The impact of mergers on fares structure:Evidence from European low-cost airlines

Dobson, Paul W. and Piga, Claudio A. (2013) The impact of mergers on fares structure:Evidence from European low-cost airlines. Economic Inquiry, 51 (2). pp. 1196-1217. ISSN 1465-7295

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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.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > Norwich Business School
Depositing User: Elle Green
Date Deposited: 11 Dec 2012 15:07
Last Modified: 07 May 2020 23:40
URI: https://ueaeprints.uea.ac.uk/id/eprint/40528
DOI: 10.1111/j.1465-7295.2011.00392.x

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