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

Christian Bontemps, Kevin Remmy and Johnny Wei
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Kevin Remmy: University of Mannheim = Universität Mannheim
Johnny Wei: Compass Lexecon

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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.

Keywords: Merger; Airlines; Network; Structural model; Nested logit; Airfare; Demand; Supply (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-com, nep-ind, nep-reg and nep-tre
Note: View the original document on HAL open archive server: https://hal.science/hal-03845873v1
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Citations: View citations in EconPapers (2)

Published in Journal of Transport Economics and Policy, 2022

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Working Paper: Ex-post evaluation of the American Airlines-US Airways merger: a structural approach (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03845873

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