HighlightsWe estimate airlines short-run stochastic cost function using a Bayesian approach.We compute total factor productivity, profitability change and their components.Profitability change is mainly driven by input and output price changes.In the last decade, input price change is the most important driver of profitability.From early 90s, productivity gains are transferred from airlines to consumers.
AbstractThis paper studies airline profitability change computed through a Bayesian estimation of a cost function. The stochastic frontier is applied to a dataset including the largest worldwide airlines in the period 1983–2010. We show that productivity change is mainly driven by technical change becoming continuously positive from early 1990s. Furthermore, in the last decade profitability change is mainly driven by input price change which exhibits a similar pattern to output price change. In presence of productivity growth, the output price increase is lower than the input price increase suggesting that part of productivity gains are transferred from airlines to consumers.
Profitability change in the global airline industry
2017-03-22
12 pages
Aufsatz (Zeitschrift)
Elektronische Ressource
Englisch
Profitability change in the global airline industry
Online Contents | 2017
|Outlook for Profitability in the Airline Industry (Summary)
British Library Conference Proceedings | 1993
|Restructuring hits airline profitability
Online Contents | 2013
Leasing and profitability: Empirical evidence from the airline industry
Elsevier | 2017
|