Taking Off or Turbulence? An Empirical Analysis of The U.S. Airways and American Airlines Merger

Ever since the Airline Deregulation Act of 1978, airline mergers have been a hot topic of debate in the fields of antitrust and industrial organization. While the empirical evidence covering early airline mergers largely suggests these mergers decreased consumer welfare via increases in fares, the evidence surrounding more recent mergers remains unclear. This paper contributes to the existing literature by conducting a difference-in-difference analysis on the domestic pricing effects of the U.S. Airways and American Airlines merger. My analysis suggests small, but highly statistically significant, increases in airfares in markets affected by the U.S. Airways and American Airlines merger. However, overall welfare effects remain unclear.