AbstractCode sharing and global alliances both have been increasingly adopted by airlines worldwide in recent years. A growing number of airlines, therefore, are embedded in networks of multilateral “coopetitive” (i.e., cooperative, but competitive) relationships that influence their product offering, pricing strategies, operating efficiency, market power, and their overall successes. There has been considerable research analyzing the benefits for airlines from joining global alliances, including bilateral code-sharing partnerships. However, the joint effect of code-sharing and global alliances on airline performance has not been fully investigated. In this paper, we study how the use of code-sharing strategies and their structural embeddedness into global alliances may impact airline performance. Using a unique dataset compiled from Flight Global and Airline Business's Annual Airline Alliance Report, the paper empirically investigates the joint benefits of code-sharing partnerships and global alliances on airline profitability. The results based on a group of 81 airlines during the 2007–2012 period show that the profit margin of an airline is positively associated with the number of code-sharing partners it has. Furthermore, the profit margin gains from code-sharing are greater when an airline has a higher proportion of its code-sharing partners in the same global alliance; i.e., allied code-sharing partners. Finally, we find no significant evidence that the percent of comprehensive code sharing partnerships to total partnerships has an impact on profit margin.

    HighlightsEmpirically investigating the joint effects of code-sharing partnerships and global alliances on airline profitability.The profit margin of an airline is found to be positively associated with the number of code-sharing partners it has.The allied code-sharing partnership is found to lead to greater profit margin gains.The comprehensive code-sharing partnership is not found to have the expected positive effect on an airline’s profit margin.


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    Title :

    The effect of code-sharing alliances on airline profitability


    Contributors:
    Zou, Li (author) / Chen, Xueqian (author)

    Published in:

    Publication date :

    2016-09-15


    Size :

    8 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English





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