Impacts of airline mergers on passenger welfare

Vikrant Vaze, Tian Luo and Reed Harder

Transportation Research Part E: Logistics and Transportation Review, 2017, vol. 101, issue C, 130-154

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.

Keywords: Airline merger; Passenger welfare; Airline service frequency; Multinomial logit; Consumer surplus (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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DOI: 10.1016/j.tre.2017.03.005

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