Do Shared Marketing and Operations within Joint Ventures have Differential Impacts on Airline Pricing?
Abstract
Over time, airlines have increasingly been coordinating, both in marketing and operations, via joint ventures. While previous analyses have measured overall impacts of airline joint ventures on prices (see, e.g., Calzaretta et al., 2017; Brueckner and Singer, 2019; Tan and Zhang, 2022), to our knowledge no one has attempted to parse out any such effects according to the practical elements of the joint venture relationship. In this paper, we examine whether and how prices differ depending on the relative balance of shared marketing vs. shared operations within a joint venture. Both types of shared activity could impact both the firms’ ability to exercise market power and their cost structure, making the theoretical impact ambiguous. By measuring and disentangling these channels of potential price impacts, we can gain a deeper understanding of the mechanisms behind joint venture impacts on airline pricing, and in doing so, potentially improve the accuracy of antitrust scrutiny of joint ventures.
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