced transnational airlines (Mintzberg, 1979)

2.5 The transnational context: Establishing global recognition and competitiveness

Globalization is a phenomenon that most industries and major companies therein choose, strive for and adapt to. On the one hand lies the legacy of domestic or local experience and competencies shaped in that mould, while on the other lies the challenge to customize and adapt this ‘strategic configuration’ to market realities of different international markets (Mintzberg, et al, 1998; Mintzberg, 1979). The multiple subsidiaries and spread across countries creates the need for multidimensional competencies that are flexible. These also come with the principle competency of being able to choose the right mix and leverage it to local realities. The relationship between intermediaries and with the parent /home unit is important resource strength. The perspective of being able to adapt, and at the same time identify with the parent organisation brings to the fore the important aspect of creating a balanced interdependency (Bartlett and Ghoshal 1987). Going trans-national thus needs to be a carefully crafted initiative with the aforesaid issues and a host of variables to be considered. These variables include the economic climate, and industry level variables.

Baden fuller and Stopford (1991) provide a set of considerations that impact on the profitability of a global strategy (figure 1). While these are generic considerations that point that is again emphasized in shaping of this framework is that competing in the transnational market is a very distinct foray than domestic competition. Being a domestically profitable and successful firm will not imply that the same success will be repeated in the international market (Rangan, 2000). The company has to carefully stretch and leverage (Hamel and Prahalad, 1993) its value set and configurations (Prahalad and Hamel, 1990) so as to maintain a balance between the stability of its configuration and at the same time coordinate the diverse subsidiaries to gain maximum synergy and interdependent benefits (Porter, 1986). Air China with its nascent lineage that goes back just two decades, in its present form it being around for only a few years has a lot of lessons to draw on. Its dominance as the domestic player in China has spurred it on but its transnational success is still an early call to make. The importance of being part of the Star alliance brings a novel perspective to going transnational. The interface with more experienced airlines and the trade off of benefits from hosting each other in home countries is mutually beneficial. Alliances are crucial not only given the airline industry needs but also they bring a novel enabling and risk averse perspective to global business. How this tells on competitiveness amongst the partners is also rather unique in the case of the airline industry (Shaw, 1990).

Figure 1: Profitability of Global Strategy


consumer choice –



Concentrated national retailers with

Buy-local preferences


declining production scale


Entrenched national incumbents

Regulation: growing trade barriers

Profitability of a Global Strategy

Baden-fuller, Stopford, 1991

Finally, the global local dichotomy extends to the idea of global recognition as well. While being a national carrier helps the importance of being able to associate brand with value and quality as against just being symbolic and prestigious in a national context, is important for business (Mintzberg et al, 2003). The associated artifacts with the brand e.g. the way United has chosen ‘rising’ as the slogan to go with brand, also matter. Numerous trans-national businesses like the HSBC bank plc and Chupa Chups have benefited greatly from a careful orientation on configuring the brand and associated artifacts. Needless to say these are just supporting aspects and cannot take off unless the basic premises of customer satisfaction and business performance are first taken care of. The alignment of these with strategic thrusts of the time is crucial for creating a clear image, value perceptions and expectations -both within and outside the firm (Child, 1972).

2.6 Conclusions

This literature review has looked at the industrial context and relevant studies and sources associated with it. The reflections are tied in around the US-China open skies agreement and the two Airlines under focus- Air China (in the main) and United Airlines (as a comparative frame of reference). This is then contextualized with literature that looks at opportunities, change and performance in context of learning and performance feedback, and also the transnational context. Synthesis from this review has helped shape the questionnaires used to inform this study (Appendices A-E). The next chapter provides the approach and methodology that this dissertation has deployed and includes among other routine aspects, further insights into instrument development, sample and methods in analyses.

Chapter 3. Approach and Methodology

This chapter outlines the process and methods that have enabled this study. The chapter first profiles qualitative and quantitative methods, and then it discusses the sample and data prior to the structuring of questionnaires for this study. The chapter also presents some discussion on methods in analyses, some methodological limitations and the time plan under which this study was conducted.

3.1 Qualitative and Quantitative Approaches

The evidence for a study and the questions it posits lie in data that are collected in context of the study and are subject to analyses. The design of collection and analyses can either be focused upon meaning and subjective appreciation and interpretation or alternatively, on measurement using indicators that approximate, say for instance, the extent of alignment with assertions . The former is associated with an inductive approach and posits itself as a more robust alterative to the scientific premise and positivists approach (Saunders, et al 2003; Kolb, 1979).

The deductive approach works at more objective interpretation looking at ‘What’ while the inductive approach concerns itself more with the ‘hows’ and ‘whys’. This study engages both approaches but is dominated by the deductive approach as it seeks to decipher the consequences stemming from a phenomena or instance more than it seeks the reasons behind those consequences. Furthermore, the interpretative realties of qualitative research that looks at ‘meanings’ are much nuanced and thus rather complex to validate when a multitude to stakeholders with different profiles are included (Taylor and Bogdon, 1998; Creswell, 2003)

3.2 Sample, Data and Access

The sample for this study included a total of 34 respondents. Of these 2 were top management personnel at Air China, 10 each were customers who had last flown Air China and United Airlines respectively, and 8 each as staff of Air China and United Airlines. An attempt was made to keep a spread across ground crew, stewards and lower management levels within this limited set.

The sampling was ‘purposive’ as the nature of stakeholder categorization indicates. It was also ‘convenience’ sampling as availability was an issue. To some extent ‘snowball’ sampling was used for staff interviews where access was difficult. Personal references created a biased but provided much needed respondents (Saunders et al, 2002).The customers were contacted after flight at the airport and in a couple of instances on board. The ground crew and management were contacted at airports and in two instances on board.

Secondary data was collected using past research on the industry and airlines using web sites, academic papers and industry reports. This also shapes the literature review. Primary data as under a questionnaire sample study was collected using a set of five questionnaires across respondent groups. Designed using a synthesis from review of industrial information and extant research, these are provided as appendices to this study and enumerated in the section to follow.

3.3 Questionnaire- Instruments

Of the questionnaire instruments across the total of five respondent sets the questionnaire for top management at Air China was aimed at qualitative data using ‘open ended’ questions. The other questionnaires were all predominantly structured as ‘close ended’ tools with scope for comments to rationalize choices if the respondent chose to (Brynman and Bell, 2003). The questionnaires for customers were deliberately sharp and focused given the paucity of time with, and inconvenience it may cause to, passengers coming off flights. These questionnaires could not be pre-tested given that respondents for the main data collection exercise were difficult to find in the first place. By extension, using some of them for pre-testing was throwing away critical respondents from the small sample that was eventually accessed. The customer questionnaires were however, administered to colleagues and peers to compensate. This was under the assumption that their reflection of flight experience independent of research sites could at least provide cues to improve the structure and content of the instruments. Some useful feedback here resulted in reduction of the length of the customer questionnaires from their initial draft. This also helped include some profile related aspects despite reservations about their utility if the respondent set was small, as indicated in the initial proposal and as it turned out to be. These instruments are as listed in appendices and benefit from the literature review that examined conceptual, industrial and theoretical aspects to inform the questions and indicators therein.

3.4. Methods in analyses

Deductive approaches based on close ended questionnaires benefit from inferential statistics (Saunders, 2002). However, in this study, the low sample size has allowed for only descriptive patterns using tools in Microsoft Excel. The open ended questionnaire was also limited to just two top management people and sophisticated techniques like textual analyses were too extensive to use on the limited assertions made (Barthes, 1967, Saunders, 2003). The assertions were instead distilled using a carefully scan of the comments. Finally, the multiple sets of respondents helped moderate this lack of robustness due to low sample size, perceptions could be useful compared across questionnaire groups for interesting interpretations that are reported in the findings chapter to follow. This has helped present sharp and focused discussions in the chapter thereafter.

3.5 Limitations in Approach and Methods

The approach and methods required access to people at work or in travel, or just after travel. This was inconvenient from respondent willingness to answer and even from an ethical point of view. The respondents were not insisted upon in any way and were spoken to about their willingness when they were relatively relaxed. The sample size is much less than critical for robust statistical analysis and this is a constrain of this study which is as a consequence is of an exploratory nature only. Statistical methods deployment is also by extension limited to pattern and graphical output across average score. Variance in respondent perceptions wherever high has been mentioned, but within the limited sample size it is unlikely to be of any consequence in improving robustness.

3.6 Time Plan

The time frame for this study and the study progress as also reported in the initial proposal is as follows. The study more-o-less kept to this time plan apart from a slight underestimation of the time it took to collect data.

Figure 2: Gnatt Chart of Activities

April 01 -15/ 15-30

May 01-15/ 15-31

June 01-15/ 15-30

July 01-15/ 15-31

August 01-15/15-31

Sep.01-15/ 15-30

Formulation of research



Literature review





Secondary data collection






Primary data collection






Analysis of data






Writing first draft





Writing final draft





Chapter 4. Findings and Interpretation

This chapter presents the results from the questionnaire studies. Questionnaires are listed in Appendix A to E as per the Questionnaire labels below. These five questionnaires administered to Air China Employees, Top management at Air China, Air China Customers, United Airline Customers, and United Airline Staff are sequentially discussed in the sections to follow.

4.1 Questionnaire A: Air China Employees

This questionnaire administered to operational and lower middle level management staff at Air China sought their perceptions over a series of five questions with sub items therein. The first question on improvements at Air China in the aftermath of the open-skies agreement with the United States presented the following pattern:

Figure 3

The average likert scores (on 1-5) as the only option in a limited sample of eight for this questionnaire shows that- fleet maintenance and people management have been easy or by extension, successful areas of intervention. The ‘ease of’ orientation of the question has been a proxy to an extent- to examine easy to do, and realized successful intervention areas. Supplier management and passenger perceptions management have both been difficult areas to manage. Responses indicate that innovative solutions and experimentation with in flight services intended to establish competitive differential with other airlines have not always met with success. On the supplier management front it seems that though long term relationship is a focus it is not always conducive to the orientation of the suppliers. Furthermore, some critical suppliers by virtue of the quality of input and criticality of input hold power over contractual decisions especially with other major airlines entering the Chinese airspace. Among others in the chart, information systems area has been on the higher side of the spectrum of successful interventions. This is in part associated with aspects to do with the fleet maintenance and upgrade as part of a holistic initiative. In flight and off flight service are just about the middle zone and coming from employees it is clear that they also see a challenge in raising it to higher levels: factors that are again closely intertwined with the issue of customer perception management.

The second question in this questionnaire dealt with seeking agreement/ disagreement perceptions about management efficacy across a range of areas at Air China. The results provide for the following pattern:

Figure 4

The management of flight schedules seems to have performed well followed by alliancing the most recent and significant of which has been Air China’s inclusion into the Star Alliance. Fleet management and marketing and promotion for global recognition are just about the mid tier (on a 1 to 5 scale). In association with results for question 1 where fleet maintenance issues have been seen as easy to deliver this suggests management has now turned its attention to other areas. This is given that fleet management, maintenance, upgrade and allied issues are at an adequate level and not considered critical performance areas. Brand image fares poorly and in association with the marketing and promotion adequacy perceptions it seems that there is more to brand image than marketing and promotion. The relevant comments also seem to suggest that while investment in marketing and promotion is there brand image has not been linked well with cross-cultural issues and realized service quality- which lies at the core for successful translation of a propounded image to its acceptance as such by the global customer.

The third question that dealt with initiatives that would help improve learning environment and performance feedback utilization at Air China found the above assertions validated. Of the eight respondents all mentioned increasing interface with the customers in the top two priorities. The fascination with legacies of much senior (in age) international airlines seems to have translated in an emphasis on customizing and replicating best practices in the airline industry as the next favoured option. This was in the top two with four of the eight respondents and, additionally in the top four by the remaining four respondents. Employee ownership of processes and decision making came a close third with being mentioned in the in the top two by three respondents and, additionally in the top four by two other respondents. This links with the employee ownership processes in practice at many western carriers including United Airlines and validates the assertion about replicating industry level phenomenon to harness success. Other factors which shaped the choices set in this preference order question were: simplifying procedures and systems, improving training and education within the organisation, setting up feedback and monitoring (they already exist and the question was taken as setting up further systems), and alliancing in that order of prevalence in responses. This ranking should keep in mind that the ones that were already in place rather robustly were not considered worthwhile to invest in further. Interestingly with this assertion in mind, cross functional working and experimentation (implied by exploring outside conventional in item 8) did not appear in any responses. This links with the difficulties in linking experimentation to successful cutting age breakthrough in service, and with the overt emphasis that already exists under the people management orientation on cross functional teams.

The fourth question dealt with the perceptions about what had contributed to Air China’s international growth over the last two years. The results as presented in Figure 4 below show an interesting pattern

Figure 5

Being the flagship carrier of China and adoption of new technologies that includes the idea of upgrading infrastructure and investment in systems are seen as central drivers that have led to growth so far. Domestic strength and presence are also cited as having been important. Interestingly creativity and innovation is also high on the chart of its contribution to past growth, an agenda that previous results suggest has been difficult to link to performance now, and is not really preferred for further investment. Strangely while alliancing has increased the spread of the airlines it is not on top of the list but makes the bottom along side multicultural sensitiveness- both thus not being seen as pivotal to growth so far. This rationalizes that fact that these are in turn key concerns now – that they matter for the future of transnational agenda in present times as asserted by earlier results.

The final question of the employee questionnaire for Air China seeks suggestions about how Air China can work to maximize its gains from the open skies agreement. There is no spread in pattern here as six of the eight respondents under a novel prioritization structure that the question provided, preferred gaining knowledge and experience from working with more experienced partners as on top of the list. The other two also had this as number two on the list of five items. The allied suggestion of international exposure for staff came second on the list with being in the top three for all and in the top two for three of the eight respondents. The other suggestion items were uniformly spread out with suggesting creative groups to think outside the box (item 5) being just pushed to the bottom relative to others.

4.2 Questionnaire B: Air China Top Management

This was a purely qualitative questionnaire seeking open ended responses on issues aligned with the research questions. It was delivered to two top management personnel both of which had not filled in Questionnaire A (given paucity of time no top management personnel filled in Questionnaire A and their responses are limited to Questionnaire B).

The central issues highlighted for the first question were rather ambiguous and difficult to summarise. This was about how successful Air China had been in delivering benefits for itself and its customers in the aftermath of the open skies agreement. Going over the text of interview again and again and distilling points that were close to the question asked, the following seem to be an adequate representation of the answers:

  • Air China was seen as an equal partner with the US Airlines, and is hosting them in a relatively booming domestic market. This to build relationships that will allow Air China to seek revenue generation on international routes in the long run.
  • Localized dominance and profitability is fickle and the open skies agreement equates to being able to spread market risk despite the airline industry across the globe responding to fuel prices, accidents and the capital market.
  • There is a strong base backed by the government’s and media’s projection of Air China as the national carrier that has translated into greater prestige in flying Air China on international routes.

The central issues highlighted for the second question about factors affecting overall growth and performance of Air China had clearer responses that can be summarized as:

  • Strong domestic base
  • Coming together of resource strengths in the aviation merger that brought new Air China into being
  • Government patronage
  • Willingness to learn and experiment
  • People management /excellence programmes seeking continuous improvement

The third question on issues affecting global brand development and recognition for Air China mimicked several of factors raised for the second question. However one critical point that was raised by the respondents in addition was the ability to create a service quality premise that appealed to the global customer with a capability to customize it to the individual customer as and when required. Another factor here was being able to engage with and better internalize the experiences and practices that were associated with performance in the global airline industry.

The fourth and final question of this questionnaire led on from this assertion about lessons from more experienced airlines, but was again not clearly articulated. The respondents kept talking about the international airline industry and not more experienced airlines. On further discussion one of the respondents clearly cited the reason as being able to learn to recover given the event specific crisis the international airline industry has faced. Another aspect mentioned and discussed at length was to acquire capabilities through exchange and observations while retaining and protecting what they were better at- a nearly textbook answer around competition and capabilities.

4.3 Questionnaire C: Air China Customers

This questionnaire examined views and perceptions of Air China customers in relation to their flight experiences. Of the ten respondents two had availed of frequent flyers with Air China and all had flown internationally in the last year. Though not part of the questionnaire four of the ten respondents were Chinese nationals. The segmentation was not of much consequence as the low sample size just sufficed for presenting descriptive patterns.

The first two questions were about rating Air China and its competition across a range of attributes relating to service quality and customer satisfaction. The results provide for the following pattern:

Figure 6

Clearly Air China is doing markedly better in terms of value for money and some service attributes like gate access and in flight accommodation (investments in fleet and better capacity management). The latter maybe biased because of the home base site where the responses were gathered. The communication, punctuality and other service aspects including pre, in and post flight are nearly on par with other airlines. While the pattern is on the whole positive it indicates that there is no real differential that Air China can be very excited about in terms of outperforming the competition ‘significantly’.

Figure 7

Clearly Air China was seen as a viable alternative to American carriers which amounts to it being on par in terms of seeking benefits from the US China Open skies agreement in the long run. Also while being the national Chinese carrier was a key non-replicable asset the indistinguishable service levels were reasserted in responses to whether Air China was a unique flying experience or not. Customer recollection of communications about Air China whether advertisements or news on initiatives seemed to be below par.

4.4 Questionnaire D: United Airline Customers

To elicit a comparative perspective this questionnaire was administered to customers who had last flown a United Airlines flight. The comparative pattern on rating by customer experience as from the first two questions showed the following:

Figure 8

Clearly there is a lower performance with respect to competitors in terms of in-flight service in particular. This probably also translates into problems as far as relative perceptions about value for money goes. While communication and information aspects are relatively better service aspects are relatively lower overall than competitors. Operational aspects like better in-flight accommodation are linked to service but do not readily have an effect on all service aspects as this pattern shows.

Responses to the third question (Figure 8) show that customers think that given international competition and opening up of borders any complacency about being a prestigious US carrier lending advantage to United Airlines would be ill found. United’s communication and advertising related aspects seem to be in customer memory. The low score on a unique flying experience and midway scores on being an alternative shows that the airlines are in an overall sense on par or in other words, not very distinguishable from the customers’ perception stemming from their flying experiences.

Figure 9

4.5 Questionnaire E: United Airline Staff

The last questionnaire completes the loop by examining United Airline staff numbering a total of eight, as equal to a similar questionnaire administered to Air China staff and discussed before.

Responses to the first question that uses the proxy of how easy it has been to process improvements across different areas, shows the following pattern (Figure 9). The proxy works to reflect on what has been challenging to do for the airline in terms of improvement (low score) and what has been relatively easy to achieve (high score). Clearly the staff feels that passenger perceptions management, in-flight service and also information systems management have been easier to move on. While the customer survey validates the information management perspective to some extent it is at odds with service issues. This indicates a possible disjointedness between customer perceptions and staff and management views of the same. The resource crunch facing the US airlines issue connects with investments in fleet, and supplier management as also indicated in the responses. The transnational experience that goes back decades have also possibly indicated the challenges of cross-cultural staff management and thus it is scored rather low.

Figure 10

The second question on efficacy of management is again indicative of problems faced due to capital market downturn and fuel price rises. Pricing and investment (fleet) related aspects are scored low while others are high. Brand management aspects resonate with customer findings as being high.

Figure 11

The third question dealt with initiatives that would help improve learning environment and performance feedback utilization at United Airlines. Interestingly and in contrast to Air China the responses suggest that exploration (item 8 in the question) outside conventionally understood best practices was rated high for improving the learning environment. All eight respondents mentioned this in the top four with two respondents putting it at the top and two others as the second most important. Like Air China increasing interface with customers found appeal as the top preference with five of the eight respondents and as the third and fourth most important with two others. The other responses were equally spread out across the respondents. Interestingly while all mentioned exploring outside best practices, six also mentioned following and customizing evaluation and performance related aspects in the industry. The explanation for the latter was more in terms of keeping a tab on the progress and initiatives of competitors.

The fourth question dealt essentially with contribution that different factors have made in United Airlines growth in terms of gaining benefits from the US-China open skies agreement. The response pattern (figure 8) suggests that longer transnational experience is perceived to have delivered in terms of better management of adapting to local conditions and United’s traditional forte of employee ownership has also yielded positive results on the decision making front. Among others, very clearly domestic strength and being a prestigious national carrier seems to not have worked despite United securing some well lobbied US China route contracts – outperforming domestic competition, also mentioned in the literature review. While this was in some ways contradictory to secondary information, respondent comments indicated that these were considered extremely fickle ‘opportunistic advantages’ that could not be counted on or ascribed to when it came to evaluating growth in light of the open skies agreement. Domestic competition in terms of international carriers with home bases in the US was very strong, and they also had ‘muscled in’ to acquire critical US China routes.

Figure 12

The final question seeking strategy suggestions and prioritizing them found that policy level lobbying came a close second to focus on countering external downturns. While this was in contrast to not ascribing any credit to lobbying in the question and comments before this, it suggested the need for being able to affect/influence policy and macro-economic conditions as they so drastically affect the airline business. The outside the box thinking was next on the list but with great variance some suggesting it in the top two (scores of 4 under the structure of the question) while an equal number putting it in the bottom two. As for all questions given the limited sample set some attempt at trying to look at this in terms of respondent profiles did not yield any discernable phenomena. Finally, alliancing and management change related aspects were overall at the bottom but the latter again had a high variance suggesting differing views about how this could help, if at all, for better achievement for United Airlines in the aftermath of the US-China Open skies agreement .

Chapter 5. Discussion

The study findings have indicated a definite distinction in United Airlines’ and Air China’s approach towards strategizing in the aftermath of the US- China open skies agreement. The perceptual map across employees and customers clearly indicate some central similarities and distinctions. These map the respective choices related to responding to performance and opportunities, and learning for international growth and recognition.

Air China’s investments in fleet have seen them acquire advantage over the US airlines that are plagued by capital and fuel price related crisis more than Air China. Air China has benefited from riding on national prestige and dominance, this factor is not competitively aligned for United Airlines as they operate in an environment where competitor airlines are strong. The motivation to excel fuelled by growth and alliancing has seen Air China perform well on the service front relative to competitors while United seems to be doing less than optimum on this issue.

Interestingly the staff perceptions at United seem to be less aligned with customer perceptions about less than adequate service levels. This indicates definite dichotomy and over confidence from past experience in tackling customer issues. While Air China find experimentation to be a difficult task they still attribute their past growth to this factor, indicating that while exploration is considered a challenging venture, and not opted for by employees as a way forward it is very much in the environment. A factor for this could be the race to acquire so called state of the art practices that are in the folds of transnational organisations. In many ways the adage seems to be ‘acquire international parity before experimenting’. This is indicated in acquiring parity on customer satisfaction areas with international competitors and not focusing overtly on experimentation just yet. The management however seems keen to induce experimentation whether by trying out menu based catering or even (though more in the fold of ‘exploitation’) distilling and customizing best practices to shape programmes like excellence 2008 (March, 1991; Ahmed et al, 2006).

On the other hand United’s recognition of exploration outside industry best practices -for both contribution to past growth and future performance suggests that this is much widely appreciated as-‘a must’. However the disjointed perceptions between staff and customers indicates that United may be experimenting in a silo and be in a ‘simplicity fold’ (Miller, 1993) where what has performed best in the past draws all the resources for experimentation – new areas, customer orientation, and breakout learning are on the backburner though not intentionally. A factor that could have contributed to it for United is the external shocks that seem most important to counter whether by exploring new markets or ways to lobby for countering such shocks from resources and systems outside the organisation.

Competitively speaking United’s view on alliancing in a macro sense on Open Skies or in a micro sense as under the Star Alliance seems to be getting into new markets. In contrast Air China’s thrust has one more equally important facet that of learning from alliance partners who also appear as competitors in the manner of alliancing that exists in the airline industry today.

Air China seems to be relatively low on international brand recognition despite tremendous growth. This in comparison to United could be a case of just lineage and over time existence than anything else. However, the experience of orienting and reshaping the brand, and aligning it to service value is working in a dichotomous way. While United are good at the first part, Air China seems to be better on the second i.e. service value. That it is seem a viable alternative to US carriers may be a cause of concern for United. This given that as it strives to enter new markets with pressure on its resources from external shocks, and riding its global recognition and experience of trans-nationalization; Air China is homing in on development along the lines of service value, alliance based learning, and people management.

It is the balance across competing requirements that is key to outperforming competition. This balance is also contingent on external environment and situational aspects. The external environment is markedly better for Air China with its asset of national prestige something United has to lobby for at home. In the situational new alliances provide a drive and the Olympics have yielded a boom for Air China while United and other US airlines are seeking to salvage capital market downturns at home and fuel price concerns. International situations and events affect Air China also but having less of a baggage of past experience has its advantage as well. Implicitly it is seeking new ways to grow and sequentially achieve its strategic objectives while explicitly the recognition of difficulties in doing so affects staff perceptions. For United it seems to be the other way around it seems to be outward focused and the experience baggage has made it over confident about its alignment with the customer and continuous propensity to create and innovate. While its transnational capabilities and experience thereof are issues to contend with for competitors- especially nascent one like Air China, it is only a part of the spectrum that can ensure a competitive edge in an industry as fickle and sensitive like international aviation.

Chapter 6. Conclusions and Recommendations

6.1 Response to research questions and Recommendations

Revisiting the research questions this study started off with – it is important to understand that the Open-Skies agreement has been both an opportunity and challenge for Air China, and the domestic airline industry in China. While Air China’s strategy has been to drive at expansion in the first instance, it is also trying to learn from experience of other international players. Internal change programmes focused at people management have delivered value but at the same time confronted improvement challenges and not all innovative solutions have always worked. The strategy has also worked with a focus on customer satisfaction for the global customer with appreciable gains – the approach has been to let service and innovation success led the way to global recognition. The cosmetic value aspects that are associated with branding have thus taken a back seat relative to other international airlines.

The performance of Air China has been affected by the cumulative resource strength and alliancing initiatives that have seen it grow. Operational efficiency drives have also led it to be more-o- less on par or better in relation to competitors. The resourcing of initiatives has had both a long term perspective, and a short term perspective. People management, quality initiatives et al, have tried to incorporate this essential duality. While the other Chinese Airlines are not equally capaciated the tendency to alliance with and model their business in line with the international alliancing approach of Air China can be seen (USA today, 2007; Zollo et al, 2002). More open skies agreements like with the European Union have been effective as initiatives for spread, growth and diversification to some degree. However the risks that are global in nature affect Air China as well, these shocks have affected profitability but not to the same extent as most other international airlines. The attempt to strike a realistic balance between ‘exploration and exploitation’ (March, 1991) while appreciating the difficulties in doing so by the top management and also implicitly by the staff at Air China hold it on a solid footing for the long run. With situational boosts like from the Olympics and structural facilities in a growing Chinese economy where ‘everyone wants to be’ Air China’s performance can easily outrun the external adversities of the airline industry

While global recognition is important it is also subject to a wide array of multicultural and transnational capabilities that come with experience. In the complex and dense environment of many international players and the increasingly fickle customer Air China does not have many direct (self) experiences to reflect and learn from. The indirect experiences of alliance partners are thus a useful portal. In the first instance, the cosmetic or marketing and promotion based brand development aspect seems to be important in influencing customers. Furthermore, given the erstwhile yet recent culturally and economically closed domain of China, Air China could benefit greatly from looking at narratives of airlines like the United that go back decades. However, the societal, customer and economic plane of today is much different and creativity and innovation are key to success in an industry where best practices are overtly honed by all so that there is no real competitive advantage to be drawn (Miller, 1990, 1993; Amburgey et al, 1993). Furthermore, with experience comes the need to unlearn aspects that prevent looking out of the closed box of certainties. Air China could do well to learn to escape this baggage as it grows. Finally, while Air China enjoys domestic dominance and government support experience of international airlines like United and even Lufthansa (Mintzberg et al, 2003) have shown that this is not sustainable. Governments are quick to turn if performance falls and also, domestic competition catches up sooner or later, at least to a level where government favoritism cannot be assured.

In light of the aforesaid and the discussions chapter – the recommendation for Air China in specific and the Chinese aviation industry in general would be to:

  • Work on alliancing with a perspective to learn more from experiences and less from best practices
  • Keep up the innovation tempo despite difficulties in realizing immediate benefit or success from experimentation, only one of several will yield path breaking results and all prior efforts will then be worth their while
  • Despite external shocks customer satisfaction focus should remain on top priority
  • Government recognition and support is advantageous but should be depended upon as a given
  • Opening up markets is good but the balance of benefits from partners should be carefully evaluated both from a short run and long run perspective

6.2 Limitations

The study faced some other limitations in addition to the methodological aspects discussed in chapter 3, which centered on sample, analyses and access issues. The first has been the quality of data received from open ended questions to top management at Air China where some responses were difficult to interpret because of the exploratory nature of the questions. Despite this much effort was committed to make the interpretations sharp and precise. The profile information collected was intended to be used as a further segmentation of responses for some more insight into reasons behind perceptions elicited. A finer segmentation was also indicated in the initial proposal for this study. However given the small sample size this was not possible/did not yield expressible patterns. Another limitation has been the comparison between United Airlines and Air China to be representative of the US-China realm in terms of open skies agreement. In the Chinese context while this holds fairly true with the most dominant player on board, in the US context many other dominant airlines like Continental and Northwest remain. Finally the externalities perspective needed a view from stakeholders like government, and regulatory bodies that was outside the time and scope this study permitted.

6.3 Future Research

A detailed explanation of the consequences of Open Skies on China and other emerging markets could do well to look at other Open Skies agreements. This comparative context could stretch the domain of investigation to a much fruitful frame across different agreements and thus permit a detailed relative view of the agreements, involve other stakeholders and different sets of airlines. Any future research will need to be better resourced. This is because only larger data sets across different stakeholder groups will yield significant results. They will also have the potential to include segmentation of respondents to control for any perceptual biases stemming from their profile- making the investigation more robust.


Ahmed, A.M., Zairi, M., and Almarri, K.S. (2006) SWOT Analysis for Air China performance and its experience with quality. Benchmarking and International Journal, 13(1/2):160-173

Air China, (2007-2008) Introduction [Internet] available at Access at 18:00pm 21/11/2007.

Amburgey, T. L., Kelly, D., and Barnett, W.P. (1993) Resetting the clock: the dynamics of organisational change and failure. Administrative Science Quarterly, 38(1): 51-73.

Argyris, C. (1986) Reinforcing organisational defensive routines: An unintended human resource activity. Human Resource Management, 25 (4): 541-555.

Argyris, C. (1992) Why individuals and organisations have difficulty in double loop learning. In C. Argyris (Ed.), On organisational learning. Oxford: Blackwell.

Argyris, C., and Schon, D. (1978) Organisational Learning: A theory of action perspective, Addison-Wesley, Reading MA

Asia (2007) United Airlines secures non stop flight Washington to Beijing [Internet] available at Accessed at 12:00 pm 24/02/2008

AT Kearney (2008). The Outlook for the Global airline industry in 2008 (by Brian Pearce) [Internet] available at

Access at 18:00 pm 20/01/2008

Baden-Fuller, C. and Stopford, J.M. (1991) Globalization frustrated: The case of white goods. Strategic Management Journal, 12: 493-507

Bartlett, C.A and Ghoshal, S. (1989), Managing Across Borders, Harvard Business School Press, Boston, MA

Barthes, Roland (1967). Elements of Semiology (trans. Annette Lavers and Colin Smith). London: Jonathan Cape

Brynman, A., and Bell, E. (2003) Business Research Methods, Oxford University Press.

Burns, T., and Stalker, G.M. (1961) The Management of Innovation, London, Tavistock.

Buzzell, R.D., and Gale, B.T. (1994) The PIMS Principles. New York: Free Press

Cameron, S. (2001) the MBA Handbook, the 4th Edition, London, the Pitman Publishing.

China Daily, (2007) Dialogue Aid to Progress: Paulson [Internet] available at access at 16:15pm 20/11/2007

Child, J. (1972) Organisational Structure, Environment, and Performance: The Role of Strategic Choice.  Sociology, 6: 1-22.

Creswell, J. (2003) Research Design: Qualitative, Quantitative, and Mixed Methods Approaches, Thousand Oaks, Sage Publications.

Cyert, R.M., and March, J.G. (1963): A Behavioural Theory of the Firm. Englewood Cliffs, NJ

Dixon, N. (1994) The organisational learning cycle: How we can learn collectively. Maidenhead: McGraw-Hill.

Doz, Y.L. (1996) The Evolution of Cooperation in Strategic Alliances: Initial Conditions or Learning Processes? Strategic Management Journal, 17: 55-83.

Easterby-Smith, M.P.V (1997) Disciplines of organisational learning: contributions and critiques. Human Relations, 50(9), 1085-114.

Fiol, C. M., and Lyle, M.A. (1985) Organisational Learning. Academy of Management Review, 10 (4): 803-813.

Garvin, D.A. (1993) Building a learning organisation. Harvard Business Review, July-Aug :78-84.

Hamel, G., and Prahlad, C.K. (1989) Strategic Intent. HBR 67 May June: 63-76

Hamel, G., and Prahlad, C.K. (1993) Strategy as stretch and Leverage. Harvard Business Review, March-April: 75-84.

Hedberg, B. (1981) How organisations learn and unlearn, in P.C. Nystrom and W.H. Starbuck (Eds.), Handbook of organisational design. London: Cambridge University Press.

Herzberg, F (1959) The Motivation to work, New York John Wiley and Sons.

Huber, G.P. (1991) Organisational learning: The contributing processes and literatures. Organisation Science. 2(l): 88-115.

Kolb, D. A., Rubin, I. M. and Mclntyre, J. M. (1979) Organisation Psychology: An Experiential Approach. London: Prentice-Hall.

March, J.G. (1991) Exploration and Exploitation in Organisational Learning. Organisation Science 2(1): 71-87

McDermott, R., and ODell, C. (2001) Overcoming cultural barriers to sharing knowledge, Journal of knowledge management, 5(1): 76-85.

Miller, D .(1993) The Architecture of Simplicity, Academy of Management Review, 18: 116-138.

Miller, D. (1990) The Icarus Paradox: How exceptional companies bring about their own downfall. New York: Harper Collins

Mintzberg, H (1979), The Structuring of Organisations, Englewood Cliffs, NJ: Prentice-Hall

Mintzberg, H., Ahlstrand, B., and Lampel, J. (1998) Strategy Safari: A guided tour through the wilds of strategic management, The Free Press, New York, 1998

Mintzberg, H., Lampel, J., Quinn, J.B. and Ghoshal, S. (2003) Lufthansa The Strategy Process Concepts Contexts and Cases 4th ed. Pearson: 89-101

Morgan, C.L. (1896) On modification and variation. Science, 4: 733-740.

Murali, D. (2005) See Open Skies and reach for it [Internet] available at access at 16:45pm 21/11/2007

Nickerson, J.A., and Zenger, T.R. (2002) Being efficiently fickle: A dynamic theory of organisational choice. Organisation Science, 13(5): 547-566

Nonaka, I., and Takeuchi, H. (1995) The knowledge creating company. Oxford: Oxford University Press

Pettigrew, A.M.(1973) The politics of organisational decision making. London: Tavistock.

Pondy, L. R., and Mitroff, I. I. (1979) Beyond open systems models of organisation, in L. L. Cummings, and B. M. Staw (Eds.) Research in Organisational Behaviour, Vol.1, Greenwich, CT: JAI Press

Porter, M. E. (1985) Competitive Advantage., Ch. 1: 11-15. The Free Press. New York.

Porter, M.E. (1986) Competition in Global Industries, Harvard Business School Press, Boston, MA

Prahalad, C. K., and Hamel, G. (1990) The core competence of the corporation. Harvard Business Review. 68 (May-June): 79-91.

Rangan, S. (2000) Seven myths regarding global strategy- in Financial Times Mastering Strategy: The Complete MBA Companion in Strategy. Harlow: Pearson Education Limited: Financial Times Prentice Hall.

Rogers, F. E. (1997) Market Report of Airlines, UK: Key Note Ltd

Saunders, M. Lewis, P., and Thornhill, A (2002) Research Methods for Business Students, Pearson Education.

Schwab, A., and Miner, A.S.(2001) Organisational learning and short-term collaboration: Patterns in the U.S. Movie Industry, 1930-1940. Academy of Management. Washington D.C. August, 2001.

Shaw, S. (1990) Airline Marketing and Management, the 3rd Edition, London: Pitman Publishing

Senge, P. (1990) The Fifth Discipline: The Art and Practice of the Learning Organisation New York: Doubleday Currency

Shibata, G. TSE. D., Vertinsky, I., and Wehrung, D. (1991) Do norms of decision-making styles, organisational design and management affect performance of Japanese firms? An exploratory study of medium and large firms. Managerial and Decision Economics 12(2): 135-146.

Talbot, C., and Harrow, J. (1993) Sharing or Withholding Knowledge? An Exploration of Changing Values in Managerial and Organisational Learning. Paper for British Academy of Management Conference, Milton Keynes.

Taylor, S.J., Bogdan, R. (1998) Introduction to Qualitative Research Methods, Wiley.

United (2007-2008) About United [Eras] [Internet] available at,6823,2286,00.html accessed at 1100 am 28/11/2008

United, (2007) About United [Internet] available at access at 10:00am 21/11/2007.

USA Today, (2007) U.S. Hopes for ‘Open Skies’ Deal with China by May [Internet] available at access at 13:00pm 21/11/2007.

Zollo, M., Reuer, J.J., and Singh, H. (2002) Inter-organisational Routines and Performance in Strategic Alliances. Organisation Science, 13(6): 701-713.

Did you like this example?

Having doubts about how to write your paper correctly?

Our editors will help you fix any mistakes and get an A+!

Get started
Leave your email and we will send a sample to you.
Thank you!

We will send an essay sample to you in 2 Hours. If you need help faster you can always use our custom writing service.

Get help with my paper
Sorry, but copying text is forbidden on this website. You can leave an email and we will send it to you.