An Empirical Analysis of a Merger between a Network and Low-Cost Airlines
University of Barcelona - Department of Economic Policy
Autonomous University of Barcelona - Department of Applied Economics
May 17, 2011
XREAP No. 2011-01
We use a difference-in-difference estimator to examine the effects of a merger involving three airlines. The novelty lies in the examination of this operation in two distinct scenarios: (1) on routes where two low-cost carriers and (2) on routes where a network and one of the low-cost airlines had previously been competing. We report a reduction in frequencies but no substantial effect on prices in the first scenario, while in the second we report an increase in prices but no substantial effect on frequencies. These results may be attributed to the differences in passenger types flying on these routes.
Number of Pages in PDF File: 32
Keywords: Mergers, Airline Market, Low-Cost Carriers, Difference-in-Difference
JEL Classification: L93, L41, L44
Date posted: May 23, 2011 ; Last revised: May 27, 2011
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