Ex-post Evaluation of the American Airlines-US Airways merger: a structural approach

Résumé

In this paper, we estimate a structural model of the domestic US airline market to analyse the effect of the recent merger between American Airlines and US Airways. Our results show that, between 2011 and 2016, a substantial fuel price drop, in conjunction with changes in consumer preferences towards direct flights, completely rationalises the observed decrease in prices. However, we estimate that, during the same period, more than half of the consumer welfare increase is due, on top of these environmental changes, to the ex-post optimisation of the networks of the newly merged airline and of its competitors.