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Air services on thin routes: Regional versus low-cost airlines

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  • Fageda, Xavier
  • Flores-Fillol, Ricardo

Abstract

An examination of the impact in the US and EU markets of two major innovations in the provision of air services on thin routes – regional jet technology and the low-cost business model – reveals significant differences. In the US, regional airlines monopolize a high proportion of thin routes, whereas low-cost carriers are dominant on these routes in Europe. Our results have different implications for business and leisure travelers, given that regional services provide a higher frequency of flights (at the expense of higher fares), while low-cost services offer lower fares (at the expense of lower flight frequencies).

Suggested Citation

  • Fageda, Xavier & Flores-Fillol, Ricardo, 2012. "Air services on thin routes: Regional versus low-cost airlines," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 702-714.
    • Handle: RePEc:eee:regeco:v:42:y:2012:i:4:p:702-714
    DOI: 10.1016/j.regsciurbeco.2012.03.005
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    More about this item

    Keywords

    Air transportation; Regional jet technology; Low-cost business model; Thin markets;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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