Competitive Effects of Regional Airline Exit: Evidence from the COVID-19 Pandemic

Dr. Patrick McCarthy is Emeritus Professor, School of Economics at Georgia Institute of Technology. His research areas include transportation economics, regulation, and applied microeconometrics. He is author of Transportation Economics Theory and Practice: A Case Study Approach (Blackwell Publishers, 2001), has published widely in academic journals, served on national committees, and received research funding from the Sloan Foundation, National Science Foundation, National Institutes of Health, the Federal Aviation Administration, Georgia Department of Transportation, and AAA Foundation for Traffic Safety. He has held primary appointments at Concordia University (1976 – 1978), Purdue University (1978 – 2000), and Georgia Tech (2000 – 2021). He has held visiting positions in Singapore, Greece, Germany, and China. He currently serves as Associate Editor (J. Management Science and Engineering) and is editing a volume (Emerald Publishing) analyzing the effects of the COVID-19 pandemic on the airline industry.

ABSTRACT

We examine the competitive effects of regional airline exits on the U.S. airline industry during the period April 2019 through December 2020, leveraging the first wave of COVID-19 pandemic as a natural experiment. Using propensity score matching and difference-in-differences strategies, we find that, on average, consumers are worse off after the exits. When a market experiences a regional airline exit, there is a significant 16% decrease in flight availability with no immediate replacements and a rise in the average fare by roughly 6%. The adverse supply outcome is mitigated for longer-haul markets and markets dominated by full-service carriers. Turning to the competition dynamics after the exits, incumbent airlines expand their services and raise their fares. Competing regional airlines and airlines with greater cash reserves are more able to seize market share after the exits. Fares rise, but to a lesser extent for competing regional airlines. And the exits have less impact on-time performance.

主持人

高甡

湖南大学经济管理研究中心助理教授

怀俄明大学经济学博士

时间

2024年6月3日（周一）

下午4:15-5:30

地点

湖南大学财院校区-水上教学楼211