A recent trend in aviation markets is the emergence of airline alliances. One could argue that the emergence of alliances is a continuation of the process of concentration and consolidation that was first characterized by the emergence of hub-and-spoke networks. The international aviation market is still subject to regulation, and airlines may only have the opportunity to extend their networks to foreign countries by entering an alliance agreement with a foreign airline. But also in fully liberalized aviation markets, airlines are likely to enter alliance agreements. The literature shows that passengers are likely to be better off if airlines enter alliance agreements. © 2001 Elsevier Science Ltd. All rights reserved.