Air India - The Virgin Airways Saga*



Case Code : CLBS023
Publication date : 2004
Subject : Business Strategy
Industry : Airline
Length : 04 Pages
Price : Rs. 50

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Key words:

Code-share agreements, yield management, product development, partnership

* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.


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The caselet deals with the code sharing agreement between Air India and Virgin Airways, the second biggest airlines in UK after British Airways. The arrangement was considered to be a significant development for the ailing Air India.


 » Why the code sharing arrangement between Air India and Virgin Airways did not yield the expected results.
 » The advantages of tie-ups between major airline companies.


In December 1999, India’s national carrier, Air India (A-I) signed an agreement with Virgin Atlantic Airways (VA) by which VA would fly three flights on the Delhi-London route on a code-sharing basis with A-I. A-I already had a code sharing arrangement with a number of foreign airlines.

These included Air France, Swiss Air, Bellview Airlines, Austrian Airlines, Asiana Airlines, Scandinavian Airlines, Singapore Airlines, Aeroflot, Air Mauritius, Kuwait Airways and Emirates.

Even VA had code-share agreements with Continental Airlines, Malaysian Airlines, and British Midland. In the late 1990s, Richard Branson, the chairman of VA, was targeting the lucrative Delhi-London route....

Questions for Discussion:

1. Air India’s code sharing arrangement with Virgin Atlantic was expected to benefit the ailing Air India. However, by the end of 2001, relation between Air India and Virgin Atlantic deteriorated and Virgin Atlantic threatened to pull out of India. Explain why the Air India-Virgin Atlantic code sharing arrangement failed to have the desired effect.

2. “Tie-ups between major airlines have become a key part of the global aviation strategy in the late 1990s. They range from mere code sharing arrangements and joint frequent flyer programmes to alliances.” Discuss.