HMN 2026: How Impact of regional airline exits on travelers measured

When regional airlines leave a market, travelers are likely to see fewer flights and higher fares. The harder question is how much service disappears, how quickly prices rise and whether other airlines step in to fill the gap.

New research co-authored by University at Albany economist Chun-Yu Ho and Tingting Peng, ’25, a postdoctoral researcher at South China University of Technology, helps quantify that impact, using regional airline exits during the COVID-19 pandemic to measure what happened in affected U.S. markets after carriers ceased operations.

Published in the Journal of Transport Economics and Policy, the study, “Competitive Effects of Regional Airline Exits: Evidence from the COVID-19 Pandemic,” found that affected markets experienced a 15% decline in flight availability, a 5% increase in fares and a significant drop in connecting service after regional carriers exited.

“The important question is not simply whether consumers are affected when an airline exits a market, but how large that effect is,” said Ho, an associate professor of economics in the College of Arts and Sciences at UAlbany. “Our analysis shows that regional airline exits led to a measurable decline in flight availability and a measurable increase in fares, especially in markets where travelers already had fewer alternatives.”

Measuring the impact

The study focused on the exits of Trans States Airlines and Compass Airlines, two regional carriers that ceased operations in 2020. Using propensity score matching and difference-in-differences analysis, the researchers compared markets affected by those exits with similar markets that were not.

Among the study’s key findings:

• Flight availability declined by about 15% in affected markets.
• Average fares increased by about 5%.
• Connecting flights declined by about 25%.
• Competing airlines increased service in some markets, but not enough to fully replace what was lost in the short term.

Regional airlines play an important role in the broader aviation system, often linking smaller communities to major hubs. Because those routes feed into larger networks, the effects of an airline exit may extend beyond a single airport pair.

“Regional airlines are an important part of the national air transportation network,” said Peng, who received her Ph.D. in economics from UAlbany in 2025. “When service is reduced in these markets, the effects can extend beyond the local route because many passengers rely on regional flights to connect to larger hubs and other destinations.”

Pressure across the industry

The study focuses specifically on regional carriers during the pandemic, not national budget airlines. But it arrives amid renewed attention to the financial pressure facing airlines more broadly, including volatile fuel costs, tight margins and the recent shutdown of Spirit Airlines after failed rescue talks.

While Spirit Airlines is not a direct parallel to the regional carriers examined in Ho’s study, its shutdown has put renewed attention to the financial pressures facing airlines and the disruptions travelers can face when carriers leave the market.

Major airline shutdowns are not everyday events. But airline bankruptcies, route cuts and market exits have long been part of the industry’s competitive cycle, especially during periods of economic disruption.

Ho’s study adds evidence on what those exits can mean for consumers once capacity leaves the market.

“Even when other airlines respond after an exit, the replacement is not always immediate or complete,” said Ho. “That matters for consumers because a partial replacement can still mean fewer flights, less convenient travel and higher fares in the short run.”

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