Downsizing the jet: A forecast of economic effects of increased automation in aviation

Abstract

We develop a theory of optimal aircraft size, where the cost of the flight crew is the primary factor driving the use of larger aircraft, while passenger utility is primary factor driving the use of smaller aircraft. After fitting our model to U.S. data, we perform a counterfactual experiment where the minimum crew size requirement is relaxed from two pilots to one, a policy currently being discussed by aviation experts. Implications are derived for the number of aircraft demanded and its size distribution, demand for pilots, passenger traffic, flight frequency, and where new nonstop service may be introduced.