Effects of Mergers and Divestitures on Airline Fares

2017 ◽  
Vol 2603 (1) ◽  
pp. 98-104 ◽  
Author(s):  
Zhou Zhang ◽  
Federico Ciliberto ◽  
Jonathan Williams
Keyword(s):  
Market Power ◽  
Airline Industry ◽  
Low Cost ◽  
Unique Data ◽  
Low Cost Carriers ◽  
The Impact

U.S. antitrust authorities have increasingly forced merging companies to divest assets as a condition for merger approval, with the goal of creating a more competitive postmerger environment. This study examined the effectiveness of this government strategy in the context of the airline industry, in which forced divestitures have occurred in recent consolidations. The study used unique data on assets critical to airport facilities that were involved in the divestitures to document the reallocation of those assets to low-cost carriers. Estimates of the impact of the divestitures on airfares were then calculated. The results show that, at the affected airports, fares for merging carriers fell by 3% and fares for nonmerging carriers fell by 1% relative to airports at which no divestiture occurred. These results provide evidence that the divestiture strategy used by antitrust authorities is effective in this setting in mitigating market power.

scholarly journals Tracing the Woes: An Empirical Analysis of the Airline Industry

2010 ◽  
Vol 2 (3) ◽  
pp. 1-43 ◽  
Author(s):  
Steven Berry ◽  
Panle Jia
Keyword(s):  
Airline Industry ◽  
Structural Model ◽  
Travel Demand ◽  
Low Cost ◽  
Air Travel ◽  
Demand And Supply ◽  
The Us ◽  
Low Cost Carriers ◽  
Air Travel Demand ◽  
The Impact

The US airline industry went through tremendous turmoil in the early 2000s, with four major bankruptcies, two major mergers, and various changes in network structure. This paper presents a structural model of the industry, and estimates the impact of demand and supply changes on profitability. Compared with 1999, we find that, in 2006, air-travel demand was 8 percent more price sensitive, passengers displayed a stronger preference for nonstop flights, and changes in marginal cost significantly favored nonstop flights. Together with the expansion of low-cost carriers, they explain more than 80 percent of legacy carriers' variable profit reduction. (JEL L13, L25, L93)

The Impact of Low-Cost Carriers on Airport and Route Competition

2017 ◽  
pp. 241-260 ◽  
Author(s):  
Martin Dresner ◽  
Jiun-Sheng Chris Lin ◽  
Robert Windle
Keyword(s):  
Low Cost ◽  
Low Cost Carriers ◽  
The Impact

Hedonic and Utilitarian Values Behind Engagement of Online Consumers

2021 ◽  
pp. 1242-1263
Author(s):  
Farrah Zeba ◽  
Musarrat Shaheen ◽  
Raveesh Krishnankutty
Keyword(s):  
Lived Experience ◽  
Airline Industry ◽  
Low Cost ◽  
Marketing Strategies ◽  
The Self ◽  
Customer Engagement ◽  
Third Order ◽  
Diary Method ◽  
Low Cost Carriers ◽  
Order Construct

In the hyper-competitive Indian airline industry, the low-cost carriers as well as full-service airlines are in dire need of innovative marketing strategies to engage their customers. To understand the dynamics behind the process of customer engagement, the purpose of this paper is to gain insights into the lived experience of consumers about their online air-ticket bookings experiences. In total, 60 frequent air travellers were approached to participate in the study and the self-completion diary method was incorporated to record their ticket booking experiences. The responses recorded in the diaries were analyzed on the basis of their content from which eight themes were derived. The findings bring forth the importance of hedonic experiential values along with utilitarian experiential values toward the engagement of customers during the online air-ticket booking process. The current study is one of the pioneers in conceptualization of customer engagement as a third-order construct by uncovering the sub-dimensions of the second order factors—utilitarian and hedonic experiential values.

Ailing Kenyan carrier will face more competition

2016 ◽  
Keyword(s):  
Airline Industry ◽  
Low Cost ◽  
Air Travel ◽  
Recovery Strategy ◽  
East African ◽  
Content Type ◽  
Profit Margins ◽  
Low Cost Carriers ◽  
Fuel Costs ◽  
Air Carriers

Significance Despite low fuel costs and the global airline industry running profitable operations, Kenya Airways has recorded multiple years of losses, leading the company to consider a recovery strategy that includes selling aircraft and shedding jobs. Impacts East African air carriers could benefit from industry rationalisation, but domestic political concerns could obstruct regional reforms. Low-cost carriers have emerged in Africa but struggle to make headway against publicly owned airlines. Once Kenya Airways exits fuel-hedging commitments, lower prices should improve profit margins. Without airline liberalisation and local carrier rationalisation, foreign airlines will benefit most from growing African air travel. Government protectionism, high taxes and regulation will restrict competition, especially from low-cost carriers.

Low-cost carriers versus full service carriers in ASEAN: The impact of liberalization policy on competition

2014 ◽  
Vol 40 ◽  
pp. 96-105 ◽  
Author(s):  
Shinya Hanaoka ◽  
Mikio Takebayashi ◽  
Tomoki Ishikura ◽  
Batari Saraswati
Keyword(s):  
Low Cost ◽  
Low Cost Carriers ◽  
Liberalization Policy ◽  
The Impact

scholarly journals Overview of the developments in the domestic airline industry in South Africa since market deregulation

2013 ◽  
Vol 7 (1) ◽  
Author(s):  
Rose Luke ◽  
Jackie Walters
Keyword(s):  
South Africa ◽  
Airline Industry ◽  
Structural Changes ◽  
Low Cost ◽  
Air Traffic ◽  
Air Transport ◽  
Load Factors ◽  
Low Cost Carriers ◽  
Global Impacts ◽  
Domestic Airline

Deregulation or liberalisation of air transport has had major global impacts on the domestic air transport markets, with effects ranging from stimulation to changes in the structure and functioning of these markets. In South Africa, deregulation has had wide-reaching effects on the domestic market. The purpose of this article was to investigate the current domestic air transport market. A literature review was performed to examine the effects of deregulation in other domestic air transport markets around the world. This was followed by a review of the South African domestic air transport market prior to deregulation in order to determine the changes that were made following deregulation. The ten-year period immediately following deregulation was also examined; this period was characterised by relatively large numbers of market entries and exits. A database was obtained from the Airports Company South Africa; air traffic movements, passenger numbers and load factors were evaluated. The study showed that the market is still characterised by regular market entries and exits. Also that the entry of the low-cost carriers has stimulated the market, resulting in increased air traffic movements, higher passenger numbers, higher load factors in general and the opening of a secondary airport in Gauteng, Lanseria International. Deregulation and, more specifically, the entry of the low-cost carriers has resulted in structural changes in the market and more choice for passengers.

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