Results of the US Department of Transportation's analysis of codesharing are being portrayed as a reaffirmation of US international aviation policy, which promotes crossborder airline alliance-building. However, many aviation officials are questioning the methodology of the study and its findings.
The econometric analysis, performed by Gellman Research Associates, portrays international airline codesharing as beneficial to US consumers, but detrimental to US carriers not involved in codeshare alliances.
The GRA study portrays the Northwest/KLM partnership as an overall success and the USAir/British Airways agreement as a 'mixed success.' Using data for the first quarter of 1994, the study estimates Northwest and KLM gain a total of $26.7 million a year from the alliance, but at the expense of their competitors, who lose $24.3 million. USAir and BA gain $32.8 million but other carriers lose $27.5 million. Taking into account the consumer benefits, the study says the net 'social surplus' of these alliances is $29.5 million for Northwest/KLM and $15.6 million for USAir/BA (see table on page 67a).
While KLM gains 60 per cent more than Northwest from their alliance, BA gains nearly five times as much as USAir. And US competitors lose out more than non-US carriers in both cases.
The report has been criticised for basing its findings primarily on the 'snapshot' of one quarter and two alliances. A US government source says it makes sense that BA is a primary beneficiary: 'They invested hundreds of millions of dollars in USAir. Of course they should benefit.'
The report has been criticised for basing its findings primarily on the 'snapshot' of one quarter and two alliances. A US government source says it makes sense that BA is a primary beneficiary: 'They invested hundreds of millions of dollars in USAir. Of course they should benefit.'
Source: Airline Business
