In this paper, we estimate a structural model of the domestic US airline market to analyze the effect 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 flights 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.
Merger; airlines; network; structural model; nested logit; airfare; demand; supply.;
Christian Bontemps, Kevin Remmy, and Jiangyu Wei, “Ex-post evaluation of the American Airlines-US Airways merger: a structural approach”, TSE Working Paper, n. 21-1258, November 2021.