Market Power in the U.S. Airline Industry

Bet, Germán

doi:10.2139/ssrn.3913695

Cited by 4 publications

(1 citation statement)

References 15 publications

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“…The airline industry could not maximize its profits in recent decades due to the excess capacity (Wojahn, 2012) General, 2012). These mergers allowed the airlines to cut operating costs and abandon some inefficient hubs although it raised concerns about market efficiency (Bet, 2021). Lichtenberg and Kim (1989) examined the impact of mergers on capacity utilization as well as costs and prices in the airline industry between 1970 and 1984.…”

Section: Developments In the 2000smentioning

confidence: 99%

The impact of airline business models on excess capacity

Karanki

2023

Manage Decis Econ

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Could airlines manage their excess capacity? This is a timely question, considering the likely growth in demand in the post‐pandemic period. As capacity reflects competitive priorities, business models can account for excess capacity. This study examines the impact of business models on excess capacity. The results show that capacity utilization decreased by 7%, although technical efficiency increased by 6%. As excess capacity differs across business models, airlines adopting the full‐service airline business model have higher capacity utilization than their competitors. This can be explained by the actions taken by full‐service airlines after the 2008 financial crisis.

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Section: Developments In the 2000smentioning

confidence: 99%

The impact of airline business models on excess capacity

Karanki

2023

Manage Decis Econ

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Structural Presumptions for Non-horizontal Mergers in the 2023 Merger Guidelines: A Primer and a Path Forward

Donna,

Pereira

2024

Rev Ind Organ

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Role of U.S. Airports’ Attributes in the Output Response to the COVID-19 Pandemic: A Stochastic Frontier Analysis with the Difference-in-Differences Method

Karanki,

Lim

2023

Transportation Research Record: Journal of the Transportation R

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Airports are vital to economic development, the connectivity of people and services, and the movement of goods. Moreover, airports are critical infrastructure for the COVID-19 response. In this study, we attempt to examine the impacts of the COVID-19 pandemic on U.S. airports’ outputs. Specifically, our analysis focuses on the impact on output with respect to airport size, legacy carriers’ hubs, and multi-airport systems. Using the data on 59 U.S. hub airports in 2019 and 2020 and a stochastic frontier analysis with the difference-in-differences method, we find that large hub airports faced a sharper decline in their operations compared with medium hub airports; airports serving as a major hub to the three legacy carriers experienced larger output declines possibly as a result of their greater exposure to international markets; there is no significant difference in output decreases between airports in a multi-airport system and standalone airports. Regardless of the pandemic impact, large airports, airports serving as a hub of the legacy carriers, and airports belonging to a multi-airport system are on average more efficient than their respective counterparts. The initial impact of the pandemic on airports’ output sheds light on the likely structural changes in demand that airports will face in the future.

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Market Power in the U.S. Airline Industry

Cited by 4 publications

References 15 publications

The impact of airline business models on excess capacity

The impact of airline business models on excess capacity

Structural Presumptions for Non-horizontal Mergers in the 2023 Merger Guidelines: A Primer and a Path Forward

Role of U.S. Airports’ Attributes in the Output Response to the COVID-19 Pandemic: A Stochastic Frontier Analysis with the Difference-in-Differences Method

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