Price effects of airline consolidation: evidence from a sample of transatlantic markets

We offer an analysis of price effects of airline consolidation on a sample of transatlantic markets. While joining airlines’ networks through code-sharing decreases interline fares by up to 22.5% relative to those of non-consolidated carriers, and alliance membership also produces cost savings that decrease fares by up to 10%, antitrust immunity has no significant price effect for interline trips. Evidence that antitrust immunity increases fares on non-stop routes where it decreases competition is not robust. While total effect of airline consolidation on interline fares is about the same as indicated by previous studies, we suggest different sources of this effect. This paper is the first one presenting empirical evidence of no significant price effects of antitrust immunity.