These partnerships also drive considerable traffic back to Lufthansa from other airlines, in particular through the Frankfurt hub, which is one of the world's busiest airports. Lufthansa helped found the Star Alliance at a point in time when it was in terrible financial condition (Bruch & Sattelberger, 2001)
In general, firms are less familiar with the local culture, which places challenges on their marketing arms. In addition, the company is faced with currency exchange rate risk, political risk, the application of a new set of trade and local laws (Goudy, 2007)
In addition, alliance members may fail to perform to expectations, leaving the remainder of the alliance members to pick of the slack, or simply resulting in the group failing to function as well as intended. This could be because the partner has misrepresented its competencies or it could be because the partner has failed to commit the necessary resources to the partnership (Middlemist, 2004)
M. (cost per available seat mile) of any of the major carriers" (Brancatelli 2008)
But like Southwest, it too has deployed a fuel-hedging strategy to minimize costs. Its CEO recently announced that "Lufthansa is hedged on 75% of 2011 fuel needs…We had not at all taken the rise in oil prices into account, but have been protected against it by our hedging policy" (Webb 2011)