Strategic Collaborations in the Airline Industry

Swissair, the once respected airline, shocked the world when it grounded all its aircraft in early October 2001, without giving prior warning to passengers. It subsequently went bankrupt. It was however a national icon till October 2001. An article entitled 'Squeezing the gnomes' published in the Economist (2002) states: 'For a small country, Switzerland has produced more than its share of distinctive national brands. Swiss cheese, the Swiss army knife , Swissair and, of course, the Swiss numbered bank account. Swissair alas is no more.' Among the many reasons cited for Swissair's unfortunate demise, one could be that it did not pay heed to the cross-cultural aspects of corporate strategy.

Swissair made it its corporate strategy to become a heavyweight in the airline industry by establishing linkages with other reputed airlines. By a reciprocal arrangement with the American airline Delta Airways, the two companies own a stake in each other. Swissair and Singapore Airlines also own stakes in each other. Swissair also secured an interest in Austrian Airlines. In 1995, Swissair acquired a 49 per cent ownership in the Belgian airline Sabena. In 2001, Swissair was not entirely satisfied with the strategy it had adopted, of growth through global acquisition. Its alliance with Sabena has proved to be particularly cumbersome. In late 2001, Swissair was considering ways and means by which it could divest itself of Sabena.

The problem confronting Swissair is one of intercultural management. If its alliance with Sabena is considered , there is a clash of cultures along two dimensions, ethnic as well as corporate. Former students of mine at a MSc Programme in Intercultural Management examined the Swissair-Sabena strategic alliance in late 2000. These students interviewed senior managers from both companies, and inferred that insufficient attention was being paid to the issue of meshing the different cultures together. Many Swissair managers who had been deputed to Brussels to work at the Sabena operations were commuting between Switzerland and Belgium on a weekly basis. They would fly down to Brussels on Monday morning and back to Switzerland (and home) on Friday evening. This effectively meant that these managers were not getting integrated into Sabena at a deep-seated level. Of course, most managers, both from Sabena and Swissair, insisted that this did not affect work relations in any way.

It is difficult to envisage cultural integration taking place in an organization when two culturally distinct groups of managers operate as structurally distinct entities. Cultural integration is in many ways a physical process, in the sense that individuals should physically be located in a new culture. This enables them to imbibe tacit aspects of a culture, almost by osmosis. The insights they derive are accumulated piecemeal, over time. Once in a while, understanding may dawn in a sudden flash of inspiration. More usually, however, understanding is achieved in an incrementalist fashion. That was the experience of the international managers interviewed for this book.

Source: interviews with Sabena and Swissair managers.