Merger between airlines in financial distress: does the merger save them?

Article


Zhang, Yahua. 2015. "Merger between airlines in financial distress: does the merger save them?" Competition and Regulation in Network Industries. 16 (1), pp. 66-81.
Article Title

Merger between airlines in financial distress: does the merger save them?

ERA Journal ID35638
Article CategoryArticle
Authors
AuthorZhang, Yahua
Journal TitleCompetition and Regulation in Network Industries
Journal Citation16 (1), pp. 66-81
Number of Pages16
Year2015
Place of PublicationBelgium
ISSN1783-5917
Web Address (URL)http://journals.sagepub.com/doi/pdf/10.1177/178359171501600104
Abstract

The merger in 2009 between China Eastern Airlines and Shanghai Airlines came at a time when both airlines were suffering heavy losses, and were struggling for survival during the global financial crisis. An examination of the prices on China Eastern’s seven domestic Shanghai-based routes suggests that on average fares on departure days have increased by 22% in the post-merger period. It appears that the 2009 merger conferred China Eastern with significant market power owing to the parallel nature of this acquisition, thereby resulting in record profit reported in 2010. This reminds regulatory authorities to remain vigilant in handling airline mergers when numerous parallel routes are involved.

Keywordsairline merger; market power; Lerner index; China Eastern
ANZSRC Field of Research 2020380117. Transport economics
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Byline AffiliationsSchool of Commerce
Institution of OriginUniversity of Southern Queensland
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