Integrating frequent flyer programs in multilateral airline alliances

Forming branded alliances has become a common strategyin the airline industry. These can be defined as ‘multilateral alliances’ as opposed to bilateral alliances. Limited attention has been paid to assessing the impact of multilateral alliances on complex subnetworks, such as distribution networks, cargo alliances and frequent flyer programs. These sub-networks are ‘derivative networks’ within multilateral alliances. These derivative networks create several dilemmas as theyevolve causing airline managers to confront fundamental questions regarding harmonization, conflict resolution, and organizational structure.