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

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). Keywords: air transportation; regional jet technology; low-cost business model; thin markets. JEL Classification Numbers: L13; L2; L93.