A retrospective analysis of the effects of airline mergers on China Eastern's 'lifeline' routes: a difference-in-differences approach

Zhang, Yahua (2012) A retrospective analysis of the effects of airline mergers on China Eastern's 'lifeline' routes: a difference-in-differences approach. Journal of the Asia Pacific Economy, 17 (3). pp. 464-475. ISSN 1354-7860

Abstract

We have seen a wave of mega airline mergers in the past few years including Air France/KLM, Delta/Northwest (NW) and United/Continental. However, literature examining the post-merger effects remains sparse. Using a difference-in-differences (DD) approach, this study examines the airfares on China Eastern's three 'lifeline' routes, Shanghai-Beijing, Shanghai-Guangzhou and Shanghai-Shenzhen, after the 2002 airline mergers that eliminated six state-owned airlines and resulted in three large airline groups. Passengers on these important routes seem to have not been adversely impacted, and even in 2007, the airfares were not significantly higher than that of the 2002 level despite the rise in fuel price, which may provide some evidence to support the 2009 merger between China Eastern and Shanghai Airlines and justify a lenient anti-trust treatment of mergers in China's airline industry. Retrospectively examining the actual effects of consummated mergers in China including this research has significant policy implications for the new Anti-Monopoly Law enforcement agencies that have little experience and knowledge in dealing with airline mergers and alliances at this stage.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restrcited access to published version due to publisher copyright policy.
Depositing User: Dr Shane Zhang
Faculty / Department / School: Historic - Faculty of Business and Law - School of Accounting and Finance
Date Deposited: 16 Sep 2012 12:03
Last Modified: 03 Jul 2013 01:28
Uncontrolled Keywords: airline merger; anti-trust; business routes; China eastern; tourist routes
Fields of Research (FOR2008): 15 Commerce, Management, Tourism and Services > 1505 Marketing > 150507 Pricing (incl. Consumer Value Estimation)
15 Commerce, Management, Tourism and Services > 1507 Transportation and Freight Services > 150701 Air Transportation and Freight Services
14 Economics > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation
Socio-Economic Objective (SEO2008): B Economic Development > 88 Transport > 8803 Aerospace Transport > 880302 Air Passenger Transport
Identification Number or DOI: doi: 10.1080/13547860.2012.694701
URI: http://eprints.usq.edu.au/id/eprint/21897

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