A PYMNTS Company

Are Legacy Airline Mergers Pro- or Anti-Competitive? Evidence from Recent US Airline Mergers

By  |  October 18, 2016

Posted by Social Science Research Network

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    Are Legacy Airline Mergers Pro- or Anti-Competitive? Evidence from Recent US Airline Mergers

    Dennis W. Carlton (University of Chicago), Mark A. Israel, Ian MacSwain & Eugene Orlov (Compass Lexicon)

    Abstract:     Due to a series of recent mergers, the number of legacy airlines in the United States has decreased from six to three. We conduct a comprehensive investigation of the effect on fares and output of these legacy airline mergers to determine whether the mergers have had an overall pro-competitive or anti-competitive effect on consumers. Our difference-in-differences regression analysis shows that, considered together or individually, these mergers have been pro-competitive, with no significant adverse effect on nominal fares and with significant increases in passenger traffic as well as capacity. Taken together and in sharp contrast to recent contrary claims, the results indicate that the recent legacy mergers were pro-competitive.

    Continue reading…