EconPapers    
Economics at your fingertips  
 

Tracing the Woes: An Empirical Analysis of the Airline Industry

Steven Berry () and Panle Jia
Authors registered in the RePEc Author Service: Panle Jia Barwick ()

No 14503, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The U.S. airline industry went through tremendous turmoil in the early 2000's. There were four major bankruptcies and two major mergers, with all legacy carriers reporting a large profit reduction. This paper presents a structural model of the airline industry, and estimates the impact of demand and supply changes on profitability. We find that, compared with the late 1990s, in 2006, a) air-travel demand was 8% more price sensitive; b) passengers displayed a strong preference for direct flights, and the connection semi-elasticity was 17% higher; c) the changes of marginal cost significantly favored direct flights. These findings are present in all the specifications we estimated. Together with the expansion of low cost carriers, they explained more than 80% of the decrease in legacy carriers' variable profits.

JEL-codes: L0 L1 L13 L91 L93 (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-com and nep-mic
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Published as Steven Berry & Panle Jia, 2010. "Tracing the Woes: An Empirical Analysis of the Airline Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 2(3), pages 1-43, August.

Downloads: (external link)
http://www.nber.org/papers/w14503.pdf (application/pdf)

Related works:
Journal Article: Tracing the Woes: An Empirical Analysis of the Airline Industry (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:14503

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w14503

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2022-01-13
Handle: RePEc:nbr:nberwo:14503