| Summary |
After the deregulation of the U.S. aviation industry, many airlines have been established and entered the market. In addition to changes in fares, service attributes such as frequency and flight time and even social welfare will be affected by airlines entering the market. In addition, airlines with different operational characteristics have also been established after the deregulation. In addition to traditional airlines, low-cost airlines and ultra-low-cost airlines have also been established after deregulation.
Most of the forward studies about airline entry focus on the impact of the changes in fares or single service attributes, few studies have fully analyzed the changes in fares and service attributes caused by the entry of airlines. Therefore, the goal of this study is to analyze the impact of different types of airlines on the changes in fares, service attributes and passenger welfare after the entry of different types of airlines based on the operating patterns of airlines.
This study takes cities as the analysis market, and uses the "destination-route-carrier choice model" constructed by Hsiao and Che (2020) as the basis for measuring market passengers' welfare. This model considers the impact of fares and service attributes on the welfare of passengers, and consider the issue of substitution between passengers destinations. In terms of research methods, in order to reasonably analyze the impact of airline entry events on the welfare changes of travelers, this study uses the propensity score matching method to match the experimental and control cities with similar characteristics through city characteristic variables. Then use the difference-in-difference method to control other external factors that may affect the welfare change, so as to simply obtain the welfare change brought about by airline entry. The research object takes cities as observation objects, and conducts an empirical analysis on airline entry events for the cities where the top 100 airports are located in the United States from the first quarter of 2005 to the first quarter of 2017.
The results of the study show that no matter which type of airline enters the city, passenger welfare has increased, and the entry event of ultra-low-cost airlines has increased passenger welfare by the most among the three types of airlines, and the entry of traditional airline increase least. In terms of research methods, the use of propensity score matching and difference-in-difference analysis did make a difference in the measure of welfare change.
In addition, observing the changes of the main variables affecting passenger welfare before and after the entry of airlines will find that the entry of these three types of airlines will reduce the city's fare and flight time, increase the frequency of direct flights and reduce the frequency of connecting flights, and changes in fares are the main factor causing changes in benefits. |
