Airline Partnerships and Schedule Coordination

Scheduling coordination is said to be both a reason for and a consequence of airline consolidation. This paper offers a first attempt to formally model this dimension of airline partnerships, in a simple setup of complementary alliance with schedule delay affecting the passengers' utility. We compare partnership where carriers are only allowed to coordinate scheduling to the one where airlines can jointly set both prices and schedules. We show that the former yields higher fares but better schedule coordination (in terms of shorter intervals between connecting flights) than the latter, if partner airlines do not take schedules as given when setting the fares. If a sequential 'scheduling-then-price' setup is considered, however, coordination of both fares and schedules yields both lower fares and better scheduling coordination. Further, sequential 'scheduling-then-price' results in even lower consumer welfare than the no coordination scenario. Thus, we suggest an example of a complementary airline alliance hurting interline passengers, by offering them a better quality service at too high a price