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- Title
THE IMPACT OF MERGERS ON FARES STRUCTURE: EVIDENCE FROM EUROPEAN LOW-COST AIRLINES.
- Authors
DOBSON, PAUL W.; PIGA, CLAUDIO A.
- 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. ( JEL L11, L13, L93)
- Subjects
MERGERS &; acquisitions; BUSINESS models; EASYJET Airline Co. Ltd.; RYANAIR Ltd.; GO Fly Ltd.; BUZZ Airlines (Company); AIRLINE rates; REVENUE management
- Publication
Economic Inquiry, 2013, Vol 51, Issue 2, p1196
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/j.1465-7295.2011.00392.x