Aviation competition: international aviation alliances and the influence of airline marketing practi

Authors in the literature aggregate tickets to compute the average fare paid for each type of ticket in a given travel itinerary. Department of Transportation has granted immunity from the U. We chose not to do so in large part because, after accounting for the data limitations, there are simply too few changes over the period in the number of non-stop competitors across trans-Atlantic routes to reliably employ a panel model.

This article assesses the competitive effects and efficiencies associated with such grants. It serves routes within Europe and between cities in Europe and city H in the U.

This evidence supports the normal antitrust presumption that eliminating or substantially reducing competition through merger or collaboration enhances the market power of the remaining suppliers and leads to higher prices, harming consumers.

The partners may agree to adjust flight schedules and operations to provide seamless service on code-share flights. An antitrust immunity grant allows the participants in the JV to collude in the routes that they agree to include in the agreement. We act as general counsel to established U. We conclude in Section 9.

Granting antitrust immunity to carriers in an alliance agreement eliminates competition between these carriers in their non-stop overlaps, which are the routes where they principally compete see Section 2.

In recent years, DOT has granted immunity to larger groups of airlines in the three major international alliances, significantly reducing the number of independent competitors over the North Atlantic. The SkyTeam immunity grant eliminated one competitor in two routes as of quarter three.

Concerning global alliances, in particular transatlantic alliances, it is essential that further steps be taken to fully liberalise air transport services between the European Union and third countries. Our lawyers also deftly guide clients through regulatory and enforcement matters, capital raising, insurance issues, securities offerings, restructurings, bond counsel matters, international trade and licensing, tax policies, complex accident investigations, crisis management and litigation.

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The data also show that antitrust immunity is not reasonably necessary for alliance participants to deliver pricing efficiencies to connecting passengers. Liberalisation and competition enforcement are mutually reinforcing policies. In the Commission conditionally approved for a period of ten years a co-operation agreement between Lufthansa and SAS setting up an operationally and commercially integrated transport system.

We label a ticket as a SkyTeam ticket Star, oneworld, respectively when all of the flights in the ticket are operated and marketed by members of the SkyTeam alliance Star, oneworld, respectively.

Airline industry

Carriers filing alliance and antitrust immunity proposals at DOT "Applicants" argue that an antitrust immunity grant enables the partners to deliver significant benefits, principally in the form of service to more destinations and lower fares to passengers who travel with connecting itineraries that is, itineraries that include intermediate airport stops.

Over the past seventeen years, DOT has granted immunity to over twenty international alliance agreements, permitting immunized participants in these alliances to collude on prices, schedules, and marketing.

Hence, even if connecting service is in the relevant market, the loss of nonstop competition significantly increases concentration levels in the market, and we have evidence of large, statistically significant fare effects from differences in non-stop competition on the fares paid by the vast majority of passengers.

Cities A, H are in the U. The number of airline alliances has rapidly expanded the last few years. We find some results to be sensitive to this figure and to fares at the top of fare distribution, which is highly skewed to the right. Without immunity, carriers might prefer to allocate seats to their own passengers rather than alliance passengers to maximize revenues.

Aviation Law

Comments on specific papers may be addressed directly to the authors at the same mailing address or at their e-mail address.

Airline alliances have been shown in the economics literature to benefit customers relative to traditional arms-length arrangements, so-called interline arrangements, as they allow the partner airlines to market new destinations and typically lead to lower prices.

Over time, Continental has increased capacity and frequency in that market, despite its lack of transatlantic immunity.

Airline alliance

We allow for the effect of the ATI variable to vary with the number of independent competitors in a route. The oneworld grant eliminated one competitor in another 8 routes as of quarter four, but fare data are not at this time available through For instance, in conjunction with the U.

Consider for instance the Star alliance. Unstable alliances Airline alliances may change rapidly and are still to an extent in a state of flux.Among our clients are more than 80 airlines worldwide and many of the world’s largest aerospace companies, including aircraft, engine and component manufacturers; top cities and airports; major domestic, foreign and cargo air carriers; new entrants; charter operators; large repair stations; international banks; and leasing companies and brokers.

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fic across the Atlantic.

Antitrust Immunity And International Airline Alliances

They are: International Airline Group (BA merged with Iberia) and virtually merged with American; to intra-alliance competition and/or con - flicts of interest.) Importantly, the US DoJ contests the looking for an alliance intro – see Aviation Strategy, Jan/Feb ).

Looking at the North Atlantic from a. The global aviation industry can be turbulent. We help clients find clear skies. Our aviation practice spans every facet of the industry, including regulatory, aviation finance and leasing, antitrust, airline alliances and joint ventures, litigation, legislative/lobbying, M&A, and environmental.

Airline alliances may also create disadvantages for the traveler, such as: Higher prices when competition is erased on a certain route. Less frequent flights: for instance, if two airlines separately fly three and two times a day respectively on a shared route, their alliance might fly less than 5 (3+2) times a day on the same route.

AIRLINE MARKETING COURSE TABLE OF CONTENTS Introduction Module 10 Airline Alliances & Marketing Strategy Module 11 Marketing Management in Practice.

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Aviation competition: international aviation alliances and the influence of airline marketing practi
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