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After The Recent US Airline Mergers, Did Domestic Airfares Increase?

Author

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  • Samuel D. Barrows

    (Senior Lecturer at STEM Business School, Turan University, Kazakhstan and Doctorate of Business Administration Candidate, Toulouse Business School, France.)

Abstract

The dynamics of the US domestic airfares are studied between 2002 and 2016. During this time frame, there was significant airline industry consolidations resulting in additional market concentration in the top four airlines and in the industry as a whole. The potential airfare increase resulting from this higher concentration is evaluated on both real and inflation adjusted bases through two cases. An analysis of load factors and passenger miles and their link with the airfare increases are also evaluated through two additional cases. A breakdown of all origin hubs in the US network is included which shows a vastly different airfare increase picture in the top twenty major hubs as compared to the smaller origins. Having healthy competition usually results in lower fares and this analysis confirms that dynamic. There are discussions on industry concentration, industry profitability, pricing power, and other items which can impact airfares.

Suggested Citation

  • Samuel D. Barrows, 2018. "After The Recent US Airline Mergers, Did Domestic Airfares Increase?," International Review of Management and Marketing, Econjournals, vol. 8(1), pages 1-8.
    • Handle: RePEc:eco:journ3:2018-01-1
    as

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    References listed on IDEAS

    as
    1. Peter P. Belobaba, 1987. "Survey Paper---Airline Yield Management An Overview of Seat Inventory Control," Transportation Science, INFORMS, vol. 21(2), pages 63-73, May.
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    More about this item

    Keywords

    Airline industry mergers; airfares increase; market power concentration;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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