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It's often said that airline mergers lead to more headaches for travelers, including more flight delays, late arrivals and missed connections. But an analysis of 15 years of U.S. Department of Transportation statistics found that airline consolidation has had little negative impact on on-time performance.
In fact, two Indiana University researchers found evidence that mergers lead to long-term improvements, likely due to improved efficiencies. The research is forthcoming in the Journal of Industrial Economics.
Authors - Study - Jeffrey - T - Prince
The authors of the study are Jeffrey T. Prince, chair and professor of business economics and the Harold A. Poling Chair of Strategic Management in the IU Kelley School of Business; and Daniel H. Simon, associate professor in the IU School of Public and Environmental Affairs.
Their paper is among the first to look at quality responses to airline mergers and is one of just a few papers that analyze quality responses to mergers of any kind. Prior research has mainly focused on the price effects of mergers.
Evidence - Performance - Worsening - Years - Merger
"While we find some limited evidence of on-time performance worsening in the two years immediately following a merger, we find no evidence of on-time performance worsening in the long run," Prince and Simon wrote. "In many cases, we find evidence that on-time performance improves in the long run, and suggestive evidence that it is most pronounced on routes where both merging airlines operated pre-merger."
The IU professors analyzed on-time performance for five major airline mergers since 2000, including American Airlines' acquisition of Trans World Airlines in 2001; America West's acquisition of U.S. Airways in 2005; Delta Airlines' merger with Northwest Airlines in 2008; United Airlines' merger with Continental Airlines in 2010; and Southwest Airlines' acquisition of Airtran Airways in 2011.
Prince - Simon - Years - Data - Merger
Prince and Simon used three years of data prior to each merger and then up to five years of data afterward. To create a...
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