Open skies and open gates |
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Authors: | Nolan J F Ritchie P C Rowcroft J E |
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Institution: | (1) Department of Agricultural Economics, University of Saskatchewan, Saskatoon, SK, Canada, S7N 5A8;(2) Faculty of Administration, University of New Brunswick, P.O. Box 4400, Fredericton, NB, Canada, E3B 5A3 |
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Abstract: | Airline alliances are a global transportation issue which is the subject of increasing attention in the literature. A simple simulation model of air carrier competition in a network is constructed to examine the economic welfare effects of different levels of alliance between the carriers serving the network. The simulations confirm that consumers derive benefits from improved access to passenger markets. However, in many cases, carriers tend to gain from a limited alliance such as code-sharing. This suggests that closer alliances may be driven by other considerations such as raising barriers to entry or the cross-subsidisation of international routes through greater control of the domestic market. |
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Keywords: | airline alliances gate access social welfare |
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