Can parallel airline alliances be welfare improving? The case of airline–airport vertical agreement
What is it about?
This paper introduces the concept of airport behavior into the analysis of airline alliances and focuses on the role of concession revenue sharing contracts between airports and airlines.
It investigates how parallel alliances can impact welfare and the number of passengers in the industry. The study provides new insights into the potential benefits and drawbacks of parallel airline alliances and offers implications for policymakers.
Why is it important?
The paper is important for several reasons.
Firstly, it addresses the issue of parallel airline alliances, which have been a topic of concern in the aviation industry. Parallel alliances involve multiple airlines forming alliances, and there has been debate about their impact on competition and consumer welfare. This paper contributes to the understanding of parallel alliances by examining their effects in the context of competition between vertical airport-airline pairs.
Secondly, the paper introduces the concept of airport behavior into the analysis of airline alliances. It considers the role of concession revenue sharing contracts between airports and airlines, which have become increasingly common in the aviation sector. By incorporating airport behavior, the study provides insights into how airports can influence the competition downstream market and potentially mitigate the negative effects of parallel alliances.
Thirdly, the research explores the welfare implications of parallel airline alliances. It investigates whether these alliances can be welfare improving and analyzes the impact on the number of passengers in the industry. The findings offer new perspectives on the potential benefits and drawbacks of parallel alliances, providing valuable insights for policymakers and authorities responsible for evaluating and regulating airline alliances.
Thus, this paper contributes to the existing literature by examining the effects of parallel airline alliances in the presence of airport behavior and concession revenue sharing contracts. It sheds light on the complex dynamics between airlines and airports and offers important implications for policymakers and industry stakeholders in understanding the potential welfare implications of parallel alliances.
As the author of the paper, I believe that this research is a significant contribution to the field of aviation economics. It addresses an important and timely topic, the effects of parallel airline alliances on welfare and competition.
Through this study, I aimed to shed light on the complex dynamics between airlines and airports in the context of parallel alliances. By incorporating the concept of airport behavior and analyzing the role of concession revenue sharing contracts, I sought to provide a comprehensive understanding of how these factors influence the outcomes of parallel alliances.
From a personal perspective, I find the findings of this research to be intriguing and thought-provoking. The analysis reveals that under certain conditions, parallel airline alliances can actually be welfare improving, contrary to the conventional belief that they have negative effects on consumers. This highlights the importance of considering the influence of airports and the specific contractual arrangements between airports and airlines in evaluating the impact of parallel alliances.
Furthermore, the study underscores the need for policymakers and industry authorities to take into account the nuances of airline-airport relationships when assessing the implications of parallel alliances. It suggests that concession revenue sharing contracts can play a crucial role in mitigating the potential anticompetitive effects of parallel alliances and maximizing social welfare.
Finally, I believe that this research contributes valuable insights to the understanding of parallel airline alliances and their impact on welfare. It opens up avenues for further exploration and provides a foundation for informed policy analysis in the aviation industry.Adrián Nerja
This page is a summary of: Can parallel airline alliances be welfare improving? The case of airline–airport vertical agreement, Can parallel airline alliances be welfare improving? The case of airline–airport vertical agreement, January 2023, DOI: 10.1016/j.tra.2022.11.019.
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You can read the Accepted version of the paper as Green Open Acces in RePEc.