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Impacts of airline mergers on passenger welfare

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  • Vaze, Vikrant
  • Luo, Tian
  • Harder, Reed

Abstract

Since 2005, the US airline industry has undergone a series of consolidations. We provide a comprehensive assessment of the overall effects of five major recent mergers on passengers’ welfare. We compute consumer surplus changes using passenger discrete choice models based on the attributes of airlines and routes. We then evaluate these changes, as well as changes in frequency and fare, using a difference-in-differences approach. Our major findings include large consumer welfare gains following the DL-NW and UA-CO mergers, welfare gains in regions dominated by the larger carrier in the merger, and welfare losses in highly concentrated markets following legacy mergers.

Suggested Citation

  • Vaze, Vikrant & Luo, Tian & Harder, Reed, 2017. "Impacts of airline mergers on passenger welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 130-154.
    • Handle: RePEc:eee:transe:v:101:y:2017:i:c:p:130-154
    DOI: 10.1016/j.tre.2017.03.005
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    Cited by:

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    2. Li, Hongchang & Wang, Kun & Yu, Kemei & Zhang, Anming, 2020. "Are conventional train passengers underserved after entry of high-speed rail?-Evidence from Chinese intercity markets," Transport Policy, Elsevier, vol. 95(C), pages 1-9.
    3. Le, Huubinh B. & Yimga, Jules O., 2023. "Codeshare restrictions as antitrust remedy," Transport Policy, Elsevier, vol. 138(C), pages 17-24.
    4. Yang, Hangjun & Ma, Wenliang & Wang, Qiang & Wang, Kun & Zhang, Yahua, 2020. "Welfare implications for air passengers in China in the era of high-speed rail," Transport Policy, Elsevier, vol. 95(C), pages 1-13.
    5. Ma, Wenliang & Wang, Qiang & Yang, Hangjun & Zhang, Yahua, 2020. "Evaluating the price effects of two airline mergers in China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).

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