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Bankruptcy and product-market competition: evidence from the airline industry

Ciliberto, Federico and Schenone, Carola (2012): Bankruptcy and product-market competition: evidence from the airline industry.

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Abstract

We investigate the effects of Chapter 11 bankruptcy filings on product market competition using data from the US airline industry. We find: i) bankrupt airlines permanently downsize their national route structure, their airport-specific networks, and their route-specific flight frequency and capacity; ii) bankrupt airlines lower their route-specific prices while under bankruptcy protection, and increase them after emerging. We do not find robust evidence of significant changes by the bankrupt airline's competitors along any of the dimensions above.

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