Code-share Agreements Research Articles

CHOICE OF LAW IN CODESHARE FLIGHT AGREEMENT

Purpose: The purpose of this study were to to analyze legal issues regarding the practice of codeshare agreements and what law applies when a dispute or claim for compensation occurs. Methods: The approach used in this research are statute approach, historical approach, and conceptual approach. Result and conslusion: The results of this study are that in dealing with claims for compensation submitted by passengers, the concept of choice of law cannot be deviated according to international civil law because codeshare agreements are included in the field of contract law, but depend on the law that has been determined by the airline company. Research implications: This study provides explanation about the theory of liability that can be imposed on airline companies such as liability based on fault, presumption of liability and liability without fault. Originality/value: This study provides valuable insights about several efforts that can be made if there is a dispute or claim for compensation because of the practice of codeshare agreements.

Cooperative Strategy for Airline Code-Share Agreements – A Comparative

Cooperative Strategy for Airline Code-Share Agreements – A Comparative

РОЗВИТОК КООПЕРАЦІЙНИХ ВІДНОСИН АВІАТРАНСПОРТНИХ ПІДПРИЄМСТВ В СИСТЕМІ ГЛОБАЛЬНОЇ ІНФРАСТРУКТУРИ РИНКУ АВІАЦІЙНИХ ПЕРЕВЕЗЕНЬ

The purpose of the article is to study the peculiarities of the construction and functioning of modern cooperation mechanisms of air transport enterprises, to substantiate the advantages and risks of cooperation based on the analysis of key trends of international cooperative relations in the global infrastructure system of the air transportation market. Scientific theories of international division of labour, international specialization and internationalization of cooperative relations form the methodological basis of the research. Both general scientific and special methods of scientific knowledge were used – historical-logical, descriptive-analytical, analysis and synthesis, methods of quantitative and qualitative comparisons. The informational basis of the article is monographic studies and periodical publications of domestic and foreign economists, analytical reports of international organizations, international consulting companies and analytical centres. The article examines the global experience of implementing international cooperative relations of air transport enterprises, highlights the main forms of airline cooperation. It was established that the degree and conditions of involvement of airlines in cooperative relations differ in the markets of domestic and international transportation, intercontinental air transportation. The most common mechanisms of interaction between airlines are the conclusion of interline agreements and codeshare agreements. It was revealed that global aviation alliances occupy a dominant position in the structure of the world air transport market. It is also stated that the highest level of cooperation between airlines is the creation of joint ventures, which makes it possible to avoid mergers and acquisitions. Within the framework of the study, the advantages and risks of various forms of cooperation for both air passengers and subjects of international aviation business are substantiated. Research results can be used for scientific substantiation and further creation of proper conditions for effective international cooperation of domestic air transport enterprises during the post-war reconstruction of Ukraine.

Good or bad? Passenger feelings regarding code-share alliances among airlines

Code-share agreements among airlines are common in today's airline industry and have advantages for both airline operations and passenger itineraries. However, certain negative aspects associated with code-share arrangements can displease passengers and cause them to negatively react to their preferred airlines. This study hypothesized various scenarios demonstrating code-share alliances between passengers' preferred airlines and other partners. Then, perception data from 547 Taiwanese airline passengers were collected, and multinomial logistic regression analysis was applied to discover the determinants influencing passengers' behavioral intentions. The results revealed that code-share partners from developing countries, passengers' awareness of code-share schemes, and the perceived risk of service inconsistency among code-share airlines are the key drivers influencing passengers' feelings regarding code-share strategies. Those feelings, good or bad, have clear connections with passengers' coping behaviors in terms of favorable or averse reactions. Additionally, trip purpose, travel type and sociodemographic factors, such as gender, age, and monthly income, have various degrees of influence on passengers' feelings concerning code-shared flights. Furthermore, managerial implications are discussed.

Code-sharing agreements and path quality in the US airline industry

When appraising code-sharing partnerships, policymakers are primarily interested in how such marketing arrangements affect prices. Expectedly, the pricing effects of code-sharing have been abundantly studied. This paper examines the impact of codeshare agreements on the itinerary routing of airline products in U.S. domestic markets. Using data from the U.S. Bureau of Transportation Statistics, we identify two main findings. First, consistent with the literature, we find that the overwhelming majority of domestic code-share itineraries involve a single operating carrier, a practice we refer to as virtual code-sharing. Second, and most importantly, we find that virtual (traditional) codeshare itineraries are associated with better (worse) path quality relative to itineraries marketed and operated by a single carrier in the same market. The path quality effects we find come from different sources. In the case of virtual code-sharing, the positive path quality effects come from both short- and long-haul markets whereas in the case of traditional code-sharing, the negative path quality effects originate from long-haul markets.

Tourist destinations and cooperative agreements between airlines

The important links that are formed between tourist destinations and the airline industry are evident in the previous literature. These links are active in both directions. The characteristics and the policies of tourist destinations can affect such relevant aspects as the organization of airline route networks, the inauguration of new routes and their expansion. In this study, it is proposed that the value of a tourist destination and the inclusion of airports close to the tourist destination on the routes of an airline are also related to whether that airline decides to plan its route networks with its own resources or to complement those resources with assistance from other partner airlines through cooperative alliances, specifically code-share agreements. Taking into account the assumptions of the Resource-Based and the Relational views, the value of a tourist destination can be a relevant factor in the cooperative behaviour of airlines. Moreover, the routes within which the most valuable tourist destinations are embedded can be of different types. It is therefore of interest to know whether the type of route plays a relevant role in the preference for cooperative behaviour among the routes that include tourist destinations. Around 50,000 routes and the most important global tourist destinations were considered to analyse this behaviour. The results showed that the airlines under study preferred to operate the routes that included valuable tourist destinations with their own resources, although this behaviour was more variable when differentiating between types of routes. • Tourist destination value influences the strategic behaviour of airline firms. • Airline firms will tend not to cooperate on routes with top tourist destinations. • The type of route influences the cooperative behaviour of Airline firms. • Scarce resources prompt cooperation on international routes to top destinations. • Airlines prefer to cooperate on routes with no hubs but with top tourist destinations.

The Impact of Airline Alliance Strategy on the Perceived Service Quality: A Global Survey

ABSTRACT The aim of this paper was to investigate the impact of airline alliance strategy on the perceived service quality. To this end, 153 airlines from different regions were surveyed. The data for this research were retrieved from Skytrax, AirlineRatings.com, and the official websites of Oneworld, SkyTeam and Star Alliance. Multiple linear regression analysis and one-way ANOVA were used to analyze the data and examine the hypotheses of this study. Airlines which adopted codeshare & SkyTeam agreements and others which adopted codeshare & Oneworld were more effective than those which adopted only codeshare agreements. Airlines that allied with more airlines and adopted more alliance agreements were more effective in fulfilling the quality dimensions. Very few writers so far have investigated this topic. This research bridges previous research gaps by developing a more comprehensive model and applying it in different regions.

قراردادهای پرواز با نماد مشترک از منظر حقوق رقابت: مطالعه تطبیقی درحقوق ایران و فقه امامیه، حقوق آمریکا و اتحادیه اروپا

With the development of international air transportation, the cooperation of airline companies, irrespective of their nationality, became essential. One kind of this cooperation is the conclusion of codeshare agreement between international and domestic airlines. At first, this agreement introduced as a way to advertising, but currently used as a strategic approach to gain market share and consequently creating a dominant position for the airline. that way doubts were raised about its anti-competitive nature. In examining the main issue of this study, is the codeshare agreements reduce or eliminate competition or its existence is useful for competition and increase it? The results of the research indicate that both aspects-competitive and anticompetitive- there are in these contracts and such agreements should be investigated case by case and a general rule cannot be prescribed for all these contracts. However, the competition law in various legal systems does not have a clear position on these types of agreements.

Optimizing the Marketing Strategies of Qantas Airways and Thai Airways

First, we revisit the concepts of airline marketing strategy, its components, code-share agreements, Business Model Canvas (BMC) and the benefits of marketing via strategic alliances. Due to the growth in the low-cost airlines sector and air transport passengers, traditional airlines have become increasingly exposed to a highly competitive international market, with airfares having to be reduced and efficiency increased. In response, airline companies have shifted their focus to investing in airline marketing and strategy research. In the meantime, passenger expectations change, and markets evolve rapidly. Hence, this case study is aimed at examining recent trends in passenger satisfaction and expectations, with reference to the marketing factors and airline cooperative strategies of Qantas and Thai Airways. For the study, both qualitative and quantitative approaches were employed and the results are presented separately. In the quantitative section, the BMCs of Qantas and Thai Airways are discussed to determine whether these two airlines can implement the code-sharing agreement. In the following part, customer satisfaction and expectations survey results are used to identify optimal marketing strategies and to formulate recommendations.

Codeshare agreements in the integrated aircraft routing problem

Codesharing, a common form of airline alliances, allows an airline company to market a flight operated by another airline company as its own and thus expand its outreach network. However, for an airline company, some decisions related to codeshare agreements cannot be standalone decisions that do not interact with the airline’s flight operation planning decisions including flight scheduling, fleet assignment, aircraft routing and crew scheduling. To the extent of our knowledge, this is the first work in the literature to introduce the idea of codeshare agreements while integrating it with flight scheduling, fleet assignment and aircraft routing while considering propagated delay, deadhead flights and demand uncertainty in an optimization framework. To achieve this, a two-stage stochastic model that integrates flight scheduling, fleet assignment and aircraft routing was developed. Two column generation-based algorithms were developed to solve this highly complex problem and a sensitivity analysis is performed on some parameters. The results show that codeshare agreements can have a significant impact on the profits of an airline company by allowing for more flights to be scheduled while minimizing delays in aircraft routes.

Collusive pricing patterns in the US airline industry

We formulate two empirical tests for collusive behavior based on the theoretical insights of Werden and Froeb (1994) and Athey, Bagwell, and Sanchirico (2004). The first predicts that colluding firms will reduce pair-wise differences in prices within a market if demand satisfies certain properties. The second predicts that colluding firms will sacrifice efficiency in production by increasing price rigidity to avoid informational costs. Using panel data from the US airline industry and fixed-effects estimation, we find that greater multimarket contact between carriers leads to pricing patterns consistent with both theoretical predictions, while code-share agreements are consistent with the second prediction.

Domestic code-sharing agreements and on-time performance: Evidence from the US airline industry

A key concern to policymakers when appraising code-sharing partnerships between airlines hinges on how such arrangements affect prices and service levels. Naturally, most studies on code-sharing have disproportionately focused on its price effects. This paper examines the impact of domestic code-sharing on flight delay. Using a methodology that enables us to match airline on-time performance data to passenger itinerary data, we find that codeshare products—virtual and traditional—are consistently associated with less arrival delay. These results are robust to different measures of on-time performance, even after controlling for product and market characteristics, and irrespective of market hauls.

Network Structure and Consolidation in the U.S. Airline Industry, 1990–2015

We study the effect of consolidation on airline network connectivity using three measures of centrality from graph theory: Degree; Closeness; and Betweenness. Changes in these measures from 1990 to 2015 imply: (i) the average airport services a greater proportion of possible routes; (ii) the average origin airport is fewer stops away from any given destination; and (iii) the average hub is less often along the shortest route between two other airports. Yet, we find the trend toward greater connectivity in the national network structure is largely unaffected by consolidation—in the form of mergers and codeshare agreements—during this period.

The virtualization of the airline industry: A strategic process

This paper analyses the virtualization of the airline industry as a strategic response to competitive pressures. Increased competition has driven the associative behavior of airlines, fostered the development of global alliances and the use of codeshare agreements, substantially modifying the structure of the industry. These changes have resulted in greater efficiency and division of labor in the industry, and have caused airlines to significantly modify their operational strategies. The analysis of the evolution of operational and associative strategies in the airline industry during the past decade (2005–2015) shows the growing virtualization of the sector, derived from the use of codeshare agreements and other alliances between companies. The results show that the associative behavior allows airlines to specialize their operational strategy and to focus their resources and capabilities on a certain type of routes or origin-destination (OD) markets, with a wide variety of strategic behaviors in the industry.

Two Screening Tests for Tacit Collusion: Evidence from the Airline Industry

We formulate two empirical tests for collusive behavior based on the theoretical insights of Werden and Froeb [1994] and Athey, Bagwell, and Sanchirico [2004]. The first predicts that colluding firms will reduce pair-wise differences in prices within a market if demand satisfies certain properties. The second predicts that colluding firms will sacrifice efficiency in production by increasing price rigidity to avoid informational costs. Using panel data from the US airline industry and fixed-effects estimation, we find that greater multimarket contact between carriers leads to pricing patterns consistent with both theoretical predictions, while code-share agreements are consistent with the second prediction.

Network Structure and Consolidation in the US Airline Industry, 1990-2015

We study the effect of consolidation on airline network connectivity using three measures of centrality from graph theory: Degree, Closeness, and Betweenness. Changes in these measures from 1990 to 2015 imply: i) the average airport services a greater proportion of possible routes, ii) the average origin airport is fewer stops away from any given destination, and iii) the average hub is less often along the shortest route between two other airports. Yet, we find the trend toward greater connectivity in the national network structure is largely unaffected by consolidation, in the form of mergers and codeshare agreements, during this period.

The drivers of profitability in the top 30 major airlines worldwide

Purpose The purpose of this study is to identify the impact of human and structural capital on profitability of major airlines and examine whether region, capital ownership and control and strategic alliance play a clustering effect on profitability. Design/methodology/approach Using information from the top 30 airlines worldwide, in particular human and structural capital proxies, a linear model is regressed. Test of hypotheses were performed towards the identification of the influence emerged from variables, such as region, capital ownership and control and strategic alliances, on intellectual capital drivers and profitability. Findings Turnover is driven by human and structural capital factors, namely: employee expenses and benefits; size of board of directors; intangible assets; codeshare agreements; and passenger traffic. Airlines profitability does not depend on region, capital ownership and control or strategic alliance in which the company is integrated. Research limitations/implications In spite of the limitations, we underline the range of time under analysis and the sample size. However, the current approach can be replicated over time and based in other rankings, structured on different metrics and approaches. Practical implications The empirical results provide both an understanding of how independent variables positively affect the performance of airlines and offer some explanation as to the relationship between key characteristics of firms and profitability. Originality/value The research adds value to the current literature by exploring the effects of new intellectual capital drivers on profitability of airlines firms. Focused on a sector that strongly contributes to improve the networking between nations, it provides a new and updated overview.

A bargaining framework for the airline alliance revenue sharing problem

The main objective of complementary code share flights is to increase scope of the partner's network. When complementary codeshared flights aim at maximising their combined revenue, it might lead to inequitable distribution of revenue. Through this work, we address this issue of achieving a fair division of the combined revenue generated by the alliance network. Information of an airline's valuation of their product is typically private and could be overstated to increase their share of revenue generated through codeshare agreements. We therefore develop a bargaining framework and derive the conditions under which a specific point in Core of the cooperative game can be achieved.

A bargaining framework for the airline alliance revenue sharing problem

The main objective of complementary code share flights is to increase scope of the partner's network. When complementary codeshared flights aim at maximising their combined revenue, it might lead to inequitable distribution of revenue. Through this work, we address this issue of achieving a fair division of the combined revenue generated by the alliance network. Information of an airline's valuation of their product is typically private and could be overstated to increase their share of revenue generated through codeshare agreements. We therefore develop a bargaining framework and derive the conditions under which a specific point in Core of the cooperative game can be achieved.

Government and company contracts: The effect on service and prices in international airline markets

This paper provides evidence of the impacts of the level of liberalization signed between governments and the type of codeshare agreement signed between airlines in international aviation markets. Our work distils two basic insights: (i) increasing the level of liberalization has a positive effect on service and overshadows the impact of codeshares; (ii) codeshare agreements are heterogeneous in the sense that pooling and royalty agreements generally result in higher airfares whereas block and free sale codeshares are generally associated with lower airfares, although the latter has the most significant impact. Additionally, none of the codeshare agreements impact market frequency. Our results suggest that reducing regulation in the international aviation markets is likely to increase service levels, and that carve outs on non-stop links is unnecessary, rather restrictions should be imposed on horizontal contracts such as the type of codeshare agreement signed by airlines.