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Outsourcing and Price Competition: An Empirical Analysis of the Partnerships Between Legacy Carriers and Regional Airlines

Kerry M. Tan ()
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Kerry M. Tan: Loyola University Maryland

Review of Industrial Organization, 2018, vol. 53, issue 2, 275-294

Abstract: Abstract This paper investigates the determinants and competitive effects of legacy carriers’ outsourcing decision with independent regional airlines. Legacy carriers allocate a larger share of their operations to an independent regional airline partner compared to their own fleet or a wholly owned regional airline on routes that experience stronger competition, particularly from low-cost carriers. Moreover, legacy carriers’ airfares are lower on routes that they outsource more prominently to an independent regional airline. The results suggest that increased route competition is a motivation for the growing use of independent regional airlines by legacy carriers.

Keywords: Outsourcing; Legacy carriers; Regional airlines; Low-cost carriers; Airfares (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:kap:revind:v:53:y:2018:i:2:d:10.1007_s11151-017-9610-z