Airline Code-Sharing and Capacity Utilization: Evidence from the US Airline Industry

Abstract

Abstract:Following the passage of the Airline Deregulation Act in 1978, the degree of competition among air carriers, increased significantly. Airlines resorted to many ways—including code-sharing—in response to competitive pressures. This article is a retrospective study on the load factor effects of the largest domestic codeshare partnership established in 2003—between Delta, Northwest, and Continental airlines. After controlling for aircraft configuration, carrier, and market characteristics, we find evidence that code-sharing improves the partners' load factors relative to other carriers in all markets combined. However, we find statistically significant negative (positive) codeshare effects on load factor in markets where the codeshare partners competed (did not compete) prior to code-sharing.