Consequences of strategic alliances between international airlines: The case of Swissair and SAS

The impact of the SAS-Swissair strategic alliance on service quality, market concentration, and fares is assessed. Comparison of services before and after the alliance show increases in flights between the SAS and Swissair hubs, in the number of markets in which the alliance airlines offer connecting service, and in the average service frequency offered in these markets. Further, there has been an overall reduction in the layover time associated with SAS-Swissair connecting services. Impacts of market concentration include effective monopolization of nonstop services between the alliance partners’ hubs and a slight reduction in concentration in markets in which the partners offer connecting service. Fares in nonstop markets served by the alliance were found to have increased relative to those in nonalliance nonstop markets, probably due to the increased concentration. Variation in service and fare impacts among alliance airports was found to correlate so that those with the strongest service increases also has the lowest fare increases. Taken as a whole, the results point to the redistribution nature of alliance impacts.