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Mergers and business model assimilation: evidence from low-cost airline takeovers

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posted on 2009-05-13, 10:38 authored by Paul W. Dobson, Claudio Piga
This paper examines mergers that lead to an almost immediate replacement of the target firm’s business model in favor of that of the acquiring firm. We examine the post-merger behavior of the two leading European dedicated low-cost airlines, EasyJet and Ryanair, each acquiring another low-cost airline, respectively Go Fly and Buzz. We find that both takeovers had an immediate and sustained impact on both the pricing structures and the extent of inter-temporal price schedules used on the acquired routes, with early booking fares noticeably reduced and only very late booking fares increased. The analysis suggests that the takeovers had a net beneficial effect as a consequence of the introduction of the acquiring firms’ business models and associated yield management pricing systems.

History

School

  • Business and Economics

Department

  • Economics

Publisher

© Loughborough University

Version

  • VoR (Version of Record)

Publication date

2009

Notes

This is a working paper. It is also available at: http://ideas.repec.org/p/lbo/lbowps/2009_2.html

ISSN

1750-4171

Book series

Loughborough University. Department of Economics. Discussion Paper Series;WP 2009-02

Language

  • en

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