The Effects of Airline Alliances on Airfares, Revenue Passenger Miles, and Available Seat Utilization

Abstract

This paper will study the effects of airline alliances on the economic welfare of passengers and airlines by studying how membership in an airline alliance affects ticket price, revenue passenger miles, and available seat utilization. This paper will analyze three sets of data from the US Department of Transportation, including the DB1BTicket Report, the T-100 International Segment Report, and the T1: US Air Carrier Traffic and Capacity Summary by Service Class. The purpose of this paper is to determine how airline alliances effect consumer welfare. The results show that airline alliances lead to higher fares on domestic routes as well as greater passenger revenue miles and available seat utilization. This paper shows that more anti-trust investigation should be taking place regarding airline alliances.