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Unformatted text preview: ir networks without investing new resources, being clearly beneficial for 17 its members. As a consequence, every major airline in the world belongs nowadays to one of the three large international alliances (Oneworld, Star Alliance and Sky Team). There are of course many other features that help characterize the current and future status of the air transportation landscape such as the surge of low-cost passenger carriers, the closing of old hubs and the development of new ones, the expected evolution of regional operators to join networks, etc. Despite its simplicity, our model identifies the effects of airline alliances on fares, travel volumes and consumer surplus. Our results provide a very simple testable implication to establish whether the formation of an alliance on routes involving several airlines' flights that are complementary is profitable. The rule relies on demand parameters that measure the degree of product differentiation, and our findings are consistent with some of the observed facts in the industry. The interesting results obtained are an invitation to pursue research along these...
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- Spring '10