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Code-sharing and its effect on airline fares and welfare

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Author Info
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.

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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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Publisher Info
Paper provided by Center for Network Industries and Infrastructure (CNI) in its series Working Papers with number 2006-15.

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Length: 30 pages
Date of creation: 2006
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Handle: RePEc:cni:wpaper:2006-15

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Related research
Keywords: Airlines alliances code-share agreements antitrust immunity price discrimination

Find related papers by 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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Orit Hassin & Oz Shy, 2004. "Code-sharing Agreements and Interconnections in Markets for International Flights," Review of International Economics, Blackwell Publishing, vol. 12(3), pages 337-352, 08. [Downloadable!] (restricted)
  2. Chen, Zhiqi & Ross, Thomas W., 2003. "Cooperating upstream while competing downstream: a theory of input joint ventures," International Journal of Industrial Organization, Elsevier, vol. 21(3), pages 381-397, March. [Downloadable!] (restricted)
  3. Bamberger, Gustavo E & Carlton, Dennis W & Neumann, Lynette R, 2004. "An Empirical Investigation of the Competitive Effects of Domestic Airline Alliances," Journal of Law & Economics, University of Chicago Press, vol. 47(1), pages 195-222, April.
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  4. Jong-Hun Park & Anming Zhang, 2000. "An Empirical Analysis of Global Airline Alliances: Cases in North Atlantic Markets," Review of Industrial Organization, Springer, vol. 16(4), pages 367-384, June. [Downloadable!] (restricted)
  5. Brueckner, Jan K & Whalen, W Tom, 2000. "The Price Effects of International Airline Alliances," Journal of Law & Economics, University of Chicago Press, vol. 43(2), pages 503-45, October.
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