XREAP No. 2011-01
32 Pages Posted: 23 May 2011 Last revised: 27 May 2011
Date Written: May 17, 2011
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.
Keywords: Mergers, Airline Market, Low-Cost Carriers, Difference-in-Difference
JEL Classification: L93, L41, L44
Suggested Citation: Suggested Citation
Fageda, Xavier and Perdiguero, Jordi, An Empirical Analysis of a Merger between a Network and Low-Cost Airlines (May 17, 2011). XREAP No. 2011-01. Available at SSRN: https://ssrn.com/abstract=1844891 or http://dx.doi.org/10.2139/ssrn.1844891