Sliding doors: Alitalia–ITA transition impact on pricing strategies

This article investigates the short-term impact of the Alitalia–ITA Airways transition on pricingstrategies and market competition in the Italian domestic air transport sector. Using a noveldataset simulating over 21,000 ticket purchases before and after ITA’s market entry, we applya difference-in-difference approach combined with propensity score matching to estimate thecausal effect of this ownership transition. Our results show a significant fare reduction of approxi-mately 25% on affected routes, driven by ITA’s more competitive pricing and reduced intertem-poral price dispersion. The study also documents heterogeneous reactions among competingairlines, particularly Ryanair. These findings provide new empirical evidence on how structuralchanges in flag carrier ownership affect market dynamics, raising important considerations forcompetition policy and future regulatory design.