Explore through an economic lens the recent developments of the economic…

Managerial Economics
Introduction: The objective of this case is to give you the occasion to explore through an economic lens the recent developments of the economic evaluation of air alliances that are simultaneously – and sometimes even jointly – conducted by the U.S. Department of Transportation and the European Commission. Air alliances can take many forms, from lounge access to code-share agreements or even to Joint-Ventures or Cost-and-Revenue sharing agreements: that is they may go from a low degree of integration to a merger-like integration. According to Competition Laws enforced in all developed economies and in most emerging countries, agreements between firms supposed to compete are forbidden, unless they come with sufficient technological or economic progress while allowing consumers to benefit from a large share of it. In the EU, Article 101(3) of the Treaty of the Functioning of the European Union (TFEU) has been applied to Air Alliances to grant them immunity to antitrust prosecutions. In the U.S., the Secretary of Transportation is in charge of giving the antitrust clearance to the alliances between Airline companies. After having given these alliances antitrust immunity, the regulating agencies of both jurisdictions have started to investigate their economic effects, in particular on consumers’ surplus. The reports in reference in the bibliography illustrate this new concern of the regulators. Evolution of Air Alliances: The following table, drawn from the report [1] in the bibliography and from our own compilations from various sources (Wikipedia, websites of the companies, … ) details their composition and evolution (companies joining a network are in black, companies leaving in

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Alliances over the Atlantic: New Regulations are in the Air! Deadline to hand-in work: Sunday May 1, 2011 (Noon) Introduction: The objective of this case is to give you the occasion to explore through an economic lens the recent developments of the economic evaluation of air alliances that are simultaneously – and sometimes even jointly – conducted by the U.S. Department of Transportation and the European Commission. Air alliances can take many forms, from lounge access to code-share agreements or even to Joint-Ventures or Cost-and-Revenue sharing agreements: that is they may go from a low degree of integration to a merger-like integration. According to Competition Laws enforced in all developed economies and in most emerging countries, agreements between firms supposed to compete are forbidden, unless they come with sufficient technological or economic progress while allowing consumers to benefit from a large share of it. In the EU, Article 101(3) of the Treaty of the Functioning of the European Union (TFEU) has been applied to Air Alliances to grant them immunity to antitrust prosecutions. In the U.S., the Secretary of Transportation is in charge of giving the antitrust clearance to the alliances between Airline companies. After having given these alliances antitrust immunity, the regulating agencies of both jurisdictions have started to investigate their economic effects, in particular on consumers’ surplus. The reports in reference in the bibliography illustrate this new concern of the regulators. Evolution of Air Alliances: The following table, drawn from the report [1] in the bibliography and from our own compilations from various sources (Wikipedia, websites of the companies, … ) details their composition and evolution (companies joining a network are in black, companies leaving in red).
Bibliography: 1. “Transatlantic Airline Alliances: Competitive Issues and Regulatory Approaches”, a report by the European Commission and the United States Department of…

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