Seminarios Académicos

Abstract: This paper studies the coordinated effects of the merger between American Airlines and US Airways by examining the extent to which the connecting prices of nonmerging legacy carriers evolved when the merger eliminated Advantage Fares, a connecting flight price discounting program offered by US Airways. In our empirical analysis, we find that postmerger nonmerging legacy carriers substantially increased their connecting prices on routes where US Airways had a dominant position. From our theoretical analysis, these empirical findings can be explained by the merger’s coordinated effects. Finally, we note the potential importance of connecting services in merger analysis.