Alliance membership impact on the Russian aviation market

Abstract

This paper examines the impact of airline alliances on supply in the Russian aviation market. We use the difference-in-differences model to analyze the causal relationship between being a member of the alliance community agreements, and the number of seats and flight frequency offered at the route level. Furthermore, this paper is aimed to find out differences between private-owned and public-owned firms performances in the alliance. Using data on the international flights from European to Russian cities corresponding to the period 2002-2019, theoretical explanations on changes in number of seats are empirically tested. Our results show that the traffic growth is concentrated in dense routes. We also find that the positive impact of alliances is centered on a private S7 Airlines, while we do not find a positive effect for Aeroflot, a state-owned airline that is the largest operator in Russia.