Previous Studies of the Global Airline Industry

Despite the significant attention that the airline industry receives from the media, its customers and government policy-makers, there have been relatively few comprehensive studies of airline management and competition-related issues since the US industry was deregulated in 1978. Of the few comprehensive studies that have been completed, the majority has come from government agencies and independent research institutions rather than from universities.

Soon after deregulation in the United States, several evaluations of the early impacts on the airline industry were published. Most notable among these were a pair of books by Meyer, et al. of Harvard University: Airline Deregulation--The Early Experience (1981) and Deregulation and the New Airline Entrepreneurs (1984). These books provided a good assessment of the changes in the US airline industry during the first several years of deregulation. Unfortunately, their conclusions were somewhat premature in that the exogenous effects of a fuel crisis, economic recession, and disruptions of the air traffic control system distorted the early years of deregulation. Similar early evaluations of deregulation were published by MIT's Taneja, including Airlines in Transition (1981).

An important source of industry evaluations, especially of changes in airline competitive practices and impacts on both airfares and market concentration at major airports, has been the US Government Accountability Office (GAO). To help guide policy discussions related to airline competition, the GAO has produced studies such as "Airline Competition: Higher Fares and Reduced Competition at Concentrated Airports" (1990 and 1993), "Airline Competition: Industry Operating and Marketing Practices Limit Market Entry" (1990), and "International Aviation: Alliances Produce Benefits, but Effect on Competition is Uncertain"(1995). These studies were prepared at the request of Congress to examine specific competitive issues, and as such are ad hoc in their treatment of specific topics and timing. Despite some controversy over the evaluation methodologies used and the interpretation of some of the results, these GAO studies have nonetheless made a contribution to the understanding of the impacts of deregulation on various airline competitive practices.

The Brookings Institution has published what are arguably the broadest studies of the economic impacts of deregulation in the United States. In The Economic Effects of Airline Deregulation (1986) and The Evolution of the Airline Industry (1995), authors Morrison and Winston rely heavily on econometric analyses to estimate the impacts of deregulation on airline profitability, efficiency and distributional effects, as well as airline behavior and traveler welfare. These studies are the source of commonly quoted aggregate estimates of the benefits that consumers have realized in the form of lower fares due to deregulation, as well as the costs that specific segments of the traveling public have incurred in the form of fare restrictions and higher fares in certain dominated airline hub markets.

Many of the remaining published studies of airline competition and management in the aftermath of deregulation are more narrow in their scope, and are in the form of journal articles. Examples of articles that are widely recognized as having made an important contribution to the deregulation debate include Levine's "Airline Competition in Deregulated Markets: Theory, Firm Strategy and Public Policy", Yale Journal on Regulation (1987) and Borenstein's "The Evolution of U.S. Airline Competition", Journal of Economic Perspectives (1992).

All of these studies of the changes in the airline industry that have occurred since its deregulation have focused primarily on the economic impacts on market competition, consumer welfare, and airline profitability. As such, they tend to be aggregate studies of measurable outcomes and trends in airline markets and for the industry as a whole. More specific studies of how airline management practices have changed in the face of increased competition have been relegated to more technical journals.