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An empirical analysis of a merger between a network and low-cost airlines

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Author Info

  • Xavier Fageda

    ()
    (Department of Economic Policy, Universitat de Barcelona. Research group “Governs i Mercats” (GiM).)

  • Jordi Perdiguero

    ()
    (Department of Economic Policy, Universitat de Barcelona. Research group “Governs i Mercats” (GiM).)

Abstract

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.

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File URL: http://www.pcb.ub.es/xreap/aplicacio/fitxers/XREAP2011-01.pdf
File Function: First version, 2010
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File URL: http://www.pcb.ub.es/xreap/aplicacio/fitxers/XREAP2011-01.pdf
File Function: Revised version, 2011
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Bibliographic Info

Paper provided by Xarxa de Referència en Economia Aplicada (XREAP) in its series Working Papers with number XREAP2011-01.

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Length: 32 pages
Date of creation: May 2011
Date of revision: May 2011
Handle: RePEc:xrp:wpaper:xreap2011-01

Contact details of provider:
Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques i Empresarials, Universitat de Barcelona, c/ Tinent Coronel Valenzuela, 1-11, 08034 Barcelona
Phone: +34+934039653
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Web page: http://www.pcb.ub.edu/xreap
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Related research

Keywords: Mergers; Airline Market; Low-Cost Carriers; Difference-in-Difference;

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References

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  1. Juan Luís Jiménez & Jordi Perdiguero, 2009. "(No)competition in the Spanish retailing gasoline market: a variance filter approach," Working Papers XREAP2009-05, Xarxa de Referència en Economia Aplicada (XREAP), revised May 2009.
  2. Daniel Albalate & Germà Bel & Xavier Fageda, 2010. "Is it Redistribution or Centralization? On the Determinants of Government Investment in Infrastructure," Working Papers XREAP2010-15, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2010.
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Citations

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Cited by:
  1. Antoni Ferri & Montserrat Guillén & Lluís Bermúdez, 2012. "Solvency Capital estimation and Risk Measures," Working Papers XREAP2012-02, Xarxa de Referència en Economia Aplicada (XREAP), revised Jan 2012.
  2. Lenartowicz, M. & Mason, K. & Foster, A., 2013. "Mergers and acquisitions in the EU low cost carrier market. A Product and Organisation Architecture (POA) approach to identify potential merger partners," Journal of Air Transport Management, Elsevier, vol. 33(C), pages 3-11.
  3. Joan Ramón Borrell & Juan Luís Jiménez & Carmen García, 2012. "Evaluating antitrust leniency programs," Working Papers XREAP2012-01, Xarxa de Referència en Economia Aplicada (XREAP), revised Jan 2012.
  4. Bilotkach, Volodymyr & Fageda, Xavier & Flores-Fillol, Ricardo, 2013. "Airline consolidation and the distribution of traffic between primary and secondary hubs," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 951-963.
  5. Antoni Ferri & Lluís Bermúdez & Montserrat Guillén, 2012. "How to use the standard model with own data?," Working Papers XREAP2012-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Feb 2012.

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