Pricing and Competition in the UK-Irish Aviation Market: the Case of Ryanair vs. Aer Lingus

摘要

In this paper we study empirically the relationship between air-rnlines' spricing and market structure, to shed light on the competitionrnbetween Ryanair and Aer Lingus, given the recent attempt of thernformer to take over the latter.rnWe use a panel data set of 84,888 flights operated between thernUK and Ireland in 2003 and 2004, for total 773,593 observations. Torncontrol for the intertemporal pattern of airline fares, for each flightrnwe use different fares posted on the internet at speci?c days beforerndeparture. We focus our analysis on evaluating the impact of marketrnstructure variables on fares. We do not ?nd that high market powerrnand high market concentration have a positive effect on fares. Ourrnresults therefore suggest that using market structure variables to assessrnthe effect of the merge may not be appropriate to this context.