Board Connections and Competition in Airline Markets

I investigate the effects of board connections on coordination among U.S. legacy airlines. I focus on connections caused by airline directors' appointments to the board of third, non-competing firms. These connections do not arise from changes to airlines’ boards, and are arguably unrelated to airlines’ current and future economic prospects. In my baseline specification, I find a reduction of 2.5% in offered seats when all legacy airlines in a market are board-connected. Consistent with an anti-competitive effect, board connections are associated with an average increase of 3.7% in ticket fares. I provide evidence on director networks enabling tacit coordination among competing firms, even when direct interlocks are not allowed.