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Strategic Airline Alliances and the Impact on Passenger Behavior

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Author(s): Wellington Costa

Journal: Revista de Literatura dos Transportes
ISSN 2177-1065

Volume: 4;
Issue: 1;
Start page: 96;
Date: 2010;
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Keywords: alliances | codesharing | air transportation

ABSTRACT
This paper discusses one of the most important issues in the airline industry, namely, strategic alliances. One of the most recent studies surveyed here is the paper “Domestic airline alliances and consumer welfare”, developed by Olivier Armantier and Oliver Richard and published in The RAND Journal of Economics, 2008. This paper investigates consumer welfare consequences of a recent code-share agreement between Continental Airlines and Northwest Airlines using a discrete choice model based on individual flights. The results indicate some changes related to product pricing and consumer profile. The paper stresses that the alliance increased connecting passengers and decreased nonstop passengers, but did not impact consumers significantly, on average.
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