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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.
The Economics of Airlines expands successfully our knowledge of air transport management and bridges the gap between theory and practice with examples of real challenges facing airlines and the efficient applications of the principles of economic theory. More specifically, the first part of the book analyses fully the costs that airlines need to incur for their operations, the determinants of demand for air travel and connects them with popular pricing strategies. The second and third parts refer accurately to the organization of the airline markets and the various internal and external factors which play a significant role in the industry such as market competition, alliances, regulation, safety and airport congestion. Lastly, the author considers the reliance of airlines on key stakeholders that operate the transport infrastructure and the aircraft manufacturers. The book provides a comprehensive overview of the major concepts of the airline sector and facilitates the understanding of the industry's complexities in a clear and simple way ideal both for university students and professionals.
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