The effects of joint ventures in the transpacific airline market

Abstract

In this paper, we explore the effects of two joint ventures approved in November 2010 at the same time between Japanese airlines and the U.S. airlines, All Nippon Airways(“NH”) with United Airlines(“UA”) and Japan Airlines International(“JL”) with American Airlines(“AA”) in trans-pacific routes. We use the route-level data for the period from 2006 to 2019 to utilize difference-in-difference analysis. We find two joint ventures entirely had negative effects on transpacific routes. The joint venture between NH and UA provides evidence that the cooperation resulted in reduced the number of provided seats on the routes where they jointly operated and linked their hub airports. Regarding the case of JL and AA, the number of provided seats increase on their cooperating routes. We conjecture that these contradicting results are because of outer shocks to JL which made it to reduce its services to overcome financial crisis in 2010.