## 2 Background
### Joint Ventures in the Global Air Cargo Industry  
Joint ventures (JVs) are increasingly becoming a popular strategy in the world airline industry. Joint ventures are being formed in both the passenger and air cargo segments of the industry [32]. These joint ventures are enabling airlines to deliver greater choice to consumers, whilst at the same airlines are growing businesses. Examples of passenger joint ventures include the Air France-KLM-Alitalia and Delta JV over the Atlantic; Japan Airlines-British Airways and Finnair IV linking Japan and Europe; and the All Nippon Airways (ANA)-United JV across the Pacific [32]. In the air cargo industry, examples of recent joint ventures include the All Nippon Airways (ANA) and Lufthansa Cargo AG innovative air cargo joint venture on Japan-Europe routes. This joint venture took effect on 1 December 2014. Under the JV agreement, both ANA and Lufthansa have commenced joint sales of shipments on flights from Japan to Europe [33]. In April 2017, United Airlines (UAL) and Lufthansa Cargo signed a joint venture agreement for extensive cargo cooperation on routes between the U.S. and Europe. The two partners plan to provide a wide range of benefits to customers by cooperating on the availability of their air cargo capacity and aligning cargo reservations and handling processes. The two carriers' joint venture route network will provide greater flexibility and will also offer time savings to customers with thousands of new route combinations and more than 600 direct connections per week between the U.S. and Europe. The combined United Airlines and Lufthansa route network offering creates additional benefits for customers through access from either partner's cargo booking channels together with coordinated handling processes and transfers at many airports served by the two airlines [34].  
There are a range of factors that are leading to formation of joint ventures in the global air cargo (as well as the passenger) industry. International air transport operates within the framework of the 1944 Chicago _Convention on International Civil Aviation_ and has been traditionally administered by a complex network of multilateral government air services agreements (ASA's) and International Air Transport Association (IATA) rules [35; 36]. Commercial air rights are contained in bilateral air services agreements that are negotiated between individual countries [37; 38]. However, in some instances bilateral agreements have significantly restricted the freedom of individual scheduled airlines and, as a result has constrained competition in the international air transport industry. Confronted with these restrictions, airlines have entered into joint ventures as these JVs provide the means for international airlines to obtain access to new markets, and to offer new services [39].  
Following the privatization of airlines, especially in Europe and the deregulation of the United States airline market in 1978 [40], the desire for airlines to expand route networks internationally has resulted in increased competition between airlines. However, existing regulatory policies that restrict the takeover and use of foreign resources pose challenges to airlines. Although there are examples of firms acquiring equity stakes in international airlines, most governments do not permit complete foreign ownership of domestic airlines [41].  
Joint ventures and alliance agreements also enable partner airlines to increase efficiency, reduce their costs by cutting back on fixed costs and eliminating redundant operations. Furthermore, by coordinating aircraft and flight schedules, the member airlines can reduce their fleet requirements or take greater advantage of the capacity that is offered, as operating a larger aircraft is more suitable for matching the aircraft size with the demand of a specific route. Other JV benefits include the shared use of ground handling arrangements and airport facilities and staff, joint procurement of fuel and amenities, and cooperative advertising and promotional campaigns [41].