Tracing the Woes: An Empirical Analysis of the Airline Industry
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Jia_Tracing the.pdf
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983.79 KB
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Adobe PDF
Checksum (MD5)
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Author(s)
Barwick, Panle Jia
Berry, Steven
Date Issued
August 2010
Journal
American Economic Journal: Microeconomics
Publisher
American Economic Association
Citation
Berry, Steven, and Panle Jia. “Tracing the Woes: An Empirical Analysis of the Airline Industry.” American Economic Journal: Microeconomics 2.3 (2010): 1–43. Web. 24 May 2012. © 2010 American Economic Association
Version
Final published version
Abstract
The US airline industry went through tremendous turmoil in the early 2000s, with four major bankruptcies, two major mergers, and various changes in network structure. This paper presents a structural model of the industry, and estimates the impact of demand and supply changes on profitability. Compared with 1999, we find that, in 2006, air-travel demand was 8 percent more price sensitive, passengers displayed a stronger preference for nonstop flights, and changes in marginal cost significantly favored nonstop flights. Together with the expansion of low-cost carriers, they explain more than 80 percent of legacy carriers' variable profit reduction. (JEL L13, L25, L93)
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/mic.2.3.1
