International Airfares in the Age of Alliances: The Effect of Codesharing and Antitrust Immunity

39 Pages Posted: 29 Aug 2001

See all articles by Jan K. Brueckner

Jan K. Brueckner

University of California, Irvine - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2001

Abstract

This paper provides empirical evidence showing the effect of airline cooperation on the level of interline fares paid by international passengers. The analysis focuses on two measures of cooperation, codesharing and antitrust immunity, and the results show their partial effects are both negative. The presence of codesharing on an international interline itinerary reduces the fare by 8-17 percent, with the exact number depending on the sample used and the estimation method. Moreover, the presence of antitrust immunity reduces the fare by 13-21 percent. Codesharing and immunity are substitutes, however, in the sense that their combined effect is smaller than the sum of their partial effects. Recognizing this difference, which is captured by an interaction variable in the regressions, the combined effect ranges between 17 and 30 percent. These results provide strong evidence that airline cooperation in the fare-setting process generates substantial benefits for interline passengers.

Keywords: antitrust immunity, codesharing, alliances

JEL Classification: L0, L4, L9

Suggested Citation

Brueckner, Jan K., International Airfares in the Age of Alliances: The Effect of Codesharing and Antitrust Immunity (March 2001). Available at SSRN: https://ssrn.com/abstract=281328 or http://dx.doi.org/10.2139/ssrn.281328

Jan K. Brueckner (Contact Author)

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
531
Abstract Views
3,657
Rank
96,611
PlumX Metrics