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The Performance of European Full Service Airlines after Liberalisation: An Econometric Analysis


  • Lara Gitto

    () (University of Rome "Tor Vergata" and University of Messina)

  • Fulvio Minervini

    () (University of Macerata and University of Warwick)


Deregulation in the airline industry has forced full service airlines to change their strategies in order to respond to increasing challenges. In this paper, an econometric analysis of the possible determinants of economic performance of full service airlines after liberalisation has been carried out. A fixed effects model was used and the performance of ten European full service airlines has been analysed over a period of 11 years. Variables considered in this analysis were the number and type of aircraft in the fleet, the number and type of destinations, investments, number of employees and alliances. The analysis suggests that full service airlines should adjust fleet composition and re-organise operations on their routes in order to react to the increasingly competitive environment.

Suggested Citation

  • Lara Gitto & Fulvio Minervini, 2007. "The Performance of European Full Service Airlines after Liberalisation: An Econometric Analysis," Rivista di Politica Economica, SIPI Spa, vol. 97(1), pages 105-122, January-F.
  • Handle: RePEc:rpo:ripoec:v:97:y:2007:i:1:p:105-122

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    References listed on IDEAS

    1. Severin Borenstein, 1992. "The Evolution of U.S. Airline Competition," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 45-73, Spring.
    2. Gorin, Thomas & Belobaba, Peter, 2004. "Impacts of entry in airline markets: effects of revenue management on traditional measures of airline performance," Journal of Air Transport Management, Elsevier, vol. 10(4), pages 257-268.
    3. Tretheway, Michael W, 2004. "Distortions of airline revenues: why the network airline business model is broken," Journal of Air Transport Management, Elsevier, vol. 10(1), pages 3-14.
    4. Morrell, Peter, 2005. "Airlines within airlines: An analysis of US network airline responses to Low Cost Carriers," Journal of Air Transport Management, Elsevier, vol. 11(5), pages 303-312.
    5. Windle, Robert & Dresner, Martin, 1999. "Competitive responses to low cost carrier entry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 35(1), pages 59-75, March.
    6. Neven, Damien J. & Roller, Lars-Hendrik, 1996. "Rent sharing in the European airline industry," European Economic Review, Elsevier, vol. 40(3-5), pages 933-940, April.
    7. Mason, Keith J., 2005. "Observations of fundamental changes in the demand for aviation services," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 19-25.
    8. O’Connell, John F. & Williams, George, 2005. "Passengers’ perceptions of low cost airlines and full service carriers: A case study involving Ryanair, Aer Lingus, Air Asia and Malaysia Airlines," Journal of Air Transport Management, Elsevier, vol. 11(4), pages 259-272.
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    Cited by:

    1. Bergamini, Elisabetta & Gitto, Simone & Mancuso, Paolo, 2010. "Restructuring the Alitalia business model," Journal of Air Transport Management, Elsevier, vol. 16(1), pages 16-19.
    2. Zuidberg, Joost, 2014. "Identifying airline cost economies: An econometric analysis of the factors affecting aircraft operating costs," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 86-95.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation


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