Introduction to Air Transport Economics: From Theory to Applications

Description

Revised edition of the authors' Introduction to air transport economics, 2013. Cover Title Copyright Contents List of figures List of tables About the authors Foreword Preface to the third edition Acknowledgements 1 Advancement of the air transport industry The airline industry Financial condition of the airline industry Consolidation and bankruptcies Factors affecting world air traffic growth Economic impact of the air transport industry Outlook for the air transport industry Summary Discussion questions 2 Principles of economics with applications in the air transport industry Basic economics Scope of economics The role of economic systems Economic failures Summary Discussion questions 3 Supply, demand, and elasticity: analysis in the airline industry Basic elements of demand Derived demand Direct demand Demand function Basics of supply Market equilibrium Consumer and producer surplus Disequilibrium Price sensitivity and elasticity Summary Discussion questions 4 Cost and production analysis: the general concepts Cost classification Components of cost Cost functions Economies of scale, scope, and density Operating leverage Airline industry cost structure Airline economies of scale, scope, and density Airline breakeven analysis Airline operating leverage Summary Discussion questions 5 Operations and ownership Air traffic control system Institutional problems in US air traffic control Air traffic control in a government corporation Solutions to air traffic control problems in the US Airport ownership and management Summary Discussion questions 6 International economics and aviation Trade globalization International economics and trade Why nations trade Aircraft manufacturing and governmental subsidies International trade policy in air travel: optimality versus political realities Foreign currency and exchange rates Summary Discussion questions 7 Open skies and global alliances Chronology of international air transport agreements Bilateral and multilateral air service agreements Open skies in Europe Open skies in Asia and the Pacific Global airline strategic alliances Summary Discussion questions 8 Competitive market structure and monopolistic markets Introduction Perfect (pure) competition Monopoly Monopoly market power in aviation Monopsony and bilateral monopoly Summary Discussion questions 9 Hybrid market structure and the aviation industry Monopolistic competition Oligopolies Contestability theory Kinked demand curve theory Cournot theory Price–output determination under hybrid market structure Profitability issues Competition and anti-trust issues Industry consolidation Beyond market concentration considerations Anti-trust, market evolution, and cooperation Summary Discussion questions 10 Forecasting in the air transport industry Application Qualitative forecasting methods Data analysis Descriptive statistics Time-series analysis Time-series forecasting Forecast accuracy Regression analysis Data sources Summary Discussion questions 11 Dynamic pricing policy and revenue management Dynamic pricing policy Cost-based pricing Markup and price elasticity of demand Bundling Unbundling and airline ancillary revenue Market skimming and penetration pricing Peak-load pricing Price discrimination in the airline industry Consumer surplus Necessary conditions for price discrimination Degrees of price discrimination Uniform pricing versus price discrimination Uniform versus multiple pricing Airline revenue management Revenue management “fences” Revenue management control types Spoilage and spillage Leg-based expected marginal seat revenue model Overbooking Other issues associated with revenue management Summary Discussion questions 12 Ultra-low-cost and low-cost airlines: paradigm shifts Introduction Evolution of low-cost business model Characteristics of low-cost carriers Cost structure comparison Ancillary revenue Incumbent carriers’ response to low-cost carriers Ultra-low-cost carriers Summary Discussion questions 13 Economics of aviation safety and security The basics of aviation safety The history of aviation safety Incentives for aviation safety Causes of aviation accidents Basic economics of safety Politics and safety regulation Accident prevention Summary Discussion questions Glossary of terms Abbreviations Answers to selected questions and problems Index