Airline Economics: Foundations for Strategy and Policy

Abstract

This report describes the underlying economic principles of the modern airline industry. The emphasis on the post-deregulation industry is important, as the methods of doing business have changed radically since the first tentative steps toward deregulation were taken by the U.S. in 1976. The characteristics of the industry described in this report include the underlying economics of the industry, including both cost and demand elements; pricing practices and methods; marketing practices in the area of product distribution and brand loyalty; the construction of airline route systems; the role of public infrastructure (airports and airways); and airline finance.

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