Impacts of International Airline Alliances on Tourism

Abstract

International airline alliances have the effect of improving the efficiency and services of airlines, by, for example, lowering operating costs and making connections easier. They can thus lead to important pay-offs for tourists in terms of service improvements and lower fares. There is, however, a danger of alliances reducing competition, leading to increases in fares. The net balance of costs and benefits to tourists is dynamic, partially unquantified, and not as certain as some studies conclude. There is some economic evidence that, generally, air fares fall as a consequence of alliances, but perhaps not by the full extent of the realized cost savings. At the same time, alliances between formerly competing airlines on a route reduce competition, resulting in fewer flight services and higher fares.