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Do enhancements to loyalty programs affect demand? The impact of international frequent flyer partnerships on domestic airline demand
Author(s) -
Lederman Mara
Publication year - 2007
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/j.0741-6261.2007.00129.x
Subject(s) - exploit , scope (computer science) , loyalty , business , affect (linguistics) , on demand , market power , marketing , advertising , economics , commerce , market economy , computer science , computer security , linguistics , philosophy , monopoly , programming language
Frequent flyer programs (FFPs) may allow airlines to exercise market power on routes that depart from airports at which they are dominant. Prior research, however, has not disentangled the effects of FFPs from other advantages that dominant airlines may possess. I exploit variation in the extent and scope of U.S. airlines' FFP partnerships with international carriers to evaluate the economic impact of enhancements to FFPs. The results indicate that enhancements to an airline's FFP are associated with increases in its demand on specifically those routes that depart from airports at which it is dominant .