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International Mergers and Acquisitions in the Airline Industry

In: The Economics of International Airline Transport

Author

Listed:
  • James Nolan
  • Pamela Ritchie
  • John Rowcroft

Abstract

Mergers and acquisitions in the transportation sector are typically explained as attempts to capture economies of scale and scope through shared infrastructure and related cost-saving measures. In the airline industry, the past 15 years have seen an increasing number of international mergers and acquisitions that would have been blocked under prior regulatory regimes. This activity suggests that there are indeed gains from increasing airline size. Such gains may be largely financial in nature. One benefit to a merged airline could be greater market power over particular routes and hubs after merger, as well as improved contract structure and bargaining power in operations, although greater de-regulation and more competition internationally makes these arguments less compelling. In many cases, gains may be unique to specific airlines or operational situations. Thus, the issue addressed in this chapter is whether, in general, increasing the size or scope of airline operations enables them to function more efficiently and whether this effect is sustained across all sizes of airline. More pointedly, the chapter examines whether there exist measurable efficiency gains that can help explain the variety of mergers and acquisitions in the industry.

Suggested Citation

  • James Nolan & Pamela Ritchie & John Rowcroft, 2014. "International Mergers and Acquisitions in the Airline Industry," Advances in Airline Economics, in: The Economics of International Airline Transport, volume 4, pages 127-150, Emerald Group Publishing Limited.
  • Handle: RePEc:eme:aiaezz:s2212-160920140000004004
    DOI: 10.1108/S2212-160920140000004004
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    More about this item

    Keywords

    Airlines; efficiency; mergers and acquisitions; data envelopment analysis; L93; L41; C81;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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