EconPapers    
Economics at your fingertips  
 

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 whether 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 when all legacy airlines in a market discuss the concept of “capacity discipline,” they reduce offered seats by 1.79%. We verify that this reduction materializes only when airlines communicate concurrently, and that it cannot be explained by other possibilities, including that airlines are simply announcing to investors their unilateral intentions to reduce capacity, and then following through on those announcements. Additional results from conditional-exogeneity tests and control function estimates confirm our interpretation.

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: Track citations by RSS feed

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

Related works:
Working Paper: Coordinated Capacity Reductions and Public Communication in the Airline Industry (2018) Downloads
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 ().

 
Page updated 2020-08-04
Handle: RePEc:ces:ceswps:_8115