| Abstract: | This paper examines the formation of alliances in the contemporary airline industry, comparing this with developments in business collaboration in industry generally. It identifies the main forces driving airlines into alliances, before considering the strategies that airlines are adopting in marketing joint services, and the policies that governments are pursuing in relation to the impact of alliances on the intensity of competition. One of the main arguments advanced is that alliances increase competition in through-markets via hubs, and that they can be expected to have pro-competitive effects in narrowing price-cost margins on long-haul services, something that can be traded against any lessening of competition in short-haul hub-to-hub markets. |
