Partnering With Competitors - Effects Of Alliances On Airline Entry And Capacity Decisions

The formation of an airline alliance is one of the most important and difficult decisions that has to be made by airline management. In particular, domestic airline alliances have always caused controversy due to the possibility of attenuating the competition, which has been a key concern of policy makers. Before approving such alliances, government authorities therefore pay a lot of attention to how many overlapping routes the two airlines attempting to join forces already have. In this paper the authors go beyond this point of view and attempt to understand the competitive effects of domestic alliances by analyzing how flight networks change dynamically after an alliance.