Domestic Airline Market Research Articles

The factors determining the profitability of international airlines: Some econometric results

AbstractThe deregulation of the US domestic airline market in 1978 and its apparent relative success continues to attract a great deal of interest among US and other economists. This uniquely US experience has clearly shown that factors such as market contestability, the multiple output nature of costs, the structure of networks and airport presence play a crucial role in the survival and, ultimately, profitability of relatively free and unregulated airlines. However, most international airlines still operate in a heavily regulated environment. While the tendency is clearly toward liberalization, the question remains: What can these airlines do to improve their profitability within this framework? Our results indicate that profitable airlines have high passenger load factors, a relatively low proportion of capacity related costs, younger and more efficient fleets and supplement their passenger loads with freight.

U. S. Airline Deregulation: Its Effects on Passengers, Capital, and Labor

HIS paper presents an analysis of the effects of airline deregulation on passengers-business and personal, first class and coach-and explores how capital and labor have fared in a free market. The evidence corroborates many benefits that proponents of deregulation predicted, but it has not worked perfectly. Prices are not fully competitive, and for certain dimensions service quality is down. Furthermore, the contestability hypothesis as applied to the airline industry does not withstand statistical examination.

A Theory of Oligopoly

A Theory of Oligopoly