Project Description
This research examines how the recently approved merger between Alaskan Airlines and Hawaiian Airlines can potentially affect passenger fare prices along the routes they serve. We employ two opposing theories to derive testable hypotheses tailored to the airline industry to empirically examine airline mergers and fares. One of the theories we will use for our case study analysis is the Structure-Conduct and Performance theory, which suggests that mergers that enhance the new company's share of passengers enhances that company's ability to charge higher fares. In contrast contestability theory is the alternative we perspective we will use for this analysis. That theory indicates that the potential for other companies to compete on routes served by Alaskan and Hawaiian airlines is enough to constrain their ability to charge higher prices. The research will use contemporary estimation techniques to estimate fares on routes the companies shared prior to the merger to fares on routes where the two companies did not compete for customers. Such analysis is significant, in part, because it has the ability to explain whether this recently approved merger has the potential to negatively affect fares to passengers flying on the routes served by these two companies.
Tasks and Responsibilites
The student has already collected company operations data on over 400.000 flight served by Alaskan and Hawaiian Airlines for the 4th quarter of 2023. Collecting that data was a major undertaking but was necessary to move forward with this project. The student will use Excel to sort that data by originating and destination airports served by the two airlines just prior to the merger. They will then identify how often the two airlines served the same routes and at what frequency th provide transport service along those shared routes. Making such identification is critical as it establishes the potential loss of competition along flight routes arising from the recently approved merger. The student will also identify whether routes are served by other smaller airlines who code-share with Alsakan or Hawaiian airlines. Code-sharing occurs when a smaller company services a route using the code of the larger company. This company behavior can also reduce competition because the smaller airline is cooperating with the larger airline to service passengers. It should be noted that considering the fare effect of code-sharing companies is new and has the potential to provide a more accurate account of the potential fare effects of airline mergers.
Desired Qualifications
None Listed.