Competition and consumer welfare in airline markets: Evidence from the Alaska--Hawaiian merger

This research studies how changes in airline market structure affect airfares, with an application to the Alaska Airlines–Hawaiian Airlines merger. The analysis focuses on both nonstop and connecting service because competitive constraints in airline networks often operate across service types and across nearby (adjacent) airports. Using U.S. Department of Transportation DB1B ticket data for 2024Q1–2024Q4, this paper estimates reduced-form fare regressions that relate the log of passenger-weighted average fares to measures of legacy-carrier competition, the presence of low-cost carriers (LCCs) and ultra-low-cost carriers (ULCCs), potential entry, and adjacent-airport competitive pressure. The study then uses the estimated coefficients to conduct transparent counterfactual exercises that quantify how removing a competitor changes predicted fares on overlapping Alaska–Hawaiian routes, all of which involve Hawaiian endpoints.