A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
Air deregulation revisited: Choice of aircraft, load factors, and marginal-cost fares for domestic air travel
Abstract If airline deregulation is working as predicted, then fares should fall to marginal costs. This paper computes such optimal fares, allowing for a wide variation in point-to-point distance, traffic, and available aircraft type. It is shown that marginal-cost fares are exceeded by average carrier costs. This implies an unpleasant dilemma: either the industry is naturally destructive (if the returns are internal to firms) or else the sustainable industry configuration is less than welfare-optimal. In the latter case, the possibility of a Pareto-improvement with a judicious form of re-regulation cannot be ruled out. In light of this, a certain amount of caution about the results of deregulation is suggested.
Air deregulation revisited: Choice of aircraft, load factors, and marginal-cost fares for domestic air travel
Abstract If airline deregulation is working as predicted, then fares should fall to marginal costs. This paper computes such optimal fares, allowing for a wide variation in point-to-point distance, traffic, and available aircraft type. It is shown that marginal-cost fares are exceeded by average carrier costs. This implies an unpleasant dilemma: either the industry is naturally destructive (if the returns are internal to firms) or else the sustainable industry configuration is less than welfare-optimal. In the latter case, the possibility of a Pareto-improvement with a judicious form of re-regulation cannot be ruled out. In light of this, a certain amount of caution about the results of deregulation is suggested.
Air deregulation revisited: Choice of aircraft, load factors, and marginal-cost fares for domestic air travel
Viton, Philip A. (author)
Transportation Research Part A: General ; 20 ; 361-371
1986-01-21
11 pages
Article (Journal)
Electronic Resource
English
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