A new era of profitability? Exploring the effects of four recent US airline mergers on prices, competition, capacity, and quality
Abstract/Contents
- Abstract
- Significant financial turmoil in the 2000s prompted a series of large-scale US airline mergers between 2008 and 2013: Delta-Northwest, United-Continental, Southwest-AirTran, and American-US Airways. This recent period of industry consolidation has led to an increase in the domestic market share of the four largest US carriers from around 55% in 2008 to nearly 80% in 2015. Along with other factors, this has contributed to a period of record profits in the US airline industry. Using a difference-in-differences approach, this paper estimates the effects of each of the four mergers on prices, competition, capacity, and quality. The results suggest that in large air travel markets, three out of the four mergers led to price increases and reductions in levels of competition. In small air travel markets, the Southwest-AirTran merger had the largest impact, producing a 21% increase in its fares. The effects of mergers on seat capacity were mixed, while impacts on quality were limited.
Description
| Type of resource | text |
|---|---|
| Date created | June 5, 2018 |
Creators/Contributors
| Author | McNeill, Mark |
|---|---|
| Degree granting institution | Stanford University, Department of Economics |
| Primary advisor | Larsen, Brad |
Subjects
| Subject | Stanford University |
|---|---|
| Subject | Department of Economics |
| Subject | industrial organization |
| Subject | airlines |
| Subject | mergers |
| Subject | market power |
| Subject | competition |
| Subject | United States |
| Genre | Thesis |
Bibliographic information
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- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
Preferred citation
- Preferred Citation
- McNeill, Mark. (2018). A new era of profitability? Exploring the effects of four recent US airline mergers on prices, competition, capacity, and quality. Stanford Digital Repository. Available at: https://purl.stanford.edu/mb178cp4999
Collection
Stanford University, Department of Economics, Honors Theses
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- mmcneill@alumni.stanford.edu
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