IATA Economics

Aircraft lessor prospects and lease valuation for airlines

by William Gibson, AirBusiness Academy; Over the medium term one of the primary stresses caused by the credit squeeze will be the capacity of operating lessors to finance deliveries. The operating leasing model involves the lessor accepting the risk of aircraft residual values, a risk which airlines pay for through higher funding costs implicit in the operating lease payments. This article by William Gibson considers different leasing valuation techniques which airlines can use to assess the risks and rewards of aircraft financing alternatives.

• Market & Industry Issues
• Cost

New business models to make airlines more strategic and agile

by Professor Nawal Taneja, Ohio State University; Noted futurists are envisioning a world of consumers, suppliers and societies that are radically different from the past. In this essay Professor Nawal Taneja considers that airlines, individually and collectively, face a number of game-changing forces. Senior airline executives need to examine new business models to adapt to the potentially radically different marketplace. In his view, the alternatives are bankruptcy, shrinkage of network, government bailouts or market presence that is irrelevant.

• Market & Industry Issues
• Business Models

Air travel demand

Economic Briefing 09 "Air Travel Demand": The impact on demand of every air transport policy decision is an essential consideration. Without it, uncertainty over demand leads to ineffective or counter-productive decisions

• Market & Industry Issues
• Demand

The competition effects of airline mergers and alliances - by Mike Tretheway

• Market & Industry Issues
• Competition

US / EU open skies negotiations: the second stage begins

• Public Policy Issues
• Commercial Freedom

Estimating Air Travel Demand Elasticities - by InterVISTAS

This report prepared by InterVISTAS Consulting examines fare elasticities in the passenger aviation market – the demand response by air passengers to fare increases or decreases. The aim of the study is to provide robust elasticity estimates to address policy issues related to liberalisation, airport charges, taxation, emissions schemes, etc

• Market & Industry Issues
• Demand

The competition effects of airline mergers and alliances - by Mike Tretheway

by Mike Tretheway, InterVISTAS Consulting Inc; The analysis of the potential competition effects of an airline merger or alliance often focuses on the change in average fare prices. However, this approach is fundamentally flawed. It should be broadened to cover the impact on economic efficiency. The pricing structure of an airline is not uniform; instead different customers are charged different prices. 

• Market & Industry Issues
• Business Models

Aviation economic benefits

AIr transport can play a key role in economic development and in supporting long-term economic growth. It facilitates a country’s integration into the global economy, providing direct benefits for users and wider economic benefits through its positive imp

• Public Policy Issues
• Value of Aviation

Unions and wages in the US airline industry

by Barry Hirsch, Trinity University, San Antonio, Texas; US airlines have made significant progress in improving labour cost efficiency in recent years. However, there remains a wage premium for airline workers compared to similar skilled workers in other industries, particularly unionised workers. Attempts to limit pay increases as carriers regain financial health are necessary, but may not be achievable. A more hostile labour environment could arise, placing pressure on the overall health of US airline industry.

• Market & Industry Issues
• Cost

Airline liberalization

• Public Policy Issues
• Commercial Freedom

Airline liberalization: OXERA report

OXERA research report on airline liberalization

• Public Policy Issues
• Commercial Freedom

Light-handed regulation of airports: The Australian experience

by Peter Forsyth, Monash University; Australia has been experimenting with light-handed regulation of its major airports since 2002. However, there remains ambiguity as to what the system seeks to achieve and its effectiveness. From a broad efficiency perspective it has performed reasonably well, though not without its problems. In terms of minimizing the abuse of market power the system has been less successful.

• Public Policy Issues
• Infrastructure

Airline cost performance: update

Updated analysis with 2006 data

• Market & Industry Issues
• Cost

Economic regulation

The case for independent economic regulation of airports and air navigation service providers (ANSPs) is clear. It improves efficiency and productivity throughout the aviation industry and it encourages timely and cost-effective new investment

• Market & Industry Issues
• Infrastructure

Parochialism in international aviation: the paradox of airline ownership and control

by Dan Edwards, UK Civil Aviation Authority; The airline industry, in common with other major business sectors, is currently seeing a lot of speculation and proposals for mergers and acquisition activity. However, in contrast to other sectors such as steel or telecoms, the proposed airline deals are of a national rather than global character. This is not a coincidence, but linked to the tight ownership and control rules within the industry that restrict foreign investment in national airlines

• Market & Industry Issues
• Business Models