Airline Partnerships and Schedule Coordination

Scheduling coordination is considered both a reason for and a consequence of airline consolidation. The authors formally model this dimension of airline partnerships, with complementary alliance where stop-over delays affect passengers' utility. They compare partnership where carriers are only allowed to coordinate scheduling to the one, where airlines can jointly set prices and schedules. Coordination in fares and schedules yields lower fares and better scheduling coordination. Coordination in only the price results in lower consumer welfare than under no coordination. The authors suggest an example of a complementary airline alliance hurting interline passengers. © 2007 LSE and the University of Bath