Economics Report Library

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

Does the S-Curve still exist?

by Urs Binggeli and Lucio Pompeo, McKinsey & Company; The S-Curve effect is the phenomenon by which airlines that have a high share of frequencies on a route can attain disproportionately high market shares. With the S-Curve in mind, network managers have historically looked to build a dominant frequency position on certain routes to capture a high share of traffic and revenues. But with significant changes in the airline industry structure in recent years, does the S-Curve still exist?

• Market & Industry Issues
• Profitability

Investment incentives and airport regulation

by David Starkie, Economics-Plus Ltd; Does price-cap regulation create incentives to under-invest at privatized airports?  Empirical evidence UK and Ireland, indicates that the regulated airport companies have inclined towards over-investment rather than under-investment.

• Public Policy Issues
• Infrastructure