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Common Subcontracting and Airline Prices

Author

Listed:
  • Gaurab Aryal

    (Washington University in St. Louis)

  • Dennis J. Campbell

    (University of Virginia)

  • Federico Ciliberto

    (University of Virginia, DIW and CEPR)

  • Ekaterina A. Khmelnitskaya

    (University of British Columbia)

Abstract

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.

Suggested Citation

  • Gaurab Aryal & Dennis J. Campbell & Federico Ciliberto & Ekaterina A. Khmelnitskaya, 2026. "Common Subcontracting and Airline Prices," The Review of Economics and Statistics, MIT Press, vol. 108(3), pages 712-726, May.
    • Handle: RePEc:tpr:restat:v:108:y:2026:i:3:p:712-726
    DOI: 10.1162/rest_a_01420
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