Analysis of prospective airline mergers using a simulated annealing model

This paper examines the efficacy of a simulated annealing model of the US airline network in analyzing potential mergers between major airlines. The simulation performs satisfactorily in modeling the current hub-and-spoke system focusing on the effects on passenger routings, producer profits, and consumer welfare. In general, the simulated annealing model reasonably demonstrates the price and demand effects due to a merger of major carriers. While it cannot take into account all relevant information, such as labor union relationships and negotiating tactics, it can offers insight into the implications of airline mergers.