Abstract
ABSTRACTThis article examines the degree of persistence and breaks in the Brazilian airline industry. For this purpose we use innovative fractional integration and autoregressive models, which are more flexible than the standard approaches employed in the literature. Our model focuses on three important series, namely revenue passenger kilometers (RPK), available seat kilometers (ASK), and load factor (LF = RPK/ASK), disaggregated into domestic and international series. We found first that all series are highly persistent with orders of integration above 0.5 in all cases, thus implying nonstationary behavior. However, for the domestic series mean reversion is also achieved, while orders of integration close to 1 or above 1 are obtained in the case of the international data. Moreover, a structural break is clearly identified in all the series. Policy implications are then derived.
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