Coordinated Capacity Reductions and Public Communication in the Airline Industry

Gaurab Aryal (), Federico Ciliberto and Benjamin Leyden

No 8115, CESifo Working Paper Series from CESifo

Abstract: We investigate the allegation that legacy U.S. airlines communicated via earnings calls to coordinate with other legacy airlines in offering fewer seats on competitive routes. To this end, we first use text analytics to build a novel dataset on communication among airlines about their capacity choices. Estimates from our preferred specification show that the number of offered seats is 2% lower when all legacy airlines in a market discuss the concept of “capacity discipline.” We verify that this reduction materializes only when legacy airlines communicate concurrently, and that it cannot be explained by other possibilities, including that airlines are simply announcing to investors their unilateral plans to reduce capacity, and then following through on those announcements.

Keywords: airlines; communication; capacity discipline; text data (search for similar items in EconPapers)
JEL-codes: D22 L13 L41 L93 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-com, nep-ind and nep-tre
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp8115_0.pdf (application/pdf)

Related works:
Journal Article: Coordinated Capacity Reductions and Public Communication in the Airline Industry (2022)
Working Paper: Coordinated Capacity Reductions and Public Communication in the Airline Industry (2021)
Working Paper: Coordinated Capacity Reductions and Public Communication in the Airline Industry (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8115

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().