IDEAS home Printed from https://ideas.repec.org/a/eee/ecotra/v39y2024ics2212012224000285.html
   My bibliography  Save this article

Pricing effects of code-sharing in Africa

Author

Listed:
  • Gualini, Andrea
  • Ogliari, Laura
  • Martini, Gianmaria
  • Scotti, Davide

Abstract

This study investigates the impact of code-sharing (CS) agreements on airfares in Africa, a region largely overlooked in existing airline cooperation research. Analysing a comprehensive dataset covering international one-stop routes in Africa from 2017 to 2019, we examine the direct effects of CS agreements on connecting itinerary discount economy fares that swap from interline to CS. Additionally, we explore the spillover effects of airlines adopting CS on the fares of those that do not implement it. Our key findings reveal that the implementation of CS agreements results in an approximately 18% reduction in airfares for African international routes. Furthermore, we identify a negative spillover effect, demonstrating reduced airfares for interline itineraries by 12% when rival pairs adopt CS, while online and direct itineraries experience smaller reductions (around 4%).

Suggested Citation

  • Gualini, Andrea & Ogliari, Laura & Martini, Gianmaria & Scotti, Davide, 2024. "Pricing effects of code-sharing in Africa," Economics of Transportation, Elsevier, vol. 39(C).
    • Handle: RePEc:eee:ecotra:v:39:y:2024:i:c:s2212012224000285
    DOI: 10.1016/j.ecotra.2024.100369
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2212012224000285
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecotra.2024.100369?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alderighi, Marco & Gaggero, Alberto A. & Piga, Claudio A., 2015. "The effect of code-share agreements on the temporal profile of airline fares," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 42-54.
    2. Adler, Nicole & Mantin, Benny, 2015. "Government and company contracts: The effect on service and prices in international airline markets," Economics of Transportation, Elsevier, vol. 4(3), pages 166-177.
    3. Federico Ciliberto & Charles Murry & Elie Tamer, 2021. "Market Structure and Competition in Airline Markets," Journal of Political Economy, University of Chicago Press, vol. 129(11), pages 2995-3038.
    4. Harumi Ito & Darin Lee, 2007. "Domestic Code Sharing, Alliances, and Airfares in the U.S. Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 50(2), pages 355-380.
    5. Volodymyr Bilotkach, 2007. "Price effects of airline consolidation: evidence from a sample of transatlantic markets," Empirical Economics, Springer, vol. 33(3), pages 427-448, November.
    6. Abate, Megersa, 2016. "Economic effects of air transport market liberalization in Africa," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 326-337.
    7. Brueckner, Jan K., 2001. "The economics of international codesharing: an analysis of airline alliances," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1475-1498, December.
    8. Chen, Yongmin & Gayle, Philip G., 2007. "Vertical contracting between airlines: An equilibrium analysis of codeshare alliances," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 1046-1060, October.
    9. Njoya, Eric Tchouamou, 2016. "Africa’s single aviation market: The progress so far," Journal of Transport Geography, Elsevier, vol. 50(C), pages 4-11.
    10. Philip G. Gayle, 2013. "On the Efficiency of Codeshare Contracts between Airlines: Is Double Marginalization Eliminated?," American Economic Journal: Microeconomics, American Economic Association, vol. 5(4), pages 244-273, November.
    11. Jan K. Brueckner, 2003. "International Airfares in the Age of Alliances: The Effects of Codesharing and Antitrust Immunity," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 105-118, February.
    12. Button, Kenneth & Brugnoli, Alberto & Martini, Gianmaria & Scotti, Davide, 2015. "Connecting African urban areas: airline networks and intra-Sub-Saharan trade," Journal of Transport Geography, Elsevier, vol. 42(C), pages 84-89.
    13. de Jong, Gerben & Behrens, Christiaan & van Herk, Hester & Verhoef, Erik, 2022. "Airfares with codeshares: (why) are consumers willing to pay more for products of foreign firms with a domestic partner?," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 1-18.
    14. Bilotkach, Volodymyr & Hüschelrath, Kai, 2019. "Balancing competition and cooperation: Evidence from transatlantic airline markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 120(C), pages 1-16.
    15. Brueckner, Jan K. & Singer, Ethan, 2019. "Pricing by international airline alliances: A retrospective study," Economics of Transportation, Elsevier, vol. 20(C).
    16. Ciliberto, Federico & Watkins, Eddie & Williams, Jonathan W., 2019. "Collusive pricing patterns in the US airline industry," International Journal of Industrial Organization, Elsevier, vol. 62(C), pages 136-157.
    17. W. Whalen, 2007. "A panel data analysis of code-sharing, antitrust immunity, and open skies treaties in international aviation markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(1), pages 39-61, February.
    18. Philip G. Gayle, 2008. "An Empirical Analysis of the Competitive Effects of the Delta/Continental/Northwest Code-Share Alliance," Journal of Law and Economics, University of Chicago Press, vol. 51(4), pages 743-766, November.
    19. Robert J CalzarettaJr. & Yair Eilat & Mark A Israel, 2017. "Competitive Effects Of International Airline Cooperation," Journal of Competition Law and Economics, Oxford University Press, vol. 13(3), pages 501-548.
    20. Orit Hassin & Oz Shy, 2004. "Code‐sharing Agreements and Interconnections in Markets for International Flights," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 337-352, August.
    21. Adler, Nicole & Hanany, Eran, 2016. "Regulating inter-firm agreements: The case of airline codesharing in parallel networks," Transportation Research Part B: Methodological, Elsevier, vol. 84(C), pages 31-54.
    22. Jan K. Brueckner & Darin N. Lee & Ethan S. Singer, 2011. "Alliances, Codesharing, Antitrust Immunity, And International Airfares: Do Previous Patterns Persist?," Journal of Competition Law and Economics, Oxford University Press, vol. 7(3), pages 573-602.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Menezes Bezerra Sampaio, Raquel & Urdanoz, Miguel, 2022. "Airlines' cooperation in the US domestic market: Measuring the evolution of price gaps," Transportation Research Part A: Policy and Practice, Elsevier, vol. 166(C), pages 424-443.
    2. Volodymyr Bilotkach, 2019. "Airline Partnerships, Antitrust Immunity, and Joint Ventures: What We Know and What I Think We Would Like to Know," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(1), pages 37-60, February.
    3. Ivaldi, Marc & Petrova, Milena & Urdanoz, Miguel, 2022. "Airline cooperation effects on airfare distribution: An auction-model-based approach," Transport Policy, Elsevier, vol. 115(C), pages 239-250.
    4. Le, Huubinh B. & Yimga, Jules O., 2023. "Codeshare restrictions as antitrust remedy," Transport Policy, Elsevier, vol. 138(C), pages 17-24.
    5. Yimga, Jules, 2022. "Code-sharing agreements and path quality in the US airline industry," Transport Policy, Elsevier, vol. 116(C), pages 369-385.
    6. Czerny, Achim I. & Jost, Peter-J. & Lang, Hao & Mantin, Benny, 2021. "Carrier collaboration with endogenous networks: Or, the limits of what carrier collaboration can achieve under antitrust immunity," Journal of Air Transport Management, Elsevier, vol. 94(C).
    7. Calzada, Joan & Fageda, Xavier & Safronov, Roman, 2022. "How do global airline alliances affect flight frequency? Evidence from Russia," Journal of Air Transport Management, Elsevier, vol. 98(C).
    8. Brueckner, Jan K. & Flores-Fillol, Ricardo, 2020. "Market structure and quality determination for complementary products: Alliances and service quality in the airline industry," International Journal of Industrial Organization, Elsevier, vol. 68(C).
    9. Fageda, Xavier & Flores-Fillol, Ricardo & Lin, Ming Hsin, 2020. "Vertical differentiation and airline alliances: The effect of antitrust immunity," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    10. Gayle, Philip G. & Thomas, Tyson, 2016. "Assessing firm behavior in carve-out markets: Evidence on the impact of carve-out policy," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 178-194.
    11. Alderighi, Marco & Gaggero, Alberto A. & Piga, Claudio A., 2015. "The effect of code-share agreements on the temporal profile of airline fares," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 42-54.
    12. Gayle, Philip G. & Xie, Xin, 2019. "Firms’ markup, cost, and price changes when policymakers permit collusion: Does antitrust immunity matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 680-707.
    13. de Jong, Gerben & Behrens, Christiaan & van Herk, Hester & Verhoef, Erik, 2022. "Airfares with codeshares: (why) are consumers willing to pay more for products of foreign firms with a domestic partner?," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 1-18.
    14. Philip G. Gayle & Xin Xie, 2018. "Entry Deterrence And Strategic Alliances," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1898-1924, July.
    15. Philip G. Gayle, 2013. "On the Efficiency of Codeshare Contracts between Airlines: Is Double Marginalization Eliminated?," American Economic Journal: Microeconomics, American Economic Association, vol. 5(4), pages 244-273, November.
    16. Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.
    17. Gayle Philip G. & Thomas Tyson, 2015. "Product Quality Effects of International Airline Alliances, Antitrust Immunity, and Domestic Mergers," Review of Network Economics, De Gruyter, vol. 14(1), pages 45-74, March.
    18. Brueckner, Jan K. & Proost, Stef, 2010. "Carve-outs under airline antitrust immunity," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 657-668, November.
    19. Yimga, Jules O., 2017. "Airline code-sharing and its effects on on-time performance," Journal of Air Transport Management, Elsevier, vol. 58(C), pages 76-90.
    20. Matthias Firgo & Agnes Kügler, 2014. "Detecting Collusion in Spatially Differentiated Markets," Department of Economics Working Papers wuwp188, Vienna University of Economics and Business, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecotra:v:39:y:2024:i:c:s2212012224000285. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecotra .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.