| Summary |
In recent years, the aviation industry market has been volatile and airline mergers have been frequently reported. The merger of airlines will have an impact on the market structure, the state of competition, fares, service quality, and even social welfa re. However, most of studies focus on changes in single service attributes.
This study applies the route carrier choice model constructed by Hsiao and Chen (2019), considers the impact of changes in multiple service attributes on the welfare of travelers, and models the issue of substitution between alternatives. In addition, in order to reasonably and effectively compare the changes in the passenger welfare brought by the merger, this study uses the propensity score matching to select one to one comparable experiments through market
characteristics variables (including market distance, population, and income), and then use the difference in difference to control other factors so as to obtain the changes in welfare that are purely brought by mergers.
This study takes three mergers of different types of airlines in the United States as an example to conduct empirical analysis. The results show that whether to match markets with similar market characteristics will make the welfare measurement different, and d iff between merger types and market classifications: the merger of the same type of airline is easier to increase the passenger welfare, but the different type of airline is more likely to cause the loss of passenger welfare. In addition, the welfare in th e three merger cases are all sub categories of the existing market, but the key variables that lead to the differences in the three cases are not the same. |
