Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216511 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8115
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We investigate whether legacy U.S. airlines communicated via earnings calls to coordinate with other legacy airlines in offering fewer seats on competitive routes. To this end, we first use text analytics to build a novel dataset on communication among airlines about their capacity choices. Estimates from our preferred specification show that when all legacy airlines in a market discuss the concept of "capacity discipline," they reduce offered seats by 1.79%. We verify that this reduction materializes only when airlines communicate concurrently, and that it cannot be explained by other possibilities, including that airlines are simply announcing to investors their unilateral intentions to reduce capacity, and then following through on those announcements. Additional results from conditional-exogeneity tests and control function estimates confirm our interpretation.
Subjects: 
airlines
communication
capacity discipline
text data
JEL: 
D22
L13
L41
L93
Document Type: 
Working Paper
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