The impact of mergers on fares structure

Evidence from european low-cost airlines

Paul W. Dobson, Claudio A. Piga

Research output: Contribution to journalArticle

16 Citations (Scopus)

Abstract

This paper examines mergers that lead to an almost immediate replacement of the target firm's business model in favor of that of the acquiring firm. We examine the post-merger behavior of the two leading European dedicated low-cost airlines, EasyJet and Ryanair, each acquiring another low-cost airline, Go Fly and Buzz, respectively. We find that both takeovers had an immediate and sustained impact on both the pricing structures and the extent of intertemporal price schedules used on the acquired routes, with early booking fares noticeably reduced and only very late booking fares increased. The analysis suggests that the takeovers had a net beneficial effect for consumers, at least in price terms, as a consequence of the introduction of the acquiring firms' business models and associated yield management pricing systems. (JEL L11, L13, L93)

Original languageEnglish
Pages (from-to)1196-1217
Number of pages22
JournalEconomic Inquiry
Volume51
Issue number2
DOIs
Publication statusPublished - 1 Apr 2013
Externally publishedYes

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Mergers
Low-cost airlines
Pricing
Business model
Schedule
Replacement
Yield management

Cite this

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The impact of mergers on fares structure : Evidence from european low-cost airlines. / Dobson, Paul W.; Piga, Claudio A.

In: Economic Inquiry, Vol. 51, No. 2, 01.04.2013, p. 1196-1217.

Research output: Contribution to journalArticle

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