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Code-sharing and its effect on airline fares and welfare

Author

Listed:
  • Achim I. Czerny

    (Workgroup for Infrastructure Policy (WIP), Technische Universität Berlin)

Abstract

Airlines frequently use code-share agreements allowing them to market seats on flights operated by partner airlines. Current studies argue that with complementary networks this generates positive welfare effects because fares for interline passengers who rely on the service of multiple airlines are supposed to fall. However, with codeshare agreements airlines can price discriminate between interline and other passengers. This might harm the latter which has been ignored so far. We show that code-share agreements can lead to welfare losses in the case of complementary networks.

Suggested Citation

  • 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).
  • Handle: RePEc:cni:wpaper:2006-15
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    File URL: http://www.cni.tu-berlin.de/fileadmin/documents/RePEc/cni/working_paper/czerny_2006_code-sharing-and-its-effect-on-airline-fares_cni_wp_no_2006-15.pdf
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    More about this item

    Keywords

    Airlines; alliances; code-share agreements; antitrust immunity; price discrimination;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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