Cover image for An introduction to airline economics
An introduction to airline economics
O'Connor, William E.
Personal Author:
Sixth edition.
Publication Information:
Westport, Conn. : Praeger, [2001]

Physical Description:
xvi, 253 pages ; 25 cm
An overall look at the structure of air transportation -- How airlines serve the public interest -- Entry and exit -- The costs of airline service -- The demand for airline service -- Airline rates -- Air cargo -- Current problem areas.
Format :


Call Number
Material Type
Home Location
Item Holds
HE9803.A4 O26 2001 Adult Non-Fiction Central Closed Stacks

On Order



The fabric of the airline industry has continued to undergo remarkable changes since the 5th edition of this classic text was published in 1995. The industry has witnessed a series of mergers and a trend toward consolidation into fewer but larger airlines. Route patterns have been reconstructed around hub cities. In contrast to the early 1990s, which saw unprecedented operating deficits, the late 1990s have seen a swing to highly profitable operations, characterized by the forming of alliances among U.S. and foreign airlines. Revised substantially to cover these changes, this book is an excellent introduction to the economics of U.S. airline services, both domestic and international.

A college level text suitable for students without a background in economics, this book is intended for such one-semester courses as Aviation Administration, Air Transportation, and Economics of Air Transportation. Enhancing the book's value, the volume includes self-testing questions for each chapter and an appendix covering the portions of the basic transportation statute--the former Federal Aviation Act--that are pertinent to the text. Focusing exclusively on airlines--and excluding private, military, and other types of flying--this book is the only college text dealing exclusively with the economics of U.S. airlines.

Author Notes

William E. O'Connor is professor emeritus of Embry-Riddle Aeronautical University in Daytona Beach, Florida.

Reviews 1

Choice Review

This text on airline economics is designed for introductory courses on aviation or air transportation. O'Connor (emer., Embry-Riddle Aeronautical University) served for 18 years with the Civil Aeronautics Board. His approach is strictly institutional; his volume contains much factual and qualitative information on entry and exit of airlines, costs, demand, rates (prices), and air cargo, with a seven-page appendix of selections from the transportation statute. The history starts with the deregulation of 1978-84. Unfortunately there is little economic analysis of many issues. The slights include coverage of the role of the contestability argument, barriers to entry (scale and scope economies, gates, slots, computer reservation systems, networks), the role of unions, and an evaluation of whether deregulation has been a good policy. Familiarity with economic analysis is not necessary to understand this volume, but the volume is not sufficient to understand the airline industry. Most appropriate for academic libraries supporting strong aviation administration and economics collections. R. A. Miller Wesleyan University

Table of Contents

Tablesp. ix
Prefacep. xi
Abbreviationsp. xv
1 An Overall Look at the Structure of Air Transportationp. 1
Economic Regulation Definedp. 2
Regulatory Reformp. 2
The Transportation Statutep. 4
Special Economic Characteristicsp. 5
Other Economic Characteristicsp. 7
Characteristics of International Servicep. 8
Structure of the U.S. Airline Industryp. 9
2 How Airlines Serve the Public Interestp. 13
U.S. Public Interest Objectivesp. 13
Objectives of International Airline Servicep. 16
3 Entry and Exitp. 21
Airline Entry and Exit Policiesp. 21
Government Regulation of Entryp. 24
Government Regulation of Exitp. 39
Mergers and Acquisitionsp. 41
International Entry--Bilateral Agreementsp. 46
Current Trends in International Airline Servicep. 56
4 The Costs of Airline Servicep. 69
Accounting Categoriesp. 69
Analysis of Costsp. 71
The Production Function and Factor Costsp. 76
The Two Major Airline Cost Areasp. 80
Aircraft Selection as a Determinant of Costsp. 89
Impact of Technological Advances on Costsp. 97
5 The Demand for Airline Servicep. 103
Some Demand Characteristicsp. 103
Methods of Estimating Demandp. 109
Passenger Optionsp. 114
Travel Agencies and Computer Reservations Systemsp. 118
6 Airline Ratesp. 127
Basic Ratemaking Factorsp. 127
The Changing Structure of Airline Passenger Faresp. 131
Rate Regulationp. 138
International Rates--Dealings with Foreign Governmentsp. 146
7 Air Cargop. 153
The Cargo Mixp. 156
Cargo versus Passenger Characteristicsp. 162
Types of Aircraft and Their Impact on Cargop. 162
Terminal Facilitiesp. 167
Pickup and Delivery Servicep. 173
Air Freight Forwardersp. 175
Competition with Other Modesp. 180
Competition for Cargo between U.S. and Foreign Airlinesp. 184
The Selling of Air Freight Servicep. 185
Unitization--Containers and Palletsp. 188
Cargo Ratesp. 190
Cargo Chartersp. 194
Contract and Private Carriage of Cargop. 195
Some Current Problemsp. 197
8 Current Problem Areasp. 205
Airport-Airline Relationsp. 205
Questions for the Futurep. 211
Self-Testing Questionsp. 217
Appendix Transportation Statute--Digest of Selected Portionsp. 229
Selected Bibliographyp. 237
Indexp. 245