Common Subcontracting and Airline Prices

Gaurab Aryal; Dennis J. Campbell; Federico Ciliberto; Ekaterina A. Khmelnitskaya

doi:10.1162/rest_a_01420

Common Subcontracting and Airline Prices

Gaurab Aryal¹; Dennis J. Campbell²; Federico Ciliberto³; Ekaterina A. Khmelnitskaya⁴

¹ Washington University in St. Louis · ² University of Virginia · ³ University of Virginia, DIW and CEPR · ⁴ University of British Columbia

The Review of Economics and Statistics 2026

In the U.S. airline industry, independent regional airlines fly passengers on behalf of several national airlines across different markets, giving rise to common subcontracting. On the one hand, we find that subcontracting is associated with lower prices, consistent with the notion that regional airlines tend to fly passengers at lower costs than major airlines. On the other hand, we find that common subcontracting is associated with higher prices. These two countervailing effects suggest that the growth of regional airlines can have anticompetitive implications for the industry.

DOI: 10.1162/rest_a_01420
Volume: 108 (3)
Pages: 712-726
Language: en
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