Why Can't US Airlines Make Money?

Severin Borenstein

American Economic Review, 2011, vol. 101, issue 3, 233-37

Abstract: US airlines have lost nearly $60 billion ($2009) in domestic markets since the 1978 deregulation, most of it in the last decade. The dismal financial record challenges the economics of deregulation. I examine some of the common explanations among industry participants and researchers--including high taxes and fuel costs, weak demand, and competition from lower-cost airlines. Major drivers seem to be the demand downturn after 9/11--demand remains much weaker today than in 2000--and the large cost differential between legacy and low-cost carriers, which has persisted even as the price differential between them has greatly declined.

Date: 2011
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Citations: View citations in EconPapers (19)

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