All for one: Factors for alignment of inter-dependent business processes at KLM and Schiphol

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ALL FOR ONE

Factors for alignment of inter-dependent business processes at KLM and Schiphol

Dissertation

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ALL FOR ONE

Factors for alignment of inter-dependent business processes at KLM and Schiphol

Proefschrift

ter verkrijging van de graad van doctor aan de Technische Universiteit Delft,

op gezag van de Rector Magnificus, prof. dr. ir. J.T. Fokkema, voorzitter van het College voor Promoties,

in het openbaar te verdedigen op maandag, 15 december 2008 om 15.00 uur.

door Rolf Peter PERIÉ

elektrotechnisch ingenieur geboren te Soerabaja, Indonesië.

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Dit proefschrift is goedgekeurd door de promotor: Prof. mr. dr .ir. S.C. Santema

Samenstelling promotiecommissie:

Prof. dr. ir. J.T. Fokkema Rector Magnificus, voorzitter

Prof. mr. dr. ir. S.C. Santema Technische Universiteit Delft, promotor Prof. drs. G.J.N.H. Cerfontaine Universiteit van Utrecht

Prof. dr. ir. J.A. Buijs Technische Universiteit Delft

Jhr. Prof. dr. W. Ploos van Amstel Nederlandse Defensie Academie Breda en Den Helder

Prof. dr. P.M.J. Mendes de Leon Rijks-universiteit Leiden Prof. dr. R. Curran Technische Universiteit Delft

Dr. R.K. Gibbs heeft inspiratie geleverd voor het onderzoek Dr. ir. M.R.B. Reunis heeft, als externe begeleider, in de begin

fase in belangrijke mate bijgedragen aan het tot stand komen van het proefschrift.

ALL FOR ONE, Factors for alignment of inter-dependent business processes at KLM and Schiphol / R.P. Perié

Proefschrift Technische Universiteit Delft,

mèt literatuur opgave en samenvatting in Nederlands ISBN/EAN 978-90-9023713-8

Key-words: factors, alignment, business processes, dyads, inter-dependency, airline-airport relation.

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ACKNOWLEDGEMENTS

This dissertation has only been feasible due to the belief in, encouragement by and support of my research from my promotor, advisors, friends and family. Without them this research would not have led to this product.

Prof. mr. dr. ir. S.C. Santema

I should like to express my sincere gratitude and great appreciation to my promotor, Sicco Santema. He helped to find my research direction for which I am indebted to him. His patience, persistence, comments and suggestions were always of great value to me. His enthusiasm was very stimulating and provided the required motivation for me to overcome difficult times in the course of my research. His support and trust in my ability to perform this research are more than just commendable. I respect and also thank all the members of the Promotion Committee for their constructive comments and suggestions.

Dr. R.K. Gibbs Dr. M.R.B. Reunis MSc. Dr. O.A.W.T. van de Riet

Although I was able to focus my interest upon creation of a virtual strategic partnership between KLM, Royal Dutch Airlines and Amsterdam Airport Schiphol (AAS), it was the superb research by Richard Gibbs that provided the inspiration for my dissertation. My good friend and former office-mate during the greater part of my research, Marc Reunis, deserves much gratitude for his excellent analytical contribution as a critical sounding board regarding many aspects of the research methodology. Formulating various thoughts and facts on paper require some time to bring these into proper perspective. Odette van de Riet was able to act as a valuable mirror for this purpose.

Noa Soto Murias MSc. Mikolaj A. Fiksinski MSc. Jamyang Chhophel MSc.

Rebecca Rennestraum MSc. Michiel Drijgers MSc.,BEng. Constanstijn D.C. Wever MSc.

Hong Yang S. Oei MSc. Erik K. Driessen MSc.,BEng.

I am proud and gratified to have been able to coach and supervise a number of students working on their final thesis and carrying out an internship for their degree as Aerospace Engineer. The extensive literature research by Noa remains an example for all aspiring engineers, and it was also extremely valuable for my research. Both Rebecca and Hong Yang provided an essential reconnaissance of KLM and AAS respectively in the context of the inter-dependent business processes of these firms. Further research by Mikolaj, Michiel, Erik and Constantijn provided full insight into the relations of KLM and AAS in the context of four selected inter-dependent business processes. Their findings should not only provide food for thought but also help to align these processes in order to obtain the required competitive advantage of this airline-airport combination. Mikolaj, Michiel and Erik have also provided significant and creative support for the proper layout and consistency of the texts and

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illustrations for this research. I also note that the excellent analytical prowess of Jamyang provided an important and valuable contribution to my research, specifically regarding complementary and involuntary relations.

M.M.H. van Boxtel (Drs.Ing.) B.J.H. Gimberg B. Lievegoed (Drs.)

J.C.C. Bruggeman (Drs.) A.H.P. Kieboom (Drs.) O. van Reeden

A.H. Dijkstra (Drs.) M. Koopmans MSc. J.P.W.M. Smeets

The execution of an internship at KLM and AAS, which also adds value to these firms, requires not only the willingness of these firms to suffer the presence of students but also and more importantly their interest and guidance for the students. The efforts of these supervisors should be commended and are highly valued.

A.C. Veldhoen

“A picture paints a thousand words” remains a relevant expression. Nettie Veldhoen, as a friend and former colleague, provided her valuable assistance to place various figures in the texts.

Chris

I am indebted to my family and, of course specifically, Chris for her patience, support and reminding me that research for one PhD. is sufficient for a lifetime.

Rolf P. Perié

Delft, The Netherlands November 24, 2008

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PREFACE

Introduction

The motives for this dissertation are based upon my experience in diplomatic service in France and Portugal as well as international materiel cooperation and strategic planning. During the period 1976 – 1979 as a young Lieutenant Commander of the Royal Netherlands Navy, I was Secretary to the first Director General for Materiel at the Ministry of Defense. In addition, during the period 1985 – 1992 as naval Captain, I was Director of Planning and Policy at the Naval Materiel Directorate and subsequently Defense Attaché at The Netherlands embassies in Paris, France as well as in Lisbon, Portugal.

Inter-dependence and Mutual Benefit

I am convinced of the necessity and in many cases actual requirement for deeper inter-dependence of European society in general and in particular of European industry. Maintenance of divisions within Europe according to in the main national preferences is and will be detrimental to prosperity of this continent. In order to provide a valuable contribution to the creation of a stronger and more resilient European industry, specific attributes require to be developed by relevant national actors which are to be accepted in the competitive European context.

Based upon my specific experience during my career within the Ministry of Defense, described above, as well as at the NATO C3 Agency (1993 – 1996) and the National Organization for Applied Science TNO (1996 – 2005), I envisage a form of a virtual strategic partnership- without distorting competitive practice - between at least two important contributors to the product of aviation industry within The Netherlands, i.e. KLM, Royal Dutch Airlines and Amsterdam Airport Schiphol (AAS). Important aims are to increase capacity-oriented operations, reduce the integral cost of hub-airport operations, increase joint revenues and improve their mutual image in order to gain and maintain their competitive advantage in North-western Europe.

This partnership of KLM and AAS can only be created and remain successful as a result of shared values across borders of the firms, an updated long term Main Port vision and jointly established regularly reviewed prioritized programs based upon alignment or partial integration of their value chains. This partnership can thus be focused upon their shared and better aligned business processes as each of these processes contribute to their joint product, while these firms operate customer-oriented to also their mutual benefit.

The Scientific Challenge

The international competitiveness of the national economy, including in particular the aviation industry, depends to an extent on the ability to create science-based knowledge which is relevant, rigorous, and which makes a valuable contribution to society and its institutions. This implies, in my view, that knowledge developed by academia should help

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practitioners to make better-informed decisions and implement more effective solutions for opportunities and problems they encounter.

This provides an important challenge to me as PhD. researcher, within the field of Aerospace Management and Operations, to hone my effectiveness at creating and transferring knowledge which is relevant, rigorous, and valuable for practical application for KLM and AAS the same time.

This research regards the improvement of the effectiveness and efficiency of specific business processes of airlines and airports. In particular the feasibility of alignment of inter-dependent business processes of KLM and AAS will be contributed. The aim is to find factors for the envisaged alignment of these specific business processes to improve e.g. their capacity-oriented hub operations etc. mentioned above.

Scientific Inspiration for Dissertation

During the orientation phase of my research, I found extensive research for thesis work carried out at the University of Gloustershire by Dr. Richard K. Gibbs. That research is concerned with understanding mediating effects of attributes of relational exchange on both tangible and affective outcomes of a manufacturer – intermediary relationship. That research argues that inter-organizational relationships represent a potential source of competitive advantage and, specifically, that it is the manner in which these relationships are managed that enables a realization of above average returns for a firm (Gibbs, 2006).

The great majority of different forms of alignment of business processes was and still is used for business growth by expanding existing markets or entering new markets. However in recent years two other aspects have become increasingly important. These are alliances for innovation and alliances to add value or cut cost in the supply or value chains. Regarding the last aspect, organizations (e.g. Toyota and Rolls Royce) have long woken up to the added value of alignment in their supply or value chains by sharing critical knowledge with suppliers. These industries have thus either reduced the non-value adding steps in their chains or transformed these into activities that do add value, which is more challenging.

Summary

Based upon inspiring research results regarding the attainment of competitive advantage by focused management as well as alignment of value chains, including sharing of resources and reduction of non-value adding steps, a starting point is established for this research to satisfy my scientific interests.

Of course, I hope that this research will be regarded as an original contribution, but claim to originality is difficult to establish. In building science, each researcher starts with contributions of others.

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ABSTRACT

As airline and hub competition becomes fiercer, airline-airport co-operation becomes a necessary option for both main carrier airlines and hub airports to face this competition together. The inter-dependency between airlines and airports in producing air-transport services is tight, i.e. their destinies are inter-twined. Their existence as viable economic entities depends upon market performance of each other. This leads to the assumption that the relation of airlines – airports serves as an example case for dyadic alignment.

Although research has been carried out regarding many forms of co-operation, little is known about specifically alignment at the business process level. By alignment of their inter-dependent dyadic business processes competitive advantage can be obtained; both KLM and AAS have acknowledged this.

The aim of this research is to determine Factors for Alignment for specific inter-dependent business processes at KLM and AAS. For research purposes the research question is formulated as follows:

Which are the factors for alignment of dyadic business processes at KLM and AAS?

Answers to this research question are to increase the understanding of the effect of different factors upon alignment. This research has a theoretical as well as a practical value. It develops a theoretical Delft Factors for Alignment (DFA) model. This enables subsequent development of analysis tools that quantitatively and qualitatively measure the performance of Factors for Alignment. For practical purposes, it identifies issues and maps differences and similarities present between KLM and AAS within their specific dyadic business processes. These dyadic processes are Environmental Capacity, Network Planning, Infrastructure

Planning and Aircraft Stand Allocation.

This research is based upon the assumption that alignment of the dyadic business processes of KLM and AAS is achieved by addressing the issues affecting alignment regarding various subjects within each business process, as indicated by employees of these firms.

By making use of interviews and questionnaires within both firms it is found that the issues present within four dyadic business processes of these firms, at three different levels of decision making, can be modeled by the developed DFA model. The model identifies the most potential of Factors for Alignment of their dyadic business processes. It is proven that the DFA model is a diagnostic tool in finding the Factors for Alignment of dyadic business processes of KLM and AAS by creating a structured ordering of the issues by interviews and questionnaires.

The research question, as formulated above, is answered by primary and secondary Factors for Alignment per business process. This also implies that the DFA model is effective for analysis of dyadic business processes.

The research methodology has proven to be viable. This would encourage application for research of other dyadic business processes at KLM and AAS, which could also strengthen their competitive advantage.

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1.3.9 Process Selection...49 1.3.10 Research Field ...50 1.4 Research Contributions ...52 1.4.1 Scientific Contribution ...52 1.4.2 Managerial Contribution ...53 1.4.3 Societal Contribution...54 1.5 Structure of Dissertation ...54 2 Research Design ... 57 2.1 Introduction...57 2.2 Research Question ...58 2.3 Research Setup ...58 2.3.1 Literature Research ...58 2.3.2 Case Studies ...61 2.4 Interview ...66 2.4.1 Intent ...66 2.4.2 Data ...67 2.5 Questionnaire ...69 2.5.1 Intent ...69 2.5.2 Data ...70

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2.6 Combining Interview and Questionnaire Data ...72

2.7 Comparing Results of Partner Firms ...74

2.8 Presenting Analysis Results per Firm and per Dyad ...75

2.9 Conclusion ...75

3 Literature Research into Factors for Alignment ... 77

3.2 Methodology ...77

3.3 Composing the Article Long, Short and Final Lists...79

3.4 Defining Constructs ...81

3.5 Defining the Factors...83

3.5.1 Linking Attributes to Constructs and Factors...83

3.5.2 Defining the Factors and Constructs ...89

3.6 Conclusion ...92

4 Research of Business Processes at KLM and AAS ... 95

4.2 Case I: Environmental Capacity...97

4.2.1 KLM Analysis ...97

4.2.2 Amsterdam Airport Schiphol Analysis ...102

4.2.3 Conclusion Environmental Capacity Dyad KLM - AAS ...105

4.3 Case II: Network Planning ...109

4.3.3 Conclusion Network Planning Dyad KLM – AAS ...117

4.4 Case III: Infrastructure Planning...121

4.4.3 Conclusion Infrastructure Planning Dyad KLM - AAS ...129

4.5 Case IV: Aircraft Stand Allocation ...133

4.5.3 Conclusion Aircraft Stand Allocation Dyad KLM-AAS...141

5 Conclusions... 145

5.2 Research Question and Research Set-up ...145

5.3 Research Contributions ...148 6 Recommendations ... 151 6.1 Further Application ...151 6.2 Further Research ...151 7 Discussion... 157 7.1 Research Validity ...157 7.2 Research Limitations ...159

7.3 Complementary and Involuntary Relations ...159

7.4 Reflection ...160

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Appendices... 171

Appendix A Process Descriptions ...173

A.1 Environmental Capacity ...173

A.2 Network Planning ...176

A.3 Infrastructure Planning ...177

A.4 Aircraft Stand Allocation...182

Appendix B Article Long/Short/Final List...187

B.1 Article Long List ...187

B.2 Article Short List ...198

B.3 Article Final List...202

Appendix C Construct Definitions and Questionnaire Contents ...205

C.1 Construct Definitions...205

C.2 Questionnaire Contents...207

Appendix D Article Characteristics...209

Appendix E Key Documents ...213

Summary... 215

Nederlandse Samenvatting... 221

Curriculum Vitae ... 227

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LIST OF FIGURES

Figure 1-1: Research focus within national civil aviation ...23

Figure 1-2: Overview of Major Airline Business Models in Europe...24

Figure 1-3: Unit Cost Comparison across European Flag Carrier Models vs. LCC ...24

Figure 1-4: Major Challenges for the European Airline Industry...26

Figure 1-5: Alignment in the Value Chain ...27

Figure 1-6: Mainport development objectives of KLM and AAS ...30

Figure 1-7: Mainport interaction cycle of this research...31

Figure 1-8: Processes and aspects influencing the interaction cycle ...31

Figure 1-9: Value Chain Transition from Adversarial to Collaborative Relationships ...35

Figure 1-10: Value Chain Airports ...36

Figure 1-11: Value Chain Airlines ...37

Figure 1-12: Determinants of Inter-organizational Competitive Advantage ...42

Figure 1-13: Types of Business Processes Managed Jointly for Mutual Benefit ...46

Figure 1-14: Transitioning to a more aligned model ...51

Figure 1-15: Dissertation Structure ...55

Figure 2-1: Literature Research Approach phases...61

Figure 2-2: Research Set-up ...64

Figure 2-3: Levels of respondents’perspectives ...66

Figure 2-4: Interview transcript analysis approach...68

Figure 2-5: Respondent Specific Factor Occurrence Matrix ...69

Figure 2-6: Bar chart Illustration of Average Factor Score and Average Factor Delta ...71

Figure 2-7: Influence of Factor Delta on improvement effect ...72

Figure 2-8: Factor Delta vs. Occurrence Plot ...73

Figure 2-9: Research Set-up, Parts and Chapter Layout...76

Figure 3-1: Gibbs Model ...78

Figure 3-2: Literature Research Methodology, Phases 1 – 5...79

Figure 3-3: From Gibbs constructs to Delft Factors for Alignment ...81

Figure 3-4: Constructs seen over Time...82

Figure 3-5: DFA model ...93

Figure 4-1: Continuation Research Approach phases 6 - 8 ...95

Figure 4-2: KLM Environmantel Capacity Average Questionnaire Factor Scores and Delta...99

Figure 4-3: KLM Environmental Capacity Factor Delta vs Occurrence Plot...100

Figure 4-4: AAS Environmental Capacity Average Questionnaire Factor Scores and Delta...103

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Figure 4-6: KLM Network Planning Average Questionnaire Factor Scores and Delta...111

Figure 4-7: KLM Network Planning Factor Delta vs Occurrence Plot ...112

Figure 4-8: AAS Network Planning Average Questionnaire Factor Scores and Delta ...115

Figure 4-9: AAS Network Planning Factor Delta vs Occurrence Plot ...116

Figure 4-10: KLM Infrastructure Planning Average Questionnaire Factor Scores and Delta ...123

Figure 4-11: KLM Infrastructure Plannine Factor Delta vs Occurrence Plot ...124

Figure 4-12: AAS Infrastructure Planning Average Questionnaire Factor Scores and Delta...127

Figure 4-13: AAS Infrastructure Planning Factor Delta vs Occurrence Plot...128

Figure 4-14: KLM Aircraft Stand Allocation Average Questionnaire Factor Scores and Delta ...135

Figure 4-15: KLM Aircraft Stand Allocation Factor Delta vs Occurrence Plot ...136

Figure 4-16: AAS Aircraft Stand Allocation Average Questionnaire Factor Scores and Delta ...139

Figure 4-17: AAS Aircraft Stand Allocation Factor Delta vs Occurrence Plot ...140

Figure A-1: The Alders Process ...174

Figure A-2: Infrastructure Planning and Development Process ...180

Figure A-3: Gate Planning Process ...184

Figure A-4: Area Division Transfer Central vs. Common Use ...185

Figure 0-1: DFA model ...219

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LIST OF TABLES

Table 3-1: Literature Search Data ...79

Table 3-2: Article Ranking Results ...80

Table 3-3: Construct Competence Fit, associated Attributes and Factors ...84

Table 3-4: Construct Structure Fit, associated Attributes and Factors ...84

Table 3-5: Construct Culture Fit, associated Attributes and Factors ...85

Table 3-6: Construct Social Bonding, associated Attributes and Factors...85

Table 3-7: Construct Competence Fit, associated Attributes and Factors ...86

Table 3-8: Construct Dependency, associated Attributes and Factors...86

Table 3-9: Construct Communication, associated Attributes and Factors...87

Table 3-10: Construct Cooperation, associated Attributes and Factors...88

Table 3-11: Construct Commitment, associated Attributes and Factors ...89

Table 3-12: Construct Conflict, associated Attributes and Factors ...89

Table 3-13: Definitions Constructs and Factors for Alignment...90

Table 3-14: Relation Factor and Article Number ...91

Table 4-1: KLM Environmental Capacity Factor Occurrence Matrix...98

Table 4-2: KLM Environmental Capacity Ranked Results Compared...99

Table 4-3: KLM Environmental Capacity Process Ranked Factors ...101

Table 4-4: AAS Environmental Capacity Factor Occurrence Matrix...102

Table 4-5: AAS Environmental Capacity Ranked Results Compared ...104

Table 4-6: AAS Environmental Capacity Process Ranked Factors ...105

Table 4-7: Environmental Capacity Factor Potential for Alignment ...106

Table 4-8: Environmental Capacity Priority of Factors for Alignment for AAS and KLM ...107

Table 4-9: KLM Network Planning Factor Occurrence Matrix ...110

Table 4-10: KLM Network Planning Ranked Results Compared ...112

Table 4-11: KLM Network Planning Process Ranked Factors...113

Table 4-12: AAS Network Planning Factor Occurrence Matrix ...114

Table 4-13: AAS Network Planning Ranked Results Compared ...116

Table 4-14: AAS Network Planning Process Ranked Factors...117

Table 4-15: Network Planning Factor Potential for Alignment...118

Table 4-16: Network Planning Priority of Factors for Alignment for AAS and KLM...119

Table 4-17: KLM Infrastructure Planning Factor Occurrence Matrix...122

Table 4-18: KLM Infrastructure Planning Ranked Results Compared...124

Table 4-19: KLM Infrastructure Planning Process Ranked Factors ...125

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Table 4-21: AAS Infrastructure Planning Ranked Results Compared ...128

Table 4-22: AAS Infrastructure Planning Process Ranked Factors ...129

Table 4-23: Infrastructure Planning Factor Potential for Alignment ...130

Table 4-24: Infrastructure Planning Priority of Factors for Alignment for AAS and KLM ...131

Table 4-25: KLM Aircraft Stand Allocation Factors Occurrence Matrix...134

Table 4-26: KLM Aircraft Stand Allocation Ranked Results Compared ...136

Table 4-27: KLM Aircraft Stand Allocation Process Ranked Factors ...137

Table 4-28: AAS Aircraft Stand Allocation Factor Occurrence Matrix ...138

Table 4-29: AAS Aircraft Stand Allocation Ranked Results Compared ...140

Table 4-30: AAS Aircraft Stand Allocation Process Ranked Factors ...141

Table 4-31: Aircraft Stand Allocation Factor Potential for Alignment ...142

Table 4-32: Aircraft Stand Allocation Priority of Factors for Alignment for AAS and KLM ...143

Table 5-1: Primary and secondary Factors for Alignment per business process ...147

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LIST OF ABBREVIATIONS AND ACRONYMS

AAS Amsterdam Airport Schiphol

ADP Aéroports de Paris

AMO Aerospace Management and Operations

ANS Air Navigation Services

ASK Available Seat Kilometers

C3 Command, Control and Communications

C³ Co-operative, Coordinating, Collaborative

CDC Cour des Comptes

CEO Chief Executive Officer

Delta Difference expressed between measurements

DFA Delft Factors for Alignment

FGD Focus Group Discussion

GAO General Accountability Office

HIGH High Potential for Alignment

IOR Inter-organizational relationships

KLM Koninklijke Luchtvaart Maatschappij, Royal Dutch Airlines

LCC Low Cost Carriers

LFA Low Fare Airlines

LOW Low Potential for Alignment

LVNL Luchtverkeersleiding Nederland

MEDIUM Medium Potential for Alignment

NATO North Atlantic Treaty Organization

OC&C OC&C Strategy Consultants

PhD Doctor of Philosophy

SIM Samenwerkingsverband Innovatieve Main Port

TNO Technisch Natuurwetenschappelijk Onderzoek

UvA Universiteit van Amsterdam

VAP Value-adding Partnership

Abbreviations of Factors for Alignment

Att Attitude

C&P Coordination & Planning

CA Cooperation Assessment

CCF Corporate Culture Fit

CE Cooperation Experience

CEff Communication Effectiveness

CI Communication Intensity

CO Cooperation Objectives

CP Communication Pro-activeness

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CS Communication Systems CSp Collaborative Support DR Dedicated Resources GF Geographical Fit Int Integrity JI Joint Image

L&T Learning & Training

MA Mutual Acceptance MD Mutual Dependence Mns Mind-set MS Management Skills NCF Objectives Fit OS Organizational Skills PB Power Balance

PCF Professional Culture Fit

R&R Roles & Responsibilities

SC Structural Compatibility

Sh Sharing

SND Social Network Development

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1 INTRODUCTION

1.1 INTRODUCTION

This research is focused upon the determination of Factors for Alignment between specific inter-dependent business processes of Koninklijke Luchtvaart Maatschappij (KLM), Royal Dutch Airlines and Amsterdam Airport Schiphol (AAS). This chapter serves as overall introduction to the research. The research design for this dissertation is described in Chapter 2. The execution and results of this research are described in Chapters 3 through 5 of this dissertation.

The relationship of airlines and airports is not only complex but also not well understood by all users thereof.

“The financial health of airlines is precarious (Aviation Week & Space Technology, June 16, 2008, p.62). Fuel prices are not at the core of the problem.” The solution is not consolidation according to Robert L. Crandall in this article. “Mergers will not lower fuel prices. They will require major capital expenditures, for business processes, likely to increase labor costs and will disadvantage many employees.” Crandall continues by stating that “the goal of the aviation industry should be to harness competition and regulation to create a system responsive to the imperative of efficiency and the desirability of decent service. The aviation industry’s problems reflect several shortcomings:

• Unfettered competition does not work;

• Governments have not developed national transportation plans and have been indifferent to the decline of highways, railroads and airlines;

• Governments have failed to give sufficient priority to new air traffic control systems.” Airlines have special characteristics incompatible with a completely unregulated environment according to Crandall. “Market forces alone cannot and will not produce a satisfactory industry.”

According to a report by the Cour des Comptes (CDC), the French oversight agency similar to the U.S. Government’s General Accountability Office (GAO) as well as in The Netherlands the Algemene Rekenkamer, released a report regarding the unrealistic and ill-fated strategic planning of the Parisian airport authority (ADP), which runs Charles de Gaulle and Orly airports and several general aviation fields (Aviation Week & Space Technology, August 4, 2008, p.42). The CDC report maintains that insufficient service quality is provided to the traveling public, despite recent fee increases. CDC indirectly raises the crucial issue that it is not apparent if the primary goals of airports are to serve the traveling public or to seek a robust return upon investment.

In an advertisement by ADP of the development of their real estate for business centers and office space as well as for associated services no reference is made to the airport’s “raison d’être”, i.e. running airports. Is the airport authority no longer fully dedicated to its calling, but rather focusing on profitability? An independent investigative review for the French government has listed that their airport charges are higher than average. Pierre Sparaco, the

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author of the previous mentioned question maintains that a fresh approach is required for the Parisian airports strategy to strengthen or at least restore the traveling public’s expectations. The above mentioned complexity in the context of the relation of airlines and airports supports the requirement for research for a model regarding mitigation of the complexity between e.g. KLM and AAS. This research leads to the creation of the Delft Factors for Alignment model.

Paragraph 1.2 provides the background for this research by placing it in the context of a global dynamic industry, priorities of national government including those related to strengthening main ports, aspects of corporate interest as well as research within the department of Aerospace Management and Operations at the University of Technology in Delft.

Subsequently paragraph 1.3 discusses the scope of the research field. The scientific, managerial and societal contributions are described in paragraph 1.4. Finally the structure of the dissertation is illustrated in paragraph 1.5.

1.2 RESEARCH BACKGROUND

In this paragraph descriptions of the influence of development of global and national aspects, corporate interest as well as the research strategy of the department of Aerospace Management and Operations at the University of Technology in Delft which have led to this dissertation, are provided in the following sub-paragraphs.

1.2.1 CIVIL AVIATION AND ALIGNMENT

The basic infrastructure for civil aviation of any country comprises the following four major components (UvA, 2006, p.11; Albers et al., 2005):

1. Airlines; 2. Airports;

3. Air Navigation Services (ANS); 4. Regulatory system.

The components airports and ANS enable the component airlines to embark and disembark passengers, load and unload cargo and to transport these between an origin and destination in a safe, efficient and economical manner. The whole process is conducted under the guidance and supervision of the regulatory system within a framework of civil aviation laws and regulations, as well as in the environment.

Amongst the four entities, airlines and airports are primarily oriented towards producing the air transport services, wherein the latter acts as provider of the ground infrastructure, whilst the former offers the transportation service itself (Albers et al., 2005, p.50). “The airports provide all the infrastructure needed to enable passengers and freight to transfer from surface to air modes of transport and allow airlines to take off and land” (Graham, 2005, p.1). The

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essence of airline management “… is about matching the supply of air services, which management can largely control, with the demand for such services, over which management has much less influence” (Doganis, 2001, p.6).Regardless of the division of labor within the production of their product, airlines and airports focus on the same targets for quality service, in terms of punctuality, reliability and service. This research is focused upon the dyadic relation between airlines and airports, more specifically Koninklijke Luchtvaart Maatschappij (KLM), Royal Dutch Airlines and Amsterdam Airport Schiphol (AAS). This is illustrated in Figure 1-1.

Figure 1-1: Research focus within national civil aviation

Airlines and KLM

According to Ringbeck (2005, p.12), the air travel industry is in the grip of a far reaching restructuring process, as a reaction to what may be the worst crisis in its short history. The changed pattern of demand by e.g. new markets in Eastern Europe and Asia, the sustained success of the low-fare airlines/low cost carriers (LFA/LCC) and the significant increase of fuel costs have forced the traditional network carrier airlines into a fundamental rethink of their business model and into making a massive improvement in their cost position. The European network airlines face direct competition from LFA/LCC on approximately a third of their intra-European routes (Ringbeck et al., 2007). Furthermore, LFA/LCC are dominating the generation of new routes, having started four out of every five new city-pairs opened in the past years. By now these LFA/LCC’s have achieved a market share of approximately 25% of intra-European passengers. The significant increase of the fuel costs during the recent time frame of 2007 – 2008 for all airlines has amplified the necessity to not only cut costs and economize in the short term but also revise firm strategy for the longer term, illustrated by Figure 1-2.

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Figure 1-2: Overview of Major Airline Business Models in Europe

(Ringbeck et al., 2007)

A comparison of the average unit costs of the different flag carrier airlines with the LFA/LCC’s indicates a substantial gap of 45% and leads to the conclusion that the traditional business model of a legacy flag carrier airline urgently needs to be reshuffled. This comparison is illustrated in Figure 1-3 (ASK denotes “available seat kilometers”).

Figure 1-3: Unit Cost Comparison across European Flag Carrier Models vs. LCC

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Airports and AAS

Similarly, airports need to adapt their service offering to the changed requirements of their airline customers and to face up to the increasing factors of competition as well as e.g. environmental constraints and a profusion of smaller flights to regional locations.

KLM and AAS interact in many fields at various levels in both organizations. The most noticeable type of interaction can be observed in airside operations, i.e. the area where aircraft take-off, land, taxi are prepared for a flight. Operational activities are at the core of the inter-dependent relationship between both organizations. According to Graham (2005, p.62) a wide range of activities can be monitored at an airport. Among these are: airside delays, baggage delivery, terminal processing times, equipment availability, while consumer satisfaction levels are measured as well. Many of these aspects are beyond control of the airport. In fact airlines have a great deal of influence upon the performance of these aspects. As the largest operator at AAS, KLM performance is bound to have an influence in the way AAS is viewed by consumers.

The inter-dependency between airlines and airports in producing the air-transport services is tight, i.e. their destinies are inter-twined. Their existence as viable economic entities depends upon market performance of each other. This leads to the expectation that the relation of airlines – airports serves as an example case for dyadic alignment.

Restructuring and cost-cutting are only the first steps on a path that will see the nimblest survive and the weakest fail (Ringbeck et al., 2007, p.1). Not only the responsiveness of airports to transfer time, convenience and journey price to maintain the allegiance of visiting airlines is required, as value drivers for passengers, but also the ever increasing competition of regional and point-to-point travel due to European deregulation (Ringbeck et al., 2005, p.2).

After decades of largely independent, solitaire development strategies both airlines and airports have started to rethink their traditional customer-supplier relationship (Auerbach and Koch, 2007). While traditionally airports have been considered as infrastructure providers for airlines, today the situation is being seen as more of one of an air transport system as a whole. At the same time, liberalization and deregulation of the aviation industry have led to increasing competition. New airlines and business models have emerged; former military airports have been converted and are now being used for civil aviation activities (Koch, as cited by Auerbach and Koch, 2007). Traffic patterns and airline network structures have changed in a manner that competition is not between single carrier airlines or limited to origin-and-destination traffic but between air traffic systems and their global hub airports As such, joint airline-airport combinations are in competition with other combinations (Ringbeck et al., 2005). At the same time traffic volumes are increasing, recent kerosene price increases are causing profit margins to decrease significantly and travel behavior is changing which require flexible responses from all actors in the aviation industry, as illustrated by Figure 1-4.

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Figure 1-4: Major Challenges for the European Airline Industry

(Ringbeck et al., 2007)

A possible reaction to these developments is more alignment between airlines and airports realizing that additional opportunities involving less risk can be realized by jointly developing entrepreneurial activities (Auerbach and Koch, 2007). The objective of these efforts is to create profit for each partner. At its core is an attempt to jointly serve and cope with traffic demand in a profitable, efficient and sustainable way (Auerbach and Koch, 2007). Clear strategic alignment for the aviation industry, the participation policy, brand building, the structure of the service portfolio and the business processes exert considerable influence over the long term success of the “best practice airports” (Ringbeck et al., 2005, p.12). The exploitation of improved alignment of airlines and airports will constitute a fundamental precondition for improving operational effectiveness and efficiency and developing new areas of business.

The potential benefits of horizontal forms of alignment have been recognized by both scholars and also airlines and airports (Albers et al., 2005, p.1). Albers et al. (2005, p.1) define an “alliance as any voluntary formed, contractual arrangement between two or more independent firms with the declared intention of improving long-term competitiveness and thereby enhancing overall performance”. Organizations have implemented measures to establish alignment of varying nature. The derived savings and accrued revenue have not only benefited government and shareholders but also provided opportunities for investment of capital otherwise required for operational costs.

The next step in obtaining additional significant financial benefits is sharing the required effort for the interaction of similar major functionalities and processes by an improved alignment (Ringbeck et al., 2005, p.11).

Although airlines and airports recognize the potential benefits, a clear acceptance to facilitate the application of alignment has not widely been agreed upon (Albers, 2005). It is therefore not only necessary to define the benefits but also provide a way ahead for the implementation

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of factors for alignment to realize its potential for the mutual benefit of the (main carrier) airline and (hub) airport, i.e. KLM and AAS.

In this research the various levels of research are hierarchically linked. The corresponding texts are found in the various sub-paragraphs of this chapter.

The following figures of concentric egg-shells show the relative relation of various levels of research from the value chain to inter-dependent business processes. This is illustrated in Figure 1-5.

Figure 1-5: Alignment in the Value Chain

1.2.2 CONTEXT FOR AND CORPORATE INTEREST OF KLM&AAS

Due to the large economic importance of AAS for The Netherlands, the government of The Netherlands published its policy regarding “Toekomst van de Nederlandse Luchtvaart

Infrastructuur” (i.e. Future of the Dutch Aviation Infrastructure) in December 1999. This is

the initiative for a project which in 2002 gains its name as “Main Port Objective”. The aim of this project is maintenance of the competitive advantage of AAS as well as its associated international preferred place of business in relation to other agglomerations in North-western Europe. In spite of the important role of AAS for the economy of The Netherlands as well as its contribution to employment, the Main Port Objective is constrained by limitations due to environmental considerations of the (same) government. These limitations constrain the number of aircraft movements significantly. The increase of capacity as well as aircraft movements is crucial to attain the Main Port Objective (Ministry of Transport, 2003).

The position of The Netherlands in relation to the rest of the World has become less competitive (Ministry of Transport, 2006, p.69, 85). In the 1980’s and 1990’s this country

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was positioned amongst the leading countries of the World in providing modern logistic processes and related governmental policies. The European continent has been able to catch up with The Netherlands since that period in time due to its focus on e.g. enlargement of the European Union. Consolidation of industry in Europe has also gained significant momentum. In that context The Netherlands’ Government (Ministry of Transport, 2006, p.5, 89) wishes e.g.:

• to recognize that innovation is necessary for The Netherlands to remain e.g. a prosperous, accessible and secure nation against reasonable costs for society; and

• to maintain the position of Amsterdam Airport Schiphol (AAS) as one of the important hubs in North-western Europe, i.e. a Main Port.

This fits in the aim to attain a durable, sustainable and competitive economy (Ministry of Transport et al., 2006b).

The following aspects determine the maintenance of the competitive position of AAS as a Main Port in the global context (UvA, 2006, p.2; KLM, AAS and LVNL, 2005, p.6-7):

• Consolidation of the aviation market;

• Competitive position in relation to other Main Ports;

• Growth possibilities of AAS;

• Realization of environmental goals;

• Competitive position of the region;

• Reduction of the perception of nuisance.

From the above mentioned aspects, this research is restricted to the alignment of specific Main Port related processes. Innovative solutions for capacity related constraints of the Main Port AAS, now as well as in future, are to be provided (KLM, AAS and LVNL, 2005, p.8; UvA, 2006).

In view of the fact that many hub airports are situated geographically in close proximity, AAS is required to improve its services to remain and become more known as a best practice airport (UvA, 2006). KLM is to improve its effectiveness and efficiency as main carrier airline, within the holding company Air France – KLM, as it is required to not only attract new customers - passengers as well as cargo - but also maintain the allegiance of its present customers.

Attractiveness of a hub airport in the European and global context is required for new investors, customers, passengers and cargo. This will mainly be determined by demonstrable effective and efficient operation and interaction between existing relevant parties, i.e. AAS and KLM. Joint measures, i.e. alignment of parts of their value chains and more specifically the inter-related business processes, will facilitate the required reorganization of capacity. The complexity of not only the diverse business relationships of a hub airport (AAS) but also at the major carrier airline (KLM), as well as their inter-dependence, make research of the inter-action of these firms a challenge.

The feasibility of alignment between elements of air transport, i.e. inter-dependent business processes, is to be seen from the perspective at KLM and AAS. It is necessary that insight is obtained in the manner by which these aligned relationships can realize the gains as described in the previous texts above. After defining the benefits of alignment of business

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processes at KLM and AAS, it will be feasible to also provide a way ahead for the implementation of alignment to realize its potential for their mutual benefit.

Based upon observation of members of staff at KLM and AAS, as well as by OC&C Strategy Consultants (OC&C, 25 April 2006, p.10), it is perceived that a lack of mutual understanding or appreciation of most capabilities exists within the respective firms. Derived from this perception, it seems that within this segment of the national aviation industry knowledge regarding the value of and manner by which feasible gains can be achieved, e.g. by alignment, is insufficiently accessible to relevant managerial levels.

Albeit that these entities, i.e. KLM and AAS, engage in various forms of non-formalized irregular co-operation a lack of integral knowledge of the partner’s organization precludes any structured co-operation or alignment. This encourages appropriate research to benefit not only this segment of industry but also to gain knowledge regarding alignment as such research has neither been carried out in this country nor in a similar manner elsewhere. KLM and AAS compete on the European and global stage. This brings an additional management challenge. The business practices, policies and strategies deployed around Europe and the world require managerial and probably legal consistency but also need to be reflective of the different standards, norms and behaviors of the various countries (Gibbs, 2006, p.15). Firms, such as KLM and AAS, are confronted with the need to compete in the market by aligning their business processes with intermediaries in a channel that is characterized by increased management complexity. This complexity is created by the perceived need to market through various channel structures and do so on a global and/or European basis (Gibbs, 2006). This management task provides the initiative for this research. In order to realize an effective inter-organizational relationship KLM and AAS need to know the Factors for Alignment of their inter-dependent business processes. This alignment will reduce the integral cost of hub airport operations, increase joint revenues and improve their mutual image in order to not only gain but also maintain their competitive advantage. The constant renewal of products, processes, markets and organization enables firms to stay ahead of competition (de Man, 1996, p.9).

Airlines and airports, such as KLM and AAS, focus upon the same targets with quality of service for passengers being a defining variable of the dyad. In aviation, quality is mainly a function of punctuality, reliability and service. International airlines tend to be rather homogenous in terms of sales, service and transportation quality in the air. Competition is more likely to be seen in terms of service on the ground and in this sense airports and airlines are partners in these activities (Ringbeck et al., 2005), such as KLM and AAS. The objectives on the ground of KLM and AAS are inter-dependent to a large extent, which provides a foundation for alignment of their business processes. Derived from their common objectives, the next step would be to consider the processes which can be identified as of a mutual nature, i.e. inter-dependent. This defines their business process dyads.

The relationship between KLM and AAS was informally based upon shared objectives from their early days. Their relationship is now based upon a shared Main Port vision and strategy by Schiphol Group, KLM and LVNL (2006). The main objectives of their Main Port development, which have been identified by KLM and AAS are:

• Strengthening worldwide network destinations and frequencies;

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• Competitive region for work and living, accessibility and strengthening Amsterdam as a destination;

• International competitive business area development of infrastructure and area development as illustrated in Figure 1-6.

Figure 1-6: Mainport development objectives of KLM and AAS

(Schiphol Group, KLM and LVNL, 2006)

The objectives of Figure 1-6 are relevant for the interaction between KLM and AAS. The interaction between the four objectives of Figure 1-6 has lead to a continuous cycle with 6 concrete goals:

• Competitive position of the hub and network carrier;

• Available physical and environmental capacity;

• Demand for air transport supply network;

• Economic activities and employment;

• Attractiveness towards international companies;

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Figure 1-7: Mainport interaction cycle of this research

The competitive position of AAS and KLM in this research is the area of interest, which is specifically based upon the bottom left half of this figure (AAS, KLM and LVNL, 2005). Derived from these three goals (Competitive position etc., Available capacity etc., Demand for network etc.), inter-dependent business processes are identified. With that perspective, getting to know the Factors for Alignment of specific dyadic business processes of KLM and AAS is the focus of this research. These are influenced by many direct and indirect processes; some of them are shown in the following diagram, Figure 1-8, based upon Figure 1-6. Processes of interest for this research are e.g. Infrastructure planning, Capacity planning, Sustainability and Environment Management and Network Planning.

Figure 1-8: Processes and aspects influencing the interaction cycle

Inter-dependent business process dyads at the strategic, tactical and operational level are selected for analysis based upon the previous figure as well as research regarding the perceived inter-dependency at KLM of AAS by Rennestraum (2007). Examples of obvious inter-dependent business processes are network planning and infrastructure planning (Figure 1-8, Figure 1-10 and Figure 1-11), where sub-processes and tasks are clear and defined.

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These processes are nearly impossible to carry out in isolation of the airline or airport respectively.

Since the summer of 2004, the Cooperative Platform for Innovation at the Main Port Amsterdam (“Samenwerkingsverband Innovatieve Mainport”, or SIM) - including the Chief Executive Officers of KLM and AAS - strives to contribute to the realization of the goals of the Main Port. One of the goals is improvement of capacity and accessibility of the main port, at the so-called “airside”, i.e. the area where aircraft take-off, land, taxi and are prepared for a flight.

Three of the eight research themes of SIM are (SIM Research Program, September 2005):

• Optimization of the value chain;

• Environmental capacity; and

• Creation of stakeholder support.

With respect to the optimization of the value chain, listed above, this innovation platform expects that “specific business processes of KLM and AAS, …, can be aligned” (SIM Research Program, 2005, p.7). Similar alignment is also expected by the joint presentation of KLM and AAS regarding environmental capacity as well as creation of stakeholder support. The improvements within the value chain that are feasible, according to the research program of the SIM platform, can be determined by answering the following questions:

• “Goals: what are the wishes and requirements regarding improvements to the entire

process of passenger as well as cargo movement?

• Selection: Which sub-processes could be eligible for integration, i.e. alignment?

• Design: (step 1) which information-exchange between business processes and

individual actors is required; (step 2) which alternatives are feasible for newly integrated - i.e. aligned - business processes; (step 3) which supporting processes and tools should be developed?

• Evaluation: How do the designs contribute to improved results of the entire process

of passenger as well as cargo movement (cost-benefit analysis)?”

The eligibility for alignment, mentioned above in the question selection, is determined by those business processes of KLM and AAS which jointly can contribute to maintenance of the competitive position of the Main Port, as stated in the previous sub-paragraph (see Figure 1-6).

On the one hand the existing relation in general between airlines and airports and on the other hand the corporate expectations of KLM and AAS as context as well as corporate interest, as described above, lead to determination of the research field described in paragraph 1.3.

1.2.3 RESEARCH WITHIN STRATEGY OF AEROSPACE MANAGEMENT AND

OPERATIONS

Research within the department of Aerospace Management and Operations (AMO) is focused upon understanding processes in the AMO profiles of Supply Chain Management,

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Aviation as well as Maintenance Repair and Overhaul (MRO). There are three basic elements in the research of AMO:

• integration of parties involved in the same supply chain;

• looking through the eyes of the customer;

• open innovation.

The integrative part within AMO stems from the belief that working together delivers value to all parties in the chain, more than the sum of the optimized steps in the chain. Going for maximum gain in one step of the chain might add so many costs in other steps in the supply chain that the total value becomes negative. Specifically, AMO carries out research for the processes in the chain that add value, if possible with several parties in the chain.

The value can best be assessed by what is called in AMO “looking through the eyes of the customer”, meaning that value is only generated if activities of supplier A generate value towards the markets of the customer of A, i.e. the next step in the chain.

The third element, open innovation, represents the belief within AMO that sharing knowledge is the multiplying enabler. Sharing generates incoming cash flow in a very early stage of an innovation, thus reducing the investments required as well as enlarging the opportunities in the markets.

AMO research projects aim to enlarge the knowledge of processes and process integration in the aviation sector, commencing in The Netherlands and subsequently expanding that knowledge internationally. The AMO research strategy describes several desired end results:

• Models for collaboration in supply chain, with value creation as the ultimate goal of the chain as a whole;

• Knowing the factors that explain, influence or improve the alignment between partners in a supply chain;

• Models to make the supply chain lean;

• Integrate processes in supply chain that facilitate the alignment in those supply chains.

The relationship of airlines and airports is complex, and is located within a complex environment. Within aviation related AMO research, projects contribute to the understanding of the inter-dependency of airlines and airports, at the level of the firm as well as at business process level. The factors that explain the inter-dependency should enable parties to align themselves or their business processes. Also alignment should lead to more added value throughout the dyad of airlines and airports, both for parties involved as for the traveller.

1.3 SCOPE OF THE RESEARCH FIELD

The elements of the scope of the research field that contribute to the determination of Factors for Alignment are described in the following paragraph.

The scope of research commences with a description of a model of the value chain by the required inter-actions leading from co-operation through coordination to collaboration which

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is considered as partnership enhancing C³ behavior. This C³ behavior reduces the potentially negative behavior spiral influences within long-term close collaboration. Included in C³ behavior are Factors for Alignment, e.g. synchronizing objectives, pursuing joint approaches and promoting joint measures. Management of the value chain is to identify opportunities beyond the immediate boundaries of entities within the aligned relationship. Resources in one part of the value chain can be used in another part. Formation of inter-organizational relationships (IOR) including alignment leads to gaining and sustaining competitive advantage for the participating firms e.g. KLM and AAS. Management of the Factors for Alignment in an alignment of KLM and AAS is a key aspect. Management of inter-dependent relations is difficult but the need for strategic alignment is the main driver thereof. Any firm needs to look beyond its boundaries and must seek to develop its competitive advantage by engaging in IOR by at least alignment of its business processes.

The overall level of alignment between firms can be better captured on a part-level, i.e. the business process, rather than the compound inter-organizational level. The potential business processes that can be managed to mutual benefit are those processes which are inter-dependent, i.e. demonstrate dependence upon the other party or are partially or completely redundant. An aligned firm including its business processes encourages behavior such as innovation and risk taking because individual action is directed at achieving mutually agreed high-level objectives. In an un-aligned firm this leads to chaos.

The rationale for the selection of the inter-dependent business processes to be researched is provided in sub-paragraph 1.3.9. The conclusion of this paragraph is described in the research field at sub-paragraph 1.3.10.

1.3.1 VALUE CHAIN AND APPLICATION OF WILLIAMSON’S ORGANIZATIONAL

FAILURE FRAMEWORK

Wilding and Humphries (2006) have specifically tested the well-accepted Williamson’s economic Organizations Failure Framework (1975) as a theoretical model through which long-term collaborative relationships can be viewed. Within the value chain the need for much closer, long-term relationships is increasing due to supplier rationalization and globalization and more information regarding these inter-actions is required (see Figure 1-5). Their research used a specific theoretical model to achieve a broad understanding of business relationships within a single, albeit very large organization.

In research by Wilding and Humphries (2006), they found that strong balancing, positive business drivers were likely to produce examples of relationship building, specific investments, co-operative behavior, open communications and a desire to reduce the burden of governance through more equitable long-term arrangements. Wilding and Humphries (2006) suggest that co-operative, coordinating and collaborative behaviors involve “working together” jointly to bring resources into a required relationship to achieve effective operations into harmony with the strategies and/or objectives of the parties involved thus resulting in mutual benefit. Humphries and Wilding (2006) posed the view, based upon research by Spekman et al. (1998) as shown in the Figure 1-9, that a shift in the level of intensity between partners is necessary. Co-operation, where firms exchanged essential information and engaged supplier/customer long-term contracts, was the “threshold” level of interaction. The next was coordination, where both workflow and information were engaged to make many of the traditional linkages between and among trading parties seamless.

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Collaborative behavior engaged partners in joint planning and processes beyond levels reached in less intense trading relationships. The behaviors of co-operation, coordination and collaboration lead to different forms of alignment that all create mutual benefit for the participating partners.

Figure 1-9: Value Chain Transition from Adversarial to Collaborative Relationships

(adapted from Spekman et al., 1998)

Wilding and Humphries (2006) felt that it was justifiable to describe a form of partnership-enhancing behavior (C³ behavior) that combined all three. They were surprised that C³ (co-operative, coordinating, collaborative) played an important part in counteracting the potentially negative behavior spiral influences within long-term, close collaborations. Exploration of the theoretical framework dimensions using other relational variables such as

trust, commitment and long-term orientation could cross-tabulate and extend their findings.

Note: Words in italics indicate an emphasis related to possible Factors for Alignment which are determined in Chapter 3.

Wilding and Humphries (2006) demonstrated that their theoretical model could provide powerful insight into the research subject and especially revealed the important part played by co-operation, co-ordination and collaboration (C³ behavior) in reducing the inherently negative effects of close proximity and limited choice relationships.

The prime contribution of that exploratory research is the exposure of relationship dynamics within a large sample of long-term, collaborative value chain business dyads using an integrated application of Williamson’s Organizations Failure Framework. Managers can reduce sources of frustration that generate negative behaviors by taking joint actions. Central to achieving this is C³ behavior were setting synchronized objectives, pursuing joint

approaches to service and product delivery, lowering joint costs and risks and promoting joint measures to support the growth of trust appear to be the best ways of halting negative

behavior spirals. These are all Factors for Alignment, to be taken into account during the research described in Chapters 3 and 4.

1.3.2 VALUE CHAIN MANAGEMENT

Related to optimization of the value chain on page 32, The Netherlands Government wishes to strengthen the effectiveness of the Main Port value chain (Ministry of Transport et al.,

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2006-2007). This includes the long-term development of the Main Port strategy as well as selective measures regarding on the one hand traffic with a high economic-societal value and on the other hand adequate noise and environmental aims and achievements. To these ends, specific business processes of interest addressing these aspects at KLM and AAS are identified in sub-paragraph 1.3.9, Process Selection, such as network planning and

environmental capacity.

Tight alignment between airlines and airports is rare. It is of interest to research the relationship throughout the value chain of the dyad that exists between the two firms, i.e. KLM and AAS (see Figure 1-5). In sub-paragraph 1.2.2 and figure 1-8 examples of obvious inter-dependent business processes are mentioned as well as optimization of the value chain. Before entering into an alignment-agreement, it is necessary to identify appropriate potential joint activities (Auerbach and Koch, 2007). An analysis of the value chains of the dyad, i.e. KLM and AAS, is an approach to identify the common and different activities of these partners. For this the value chains developed by Albers et al. (2005) provides a matrix of possible fields for alignment such as the examples of capacity management and planning,

network and route development, and Main Port image, see Figure 1-10 and Figure 1-11. In

general, alignment between partners, i.e. KLM and AAS, is feasible at the level of supporting activities (Auerbach and Koch, 2007).

The objective in this research is to determine Factors for Alignment for inter-dependent business processes within the value system of the customer-supplier relationship of KLM and AAS. These inter-dependent business processes are defined at sub-paragraph 1.3.9, Process

Selection. This has determined the processes for which alignment is deemed feasible. It is

either logical due to similarity of objectives or the fact that they depend on each other, i.e. influence is experienced as inter-dependency. Inter-dependency of business processes leads to various forms of mutually beneficial management thereof. The selected business processes are a means for research to establish the Factors for Alignment.

Figure 1-10: Value Chain Airports

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Figure 1-11: Value Chain Airlines

(Albers et al., 2005)

In order to promote positive change throughout the value chain and foster alignment by developing fitting processes, shifting roles and building personal relationships, manager and worker buy-in and commitment are required. Creating this commitment is achieved by involving employees in the change process itself and not just informing them regarding the implementation thereof (Vereecke et al., 2006)

The concept of a value-adding partnership (VAP) (Johnston and Lawrence, 1988, p.95-96) is the understanding that each player in the VAP-chain, e.g. within KLM and AAS, has a stake in the other’s success. Managers look for opportunities beyond their boundaries in an aligned relationship (Spekman et al., 1998). They look for ways the resources at one part of the VAP could be used in another part. When all partners are strong, the entire aligned VAP-chain can stand up to the toughest of competitors, integrated or not.

Commitment for mutually beneficial alignment and the required structure of the management form or organization of inter-organizational management are inversely related functionalities. That implies lower commitment requires more need for structuring. More commitment implies less need for structure, i.e. more flexibility.

1.3.3 INTER-ORGANIZATIONAL RELATIONSHIPS

From a strategic perspective, the basic motive for forming an inter-organizational relationship (IOR), including alignment (Spekman et al., 1998), is gaining and sustaining competitive advantage for the participating firms (Das and Teng, 1999). This over-riding

All for one: Factors for alignment of inter-dependent business processes at KLM and Schiphol

ALL FOR ONE

ALL FOR ONE

ACKNOWLEDGEMENTS

PREFACE

ABSTRACT

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

LIST OF ABBREVIATIONS AND ACRONYMS

1

INTRODUCTION