The Effect of Joint Ventures on Airline Competition: The Case of American Airlines, British Airways and Iberia Joint Business

Abstract

Regulatory obstacles have led international airlines to make extensive cooperation in the provision of service. The global airline alliances that link U.S. airlines to members in other states is the most visible form of cooperation. Moreover, when the alliance members obtain antitrust immunity, they can determine fares for interline trips that were not possible under traditional pricing arrangements. This research attempts to explain the effect of BA, AA and IB joint venture on transatlantic competition. Paired samples t-test results indicate that there is no significant difference in AA's economy airfare after the introduction of joint venture. Similarly, there is no significant difference in AA's business airfare. As for BA, the picture is vice versa in terms of economy airfare. There is a significant difference in BA's economy airfare. On the other hand, there is no significant difference in BA's business airfare.

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