In line with the dramatic growth of code-sharing (c-s) alliances, a number of literatures have examined the effects of c-s alliances on fares, traffic demands and welfare. This paper is concerned with c-s on US domestic routes and its competitive effects as analyzed in light of the Mutual Forebearance (MF) Theorem. The theorem depends on two conflicting forces: familiarity between multi-point competitors versus credibility to retaliate. Our methodology will seek to identify patterns in terms of volatility and growth among airports depending on the different kinds of regimes and be largely based on exploratory data analysis (EDA). Going beyond the notion of c-s as a simple outsourcing tool to reduce costs, we are highlighting their potential for becoming instrumental to incumbents to influence volatility in network competition and thus to alter competitive pressure. A model will be proposed that integrates both the distinct patterns of code-shared routes that are reflected in domestic route development between airports as well as inferences made from an application of the MF theorem to the specificities of increased code-sharing in the US.
Airline Operations and Strategy, Alliances, cooperation, complexity research and Network competition
