On the Persistent Financial Losses of U.S. Airlines: A Preliminary Exploration / Severin Borenstein.

Format:

Book

Author/Creator:

Borenstein, Severin.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16744.

NBER working paper series no. w16744

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

On the Persistent Financial Losses of U.S. Airlines

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

U.S. airlines have lost nearly $60 billion (2009 dollars) in domestic markets since deregulation, most of it in the last decade. More than 30 years after domestic airline markets were deregulated, the dismal financial record is a puzzle that challenges the economics of deregulation. I examine some of the most common explanations among industry participants, analysts, and researchers -- including high taxes and fuel costs, weak demand, and competition from lower-cost airlines. Descriptive statistics suggest that high taxes have been at most a minor factor and fuel costs shocks played a role only in the last few years. Major drivers seem to be the severe demand downturn after 9/11 -- demand remained much weaker in 2009 than it was in 2000 -- and the large cost differential between legacy airlines and the low-cost carriers, which has persisted even as their price differentials have greatly declined.

Notes:

Print version record

January 2011.