In 1938 the U.S. Government took under its wing an infant airline industry. Government agencies assumed responsibility not only for airline safety but for setting fares and determining how individual markets would be served. Forty years later, the Airline Deregulation Act of 1978 set in motion the economic deregulation of the industry and opened it to market competition. This study by Steven Morrison and Clifford Winston analyzes the effects of deregulation on both travelers and the airline industry. The authors find that lower fares and better service have netted travelers some $6 billion in annual benefits, while airline earnings have increased by $2.5 billion a year. Morrison and Winston expect still greater benefits once the industry has had time to adjust its capital structure to the unregulated marketplace, and they recommend specific public polices to ensure healthy competition.
As both an enabler and accelerator of globalisation, aviation has had profound and sometime unintended and unanticipated social and economic impacts. Commercial airports are not only transport nodes that facilitate aerial movement they are also major centres of employment but often sites of political contestation surrounding their planning and development as economic growth imperatives conflict with environmental concerns. Noise is often cited as being one of the most socially contested aspects of airport operations for local communities, particularly when flights are operating during the night. This is a particular challenge for cargo operators whose business model is based on rapid overnight delivery and distribution. Specific factors including night noise curfews and the provision and co-location of freight forwarders are significant determinants of airport choice and this, in turn, leads to freight forwarding firms clustering at major freight facilities. As well as meeting the mobility needs of business travellers and cargo consignors, air travel also facilitates the mass movement of leisure passengers. The benefits, challenges and limits to growth of this market segment are explored together with the social, economic and environmental challenges tourism creates for receiving countries. The role of airlines in planning, developing and marketing tourist destinations is also examined in this Volume. Aviation-led tourist development is particularly pronounced in cities such as Singapore and Dubai where air service deregulation and airport-airline-destination marketing strategies have created not only major international transit hubs but also significant centres of international urban tourism. In addition to serving routes with high levels of passenger and cargo demand, aviation also performs a vital role for geographically remote and/or inaccessible regions that cannot be rapidly accessed by road, sea or rail. Owing to lower levels of demand, the need for small (and sometimes specially equipped aircraft) and the vagaries of the local weather and climate, these services are expensive to operate and may not be economically viable without subsidy. Experiences from the US and European Union examine some of the issues surrounding the operation of these services. The Volume concludes with consideration of aviation's environmental impacts and potential mitigation strategies such as the EU's Emissions Trading System.
Introduction to Air Transport Economics: From Theory to Applications uniquely merges the institutional and technical aspects of the aviation industry with their theoretical economic underpinnings. In one comprehensive textbook it applies economic theory to all aspects of the aviation industry, bringing together the numerous and informative articles and institutional developments that have characterized the field of airline economics in the last two decades as well as adding a number of areas original to an aviation text. Its integrative approach offers a fresh point of view that will find favor with many students of aviation. The book offers a self-contained theory and applications-oriented text for any individual intent on entering the aviation industry as a practicing professional in the management area. It will be of greatest relevance to undergraduate and graduate students interested in obtaining a more complete understanding of the economics of the aviation industry. It will also appeal to many professionals who seek an accessible and practical explanation of the underlying economic forces that shape the industry. The second edition has been extensively updated throughout. It features new coverage of macroeconomics for managers, expanded analysis of modern revenue management and pricing decisions, and also reflects the many significant developments that have occurred since the original’s publication. Instructors will find this modernized edition easier to use in class, and suitable to a wider variety of undergraduate or graduate course structures, while industry practitioners and all readers will find it more intuitively organized and more user friendly.
The air transport industry has high economic impact; it supports more than 60 million jobs worldwide. Since the early years of commercial air travel, passenger numbers have grown tremendously. However, for decades airlines’ financial results have been swinging between profits and losses. The airline industry’s aggregate net average profit between 1970 and 2010 was close to zero, which implies bankruptcies and layoffs in downturns. The profit cycle’s amplitude has been rising over time, which means that problems have become increasingly severe and also shows that the industry may not have learned from the past. More stable financial results could not only facilitate airline management decisions and improve investors’ confidence but also preserve employment. This book offers a thorough understanding of the airline profit cycle’s causes and drivers, and it presents measures to achieve a higher and more stable profitability level. This is the first in-depth examination of the airline profit cycle. The airline industry is modelled as a complex dynamic system, which is used for quantitative simulations of ‘what if’ scenarios. These experiments reveal that the general economic environment, such as GDP or fuel price developments, influence the airline industry’s profitability pattern as well as certain regulations or aircraft manufactures’ policies. Yet despite all circumstances, simulations show that airlines’ own management decisions are sufficient to generate higher and more stable profits in the industry. This book is useful for aviation industry decision makers, investors, policy makers, and researchers because it explains why the airline industry earns or loses money. This knowledge will advance forecasting and market intelligence. Furthermore, the book offers practitioners different suggestions to sustainably improve the airline industry’s profitability. The book is also recommended as a case study for system analysis as well as industry cyclicality at graduate or postgraduate level for courses such as engineering, economics, or management.
This volume examines the role that airports play in economic development and land values, the regulation and economic efficiency of airports, airport pricing and competition, and the role played by airports in influencing airline operations and networks.
This book analyses the political, economic and managerial challenges for policy makers and the air transport industry as they face climate change. Based on an overview of the scientific background and technological options for emissions reduction, Aviation and Climate Change provides an in-depth assessment of environmental regulation and management. It provides an up-to-the-minute analysis of the effects of aviation on climate change, and an economic analysis of policies to reduce or eliminate greenhouse gas emissions. The main emphasis of the book is on the economic mechanisms used to lessen emissions – carbon taxes, emissions trading schemes and offset schemes. It pays particular attention to the ways these policies work, and to the interaction between them – for instance, the interaction between taxes and emissions trading schemes. One feature of the book is that it analyses the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) which has been developed by ICAO for international aviation, and which is due to commence operation shortly. The advantages and disadvantages of this controversial scheme are discussed. This book will be of interest to researchers in diverse areas (economics, political science, engineering, natural sciences), to air transport policy makers, and to managers in the aviation industry.
