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The airline industry is fundamental to the workings of the global economy. Yet, ironically for an industry of such sheer scale and economic muscle, profit margins are razor thin and many airlines struggle to break even. The precarious economics of the sector were fully revealed when Covid-19 grounded flights across the world prompting many national carriers to seek government bailouts, while smaller airlines collapsed.
The third edition of this standard introduction to the economics of the airline industry has been fully updated and expanded to include new material on decarbonising aviation, aircraft leasing, the application of AI technology, changes to the international regulatory architecture, blocked mergers and the challenges facing Boeing, the cargo market, the growth of ancillary revenues, as well as further analysis of the impact of the pandemic on passenger numbers and the concept of delayed demand.
The book remains a comprehensive introduction to the economics of airlines, how carriers compete, how they develop their business, and how demand and cost structure, coupled with the complex regulatory regime, produces the industry we see today.
This updated edition of The Economics of Airlines offers a solid and well-structured introduction to the key economic forces shaping the airline industry. The author effectively explains complex concepts, drawing on both theoretical foundations and industry practices. The inclusion of recent developments, such as the impact of Covid-19, the growing importance of cargo, changes in cost structures, and environmental constraints, makes the book particularly relevant today. The chapters on pricing, competition, and regulatory frameworks are especially strong, with clear explanations and up-to-date examples. We use this book for our Advanced Master’s students in Air Transport Management. However, it could also be easily used by students in transport management, as well as professionals seeking a concise yet comprehensive overview of how airlines operate within a challenging economic environment.
— Wouter Dewulf, Centre for Maritime and Air Transport Management, University of Antwerp
Volodymyr Bilotkach is Associate Professor of Aviation Mangement at Purdue University. He is Associate Editor of the Journal of Air Transport Management and serves on the Editorial Board of Research in Transportation Economics. He has published extensively on airline economics, including airline alliances and mergers, airport regulation and the distribution of airline tickets, and has advised the European Commission on policy issues in the aviation sector.
Introduction
PART I Demand and Cost
1. Demand for air travel
2. Cost
3. Airline pricing
PART II Airline Markets
4. Market structure
5. Competition and consolidation
6. Alliances and joint ventures
7. Regulation and deregulation
8. Aviation safety and security
PART III External Effects of Aviation
9. Congestion and delays
10. Air and noise pollution
11. Decarbonizing aviation
12. Positive benefits
PART IV Economics of Related Markets
13. Airports
14. Air navigation services
15. Aircraft leasing
16. Aircraft manufacturing