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Airline Economics: A Survey of Applied Issues in the Performance of the US and International Airline Industry

In: Handbook of Production Economics

Author

Listed:
  • Levent Kutlu

    (University of Texas Rio Grande Valley)

  • Daniel Prudencio

    (Rice University)

  • Robin C. Sickles

    (Rice University)

Abstract

In this survey, we consider applied issues in the productivity and efficiency of the US and the international airline industry. We discuss the implications of mergers and alliances, vertical integration, collusive behavior, bankruptcy, pricing and differentiation by heterogeneous service and network characteristics, entry and competition, airport governance, inefficiency, and deregulatory dynamics. Due to legacies of regulations in the US, European, and international airline industry and the existence of subsidized national flag carriers, there are substantial differences in the level of productivity in the provision of airline services across different carriers and over time. Thus, we also examine various treatments in the applied airline economics literature that have modeled and measured the existence of time-varying inefficiency and its persistent, brought about in part by the long-run inefficiency of incumbent firms operating in non-contested markets. The formal rules and dynamics of regulation and deregulatory initiatives in the USA, Europe, and in international markets are also discussed, as well as the economic impacts of delays, the presence and exploitation of market power in projected niche market’s and the price premiums that go hand-in-hand with market power.

Suggested Citation

  • Levent Kutlu & Daniel Prudencio & Robin C. Sickles, 2022. "Airline Economics: A Survey of Applied Issues in the Performance of the US and International Airline Industry," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 27, pages 1117-1143, Springer.
    • Handle: RePEc:spr:sprchp:978-981-10-3455-8_1
    DOI: 10.1007/978-981-10-3455-8_1
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