Airline Alliances, Antitrust Immunity, and Market Foreclosure

Volodymyr Bilotkach · Kai Hüschelrath

30 citations0/0 files storedThe Review of Economics and Statistics

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Abstract

Abstract We examine the issue of market foreclosure by airline partnerships with antitrust immunity. Overlapping data on frequency of service and passenger volumes on nonstop transatlantic routes with information on the dynamics of airline partnerships, we find evidence consistent with the airlines operating under antitrust immunity refusing to accept connecting passengers from the outside carriers at respective hub airports. Following the antitrust immunity, airlines outside the partnership reduce their traffic to the partner airlines' hub airports by 4.1% to 11.5%. We suggest regulators should take possible market foreclosure effects into account when assessing the competitive effects of antitrust immunity for airline alliances.

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References

1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 1995Another look at the instrumental variable estimation of error-components models 2007A Primer on Foreclosure 2001Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry 2004Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California 2001The economics of international codesharing: an analysis of airline alliances 2000The Price Effects of International Airline Alliances 2010Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California: Reply

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