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Price Competition between International Airline Alliances

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Author Info
Volodymyr Bilotkach

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Abstract

This paper develops a model of price competition between two international airline alliances, with consumers' preferences vertically differentiated by the number of stops. Alliances benefit the interline passengers. Alliances with antitrust immunity do not benefit interline passengers more than those without antitrust immunity, in contrast to the Cournot-type settings. While antitrust immunity leads to higher fares for non-stop travel between hubs of alliance partners, granting it might be necessary to induce consolidation between carriers. Formation of alliances with antitrust immunity is consistent with the proposed model, even though these are likely to decrease individual carriers' profit. © 2005 LSE and the University of Bath

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Publisher Info
Article provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.

Volume (Year): 39 (2005)
Issue (Month): 2 (May)
Pages: 167-190
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:tpe:jtecpo:v:39:y:2005:i:2:p:167-190

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Web page: http://www.bath.ac.uk/e-journals/jtep

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  1. Rafael Moner Colonques & Ricardo Flores Fillol, 2006. "Strategic Effects Of Airline Alliances," Working Papers. Serie AD 2006-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  2. Achim I. Czerny, 2006. "Code-sharing and its effect on airline fares and welfare," Working Papers 2006-15, Center for Network Industries and Infrastructure (CNI). [Downloadable!]
  3. Volodymyr Bilotkach, 2007. "Issues in Network Development by National Airlines: The Case of Ukraine," Rivista di Politica Economica, SIPI Spa, vol. 97(1), pages 61-80, January-F. [Downloadable!]
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