The Effects of Employee Hours-of-Service Regulations on the U.S. Airline Industry
59 Pages Posted: 16 Jan 2018 Last revised: 25 Aug 2018
Date Written: August 14, 2018
Maximum employee work-hour restrictions are made to reduce accidents. However, because they decrease the stock of work-hours available to employers, they also have unintended consequences. A quasi-experiment suggests that pilot hours-of-service reforms, which decreased the number of flights and hours a pilot may work, reduced consumer choice and increased fares in the airline industry. We find that regional and low-cost carriers reduced flight frequency, while less constrained legacy carriers (and their wholly owned subsidiaries) were unaffected. Further, we find evidence that market concentration increased on many routes, implying that fare increases may be due to a decrease in competition.
Keywords: Hours-of-Service, Airlines, Labor Regulations, Vertical Integration, Competition
JEL Classification: J22, J28, L93, R48
Suggested Citation: Suggested Citation