ALLIANCES, CODESHARING, ANTITRUST IMMUNITY, AND INTERNATIONAL AIRFARES: DO PREVIOUS PATTERNS PERSIST?

Abstract

This paper revisits the effect of airline cooperation on international airfares, using a panel data set from 1998 to 2009. The findings mostly confirm previous results, showing that full airline cooperation lowers the fares paid by interline passengers, and that incremental improvements to cooperation individually lead to fare reductions. The results, which show that codesharing, alliance service, and antitrust immunity each separately reduces fares below the traditional interline level, overturn contrary and counterintuitive findings in recent U.S. Department of Justice (DOJ) studies. The findings thus buttress the consumer-benefit arguments used in many past antitrust-immunity cases, which were called into question by the DOJ studies.