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Ex-post Evaluation of the American Airlines–US Airways Merger: a structural approach

Author

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  • Christian Bontemps

    (ENAC - Ecole Nationale de l'Aviation Civile, TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Kevin Remmy

    (université de Mannheim)

  • Johnny Wei

    (Compass Lexecon)

Abstract

In this paper, we estimate a structural model of the domestic US airline market to analyze the eect of the recent merger between American Airlines and US Airways. Our results show that, between 2011 and 2016, a substantial fuel price drop in conjunction with changes in consumer preferences toward direct ights completely rationalizes the observed decrease in prices. However, we estimate that, during the same period, more than half of the consumer welfare increase is due, on top of these environmental changes, to the ex-post optimization of the networks of the newly merged airline and of its competitors. Acknowledgments: We would like to thank the Guest Editors and two anonymous referees for helpful comments. Special thanks to Sara Crompton Meade and Mariane Bontemps for proofreading. Funding from the French National Research Agency (ANR) under the Investments for the Future program (Investissements d'Avenir, grant ANR-17-EURE-0010) is gratefully acknowledged.

Suggested Citation

  • Christian Bontemps & Kevin Remmy & Johnny Wei, 2022. "Ex-post Evaluation of the American Airlines–US Airways Merger: a structural approach," Post-Print hal-03845873, HAL.
    • Handle: RePEc:hal:journl:hal-03845873
    Note: View the original document on HAL open archive server: https://hal.science/hal-03845873
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    References listed on IDEAS

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    Cited by:

    1. Christian Bontemps & Cristina Gualdani & Kevin Remmy, 2023. "Price Competition and Endogenous Product Choice in Networks: Evidence From the US Airline Industry," CRC TR 224 Discussion Paper Series crctr224_2023_400, University of Bonn and University of Mannheim, Germany.
    2. Bontemps, Christian & Martini, Gianmaria & Porta, Flavio, 2024. "The Effects of LCCs Subsidies on the Tourism Industry," TSE Working Papers 24-1540, Toulouse School of Economics (TSE).

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    More about this item

    Keywords

    Merger; Airlines; Network; Structural model; Nested logit; Airfare; Demand; Supply;
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