The effects of airline alliances: What do the aggregate data say?

Pedro L. Marín
Authors registered in the RePEc Author Service: Philippe Gagnepain

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We consider an empirical model of worldwide airline alliances that we apply to a large set of companies for the period 1995-2000. Using observations at the companies level, we estimate a cost, capacity, and demand system that accounts for cross-price elasticities. From the estimates, we shed light on the fact that many airlines involved in the same alliances are potential substitutes. We also test for the effects of alliances on airlines’ fares and suggest that airlines inside alliances cut prices by 5% on average compared to airlines outside alliances. Finally, we construct price-cost margins for each airlines and suggest that current pricing habits are not uniform and vary from one alliance to another.

Keywords: alliances; airline; cross-price; elasticities; Nash; behavior (search for similar items in EconPapers)
JEL-codes: L11 L13 L41 L93 (search for similar items in EconPapers)
Date: 2009-04-30
New Economics Papers: this item is included in nep-com
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Journal Article: The effects of airline alliances: what do the aggregate data say? (2010)
Working Paper: The effects of airline alliances: What do the aggregate data say? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we096540

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