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Airline capacity discipline in the U.S. domestic market

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  • Hazel, Robert

Abstract

Using data from 1995 to 2016, this study examines airline capacity growth in the U.S. domestic market, and its impact on revenue. The results show that, after controlling for the strength of the economy and the price of fuel: (1) decreases in total domestic airline capacity are strongly correlated with increases in average domestic revenue per available seat mile (RASM); and (2) decreases in total domestic airline capacity are strongly correlated with increases in total domestic revenue. The results also show that using the real GDP growth rate as the focal point for capacity growth may help airlines maintain or slightly increase RASM over time.

Suggested Citation

  • Hazel, Robert, 2018. "Airline capacity discipline in the U.S. domestic market," Journal of Air Transport Management, Elsevier, vol. 66(C), pages 76-86.
    • Handle: RePEc:eee:jaitra:v:66:y:2018:i:c:p:76-86
    DOI: 10.1016/j.jairtraman.2017.10.009
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    References listed on IDEAS

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    1. Severin Borenstein, 2011. "Why Can't US Airlines Make Money?," American Economic Review, American Economic Association, vol. 101(3), pages 233-237, May.
    2. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
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    Cited by:

    1. Maung, Yun Shwe Yee & Douglas, Ian & Tan, David, 2022. "Identifying the drivers of profitable airline growth," Transport Policy, Elsevier, vol. 115(C), pages 275-285.
    2. Scotti, Davide & Volta, Nicola, 2018. "Price asymmetries in European airfares," Economics of Transportation, Elsevier, vol. 14(C), pages 42-52.

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