Flight Frequency and Mergers on Airline Markets

Posted: 19 Feb 2003

See all articles by Oliver M. Richard

Oliver M. Richard

U.S. Department of Justice - Economic Analysis Group - Antitrust Division

Abstract

The welfare consequences of airline mergers have been analyzed almost exclusively in terms of ticket price. However, when flight frequency decisions are endogenized in a model,we can estimate measures of the relative importance of price and flight frequency. Hence, in a merger analysis, we can not only predict changes in flight frequency, but also the relative consequences of those changes on consumer welfare. In this paper, merger simulations suggest that while passenger volume and consumer surplus decrease on the aggregate, some markets benefit from welfare gains once merger-induced changes in flight frequency are factored in.

Keywords: Structural Estimation, Airline Industry, Flight Frequency, Consumer Welfare, Mergers

JEL Classification: L11, C31, C51, L93

Suggested Citation

Richard, Oliver M., Flight Frequency and Mergers on Airline Markets. Available at SSRN: https://ssrn.com/abstract=361482

Oliver M. Richard (Contact Author)

U.S. Department of Justice - Economic Analysis Group - Antitrust Division ( email )

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