Effects of Strategic Airline Alliances on Air Transport Market Competition: An Empirical Analysis

Zhi H. Wang, Michael Evans and Lindsay Turner
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Zhi H. Wang: Lecturer in Tourism and Business Strategy, School of Business, Charles Sturt University, PO Box 789, Albury, NSW 2640, Australia
Michael Evans: Associate Professor of Finance and Accounting, Graduate College of Management, Southern Cross University, PO Box 157, Lismore, NSW 2480, Australia
Lindsay Turner: Head, School of Applied Economics, Victoria University, PO Box 14428 MC, Melbourne, Victoria 8001, Australia

Tourism Economics, 2004, vol. 10, issue 1, 23-43

Abstract: While alliances continue to be an important tool for airlines as they seek to expand their networks to compete more effectively with other larger networks, the effects of alliances and market liberalization on air transport market competition and airline performance have received relatively little attention. This research empirically investigates the effects of liberalization, and airline alliances, on airline competition. The analysis is based on 5,021 data sets focusing on 197 routes between the gateway cities of the major airlines' home countries. Findings show that airline passenger market share and route network share are significantly increased with increasing alliance activity. Also, airlines have a greater number of flights, passengers and passenger seats on routes for which they are involved in higher levels of cooperation and operate in more liberal markets. This suggests that multiple cooperation structures contribute more than bilateral airline service agreements to the overcoming of restrictive regulatory frameworks, enabling more effective competition.

Keywords: airline competition; airline alliances; liberalization (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:10:y:2004:i:1:p:23-43

DOI: 10.5367/000000004773166501

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