Competitive Effects of Regional Airline Exits

We examine the competitive effects of regional airline exits in the USA between April 2019 and December 2020, leveraging the first wave of COVID-19 as a natural experiment. Using propensity score matching and difference-in-differences, we find consumers are worse off after exits, with a 15 per cent decrease in flight availability and a 5 per cent rise in fares. Longer-haul markets and those dominated by full- service carriers experience less impact. Exits also reduce connecting flights by 25 per cent. Among competing airlines, regional airlines and those with greater cash reserves increase flight availability, seating capacity, and fares.