Constrained Contracting and Quasi-Mergers: Price Effects of Code Sharing and Antitrust Immunity in International Airline Alliances

Author(s):  
W. Tom Whalen
2015 ◽  
Vol 14 (1) ◽  
Author(s):  
Philip G. Gayle ◽  
Tyson Thomas

AbstractMuch of the literature on airline cooperation focuses on the price effects of cooperation. A key contribution of our paper is to empirically examine the product quality effects of airline cooperation. Two common types of cooperation among airlines involve international alliances and antitrust immunity (ATI), where ATI allows for more extensive cooperation. Additionally, this paper examines the extent to which domestic mergers affect the quality of international air travel products. The results suggest that increases in the membership of a carrier’s alliance or ATI partners and domestic mergers are associated with the carrier’s own products having more travel-convenient routing quality. Therefore, a complete welfare evaluation of airline cooperation and mergers should not ignore product quality effects.


2000 ◽  
Vol 43 (2) ◽  
pp. 503-546 ◽  
Author(s):  
Jan K. Brueckner ◽  
W. Tom Whalen

2013 ◽  
Vol 7 (2) ◽  
pp. 253-267
Author(s):  
Cayami S. C. Cavalcante

This paper performs a comparative literature review of different approaches to explain the effects of international airline alliances on fares. Authors develop different models adopting their own simplifications and boundary conditions. In the models effects of cooperative price setting are shown to have positive effects for consumers. With the improvement of services, consumers may be willing to pay a premium, which can outweigh to positive effects of allocative efficiency. In non-cooperative pricing conditions, both airlines and passengers do not reap the full benefits possible from the system. The loss of competition however always results in an increase on fares. By studying the repertoire on airline alliances it is possible to advance a comprehensive view on the subject.


2011 ◽  
Vol 7 (2) ◽  
pp. 335-380 ◽  
Author(s):  
V. Bilotkach ◽  
K. Huschelrath

2000 ◽  
Vol 49 (2) ◽  
Author(s):  
Frank Fichert

AbstractThe formation of international Airline Alliances can be beneficial to consumers but might also restrict competition in some markets, especially between hub-airports of the Alliance-partners. Competition authorities try to safeguard rivalry, e.g. by restricting the use of frequent-flier programs and by prohibiting predatory behavior. In this paper it is shown that a further opening of airline markets is inevitable. Restrictive bilateral aviation agreements should be replaced by open-skies agreements or a liberal agreement on a multilateral base. Also the “grandfathering” of slots has to be abolished and a market-based allocation mechanism should be established.


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