A: An airline alliance is an agreement between two or more airlines to cooperate for the foreseeable future on a substantial level.

The degree of cooperation differs between alliances.

Benefits/Costs
Benefits might consist of:

An extended and optimised network
This is often realised through code sharing agreements. Many alliances started as only a code sharing network.
Cost reduction
This might include sharing of
Sales offices
Maintenance facilities
Operational facilities, e.g. catering or computer systems.
Operational staff, e.g. ground handling personnel, at check-in and boarding desks.
Investments and purchases, e.g. in order to negotiate extra volume discounts.
Benefits for the traveller might be:

Lower prices due to lowered operational costs for a given route.
More departure times to choose from on a given route.
More destinations within easy reach.
Shorter travel times as a result of optimised transfers.
Disadvantages for the traveller might be:

Higher prices when all competition is erased on a certain route.
Less frequent flights, for instance when two airlines fly each three times a day on a given route, the alliance might fly only four times on the same route.