A hub carrier operates one hub linking multiple non-hub cities. It merges with a low cost carrier whose
nonstop service competes with its one-stop service. The merged airline's profit is maximized by
withdrawing the competing one-stop (nonstop) service when the hub carrier's operating cost and
connecting passengers' hub-through additional time costs are large (small). The realized merger is
welfare-improving (welfare-decreasing) when these costs are large or small (intermediate). These
findings suggest the necessity of merger regulation. In some regions, the necessity of regulation does
not monotonically change as network size increases.