| This research demonstrates the efficacy of a simulated annealing model of the United States airline network in prospectively analyzing potential mergers between major airlines. Not only does the simulation perform satisfactorily in modeling the current hub-and-spoke system, it is also an excellent tool for analyzing the potential effects on passenger routings and consumer welfare.;In most situations airline mergers negatively affect consumers through increased airfares and reduction of route choices. In all cases, the producers involved benefit from the mergers. The special case of US Airways, however, demonstrates that this particular airline's hubbing structure is exceedingly inefficient for domestic operations. Consequently, certain mergers of US Airways with United would result in a net gain for consumers due to the increased efficiency of the consolidated air carrier.;In general, the simulated annealing model reasonably predicts what would happen in the case of a merger. This information can be useful in determining whether particular mergers should be permitted by the government. While the simulated annealing framework has limitations, it does successfully predict the magnitude of effects. Thus, the simulated annealing model of airline networks proves to be a valuable tool for analyzing future mergers. |
