INTERNATIONAL AVIATION: AIRLINE ALLIANCES PRODUCE BENEFITS, BUT EFFECT ON COMPETITION IS UNCERTAIN

The General Accounting Office (GAO) was requested to (1) examine the effects of marketing alliances between U.S. and foreign airlines on airlines' traffic flows and revenues and on consumers and (2) identify the key issues concerning such alliances that need to be addressed by the Department of Transportation (DOT). Briefly, GAO found the following: Alliances between U.S. and foreign airlines have in several cases generated large gains for partners in terms of passengers and revenues. In general, the more global the scope of the code-sharing arrangement and the greater the degree of integration achieved by the airlines in scheduling, operations, and frequent flyer programs, the larger the benefits are for partners. Conversely, the impact on other U.S. airlines in terms of reduced ridership and revenues depends on an alliance's geographic scope and integration, the other airlines' competitive responses, and the extent to which competition between that alliance and the other airlines stimulates new traffic. Although consumers benefit from the conveniences--such as decreased layover time--that alliances provide, insufficient data exist to determine (1) what effect alliances have had on fares in the short term and (2) whether alliances will reduce or increase competition in the long term and thereby lead to higher or lower fares. Although DOT's policy statement notes the need to monitor the effects of alliances on competition and the international competitiveness of U.S. airlines, the agency has not required U.S. and foreign airlines to report sufficient data to fully monitor these effects. DOT also has not determined whether antitrust immunity should be potentially available for other alliances in markets that allow for significantly increased access for U.S. airlines. Finally, although DOT has proposed rules to ensure that consumers are told which airline partner will actually operate a code-share flight, neither its current regulations nor its proposed rules limit how often the same flight can be listed in computer reservation systems. Multiple listings of the same flight give airlines in an alliance a competitive advantage. Recognizing this impact, the European Union in 1993 limited to two the number of times a flight can be listed.

• Record URL:
  • http://www.gao.gov/docdblite/summary.php?recflag=&rptno=RCED-95-99
• Supplemental Notes:
  • Report to Congressional Requesters.
• Corporate Authors:

  U.S. General Accounting Office

  441 G Street, NW
  Washington, DC  United States  20548
• Publication Date: 1995-4

Language

• English

Media Info

• Features: Appendices; Figures; Tables;
• Pagination: 68 p.

Subject/Index Terms

• TRT Terms: Air routes; Airlines; Antitrust laws; Aviation; Benefits; Code sharing; Competition; Fares; Immunity (Law); Impact studies; Information, data, and knowledge; International; Itinerary; Passengers; Revenues; Ridership; Strategic alliances
• Uncontrolled Terms: Data needs; International aviation
• Old TRIS Terms: Flight listings
• Subject Areas: Aviation; Data and Information Technology; Finance; Passenger Transportation;

Filing Info

• Accession Number: 00681805
• Record Type: Publication
• Report/Paper Numbers: GAO/RCED-95-99
• Files: TRIS
• Created Date: Jul 3 1995 12:00AM