Abstract
In 2013, American Airlines merged with US Airways creating the largest airline in the world. This paper analyzes this merger’s effect on domestic airline ticket pricing using the Department of Transportation’s 10% ticket sample. This analysis confirmed insights that have been identified in prior analyses including in which there is heightened competition, prices are lower. It also demonstrates again that mergers can be correlated with rising prices. What is perhaps novel is that although legacy carriers generally increased prices post-merger, low-cost carriers did not appear to have that same freedom. Rather, they lowered prices, and those fare reductions were largest in markets for which American Airlines and US Airways played a larger role pre-merger.
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