Airline Mergers and Alliances
306 Pages Posted: 30 Jul 2002
Date Written: February 1, 2000
This document (of 306 pages) comprises the proceedings of a roundtable on airline mergers and alliances held at the OECD in October 1999.
Although airlines have long sought to enter alliances with one another, the last five years has seen an important new development - the crystallisation of international airline alliances around 4-5 major airline groupings. The scope and nature of these alliances differ, but there is a tendency towards co-operation on all aspects of the airline business. These super-alliances come as close to actual mergers as aviations Byzantine regulations allow, raising fundamental questions for competition policy-makers and enforcers. These alliances have the potential both to enhance the level and quality of services offered to consumers and, at the same time, to significantly restrict competition. This roundtable addressed issues such as: Why do airlines seek to enter such alliances? How do allliances restrict competition? What is the role played by frequent-flyer programmes and other loyalty schemes? What remedies should competition authorities consider to alleviate the harmful effects of allliances? What is the appropriate role for international co-operation between authorities?.
This document contains a background paper by the Secretariat, together with 11 submissions from OECD countries and a summary of the oral discussion.
Keywords: Airline alliances, airline mergers, hub-and-spoke competition, loyalty schemes, frequent flyer programs, aviation liberalisation
JEL Classification: L40, L93
Suggested Citation: Suggested Citation