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

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).

► We examine the impact of regional and low-cost connections.
► We focus on American and European thin routes.
► Regional airlines monopolize a high proportion of thin routes in the US.
► Low-cost carriers monopolize a high proportion of thin routes in the EU.
► Our results have different implications for business and leisure travelers.