Megan Gee, “Flying the Competitive Skies: An Analysis of Alaska Airlines Acquisition of Hawaiian Airlines”
Mentor: James Peoples, Economics, Letters & Science (College of)
Poster #37
This research project aimed to evaluate the decision by the United States Department of Justice Antitrust Division to allow Alaska Airlines to acquire Hawaiian Airlines, with a focus on the potential impact on fares in the competitive west coast segment. I was concerned about a possible increase due to consolidation of two legacies, despite competition from other legacy carriers, low-cost carriers (LCCs), and ultra low-cost carriers (ULCCs). A large sample of Alaska Airlines and Hawaiian Airlines flight data was collected by using T-100 data from Q3 2023; interviews with Hawaiian Airlines employees were also conducted. Network analysis was done to determine the frequency of overlapping routes between the two airlines using origin-destination (OD) pairs. A fare regression was then ran using the average market fare, total flights, frequency of overlapping routes, a codeshare dummy variable, and market OD pairs. The regression analysis revealed that flight distance had minimal impact on fares, while the presence of a codeshare agreement and route overlap significantly influenced fare levels. These findings suggest that the integration of networks and codeshare agreements play a larger role in fare determination than the distance flown. Over consolidation within the airline industry can lead to a more monopolistic market, potentially harming consumers through increased prices. The results raise concerns about the long-term impact of airline acquisitions on fare competition and consumer welfare, emphasizing the need for continued scrutiny of airline mergers by regulatory bodies.