Airline mergers and acquisitions increased ticket sales

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Gol's purchase of Webjet reduced the price of airline tickets. This operation, combined with the merger between Azul and Trip, increased the number of seats sold on routes operated by the companies.


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Merger between Azul and Trip increased number of seats sold
The data is contained in the working document Ex post mergers evaluation: Evidence from the Brazilian airline industry , released by the Department of Economic Studies of the Administrative Council for Economic Defense (DEE-Cade) this Tuesday (28/9). The focus of the study is to analyze the impacts of the authority's decisions in relation to two operations carried out in the Brazilian civil aviation market.

The study used the difference-in-differences Portugal Mobile Number List methodology, which is characterized by quantifying the impact of changes in the price of airline tickets, as well as the number of seats sold, before and after the operation.

In this sense, it was assessed whether two operations approved by Cade in recent years, the purchase of Webjet by Gol and the merger between Azul and Trip, had a direct impact on the average airfare price and the number of seats sold on domestic routes with overlapping flights. performance of the two companies involved in the operations compared to non-overlapping routes.

To enable the analysis, DEE-Cade considered variables related to the weighted average price of the fare and seats sold from July 2010 to December 2019 by route. Regarding the Gol-Webjet operation, the results show that Gol's fare on the routes that both it and Webjet operated reduced by around 8%. The number of seats sold on these routes increased by approximately 38% after the operation.

Regarding the merger involving Azul and Trip, no statistically significant effects were found on air ticket prices, but there was an increase of around 27% in the number of seats sold on overlapping routes after the transaction was completed.
               


According to DEE-Cade, there are two factors that must be considered in the analysis. The first is that no anti-competitive effects were observed arising from the two operations analyzed. The second point is that the mergers were approved by Cade with the imposition of special conditions related to efficiency at Santos Dumont airport, in Rio de Janeiro.

In this way, the department concluded that “it is possible to say that Cade achieved its objective of defending the competitive environment” in this sector. With information from Cade’s Press Office.