Straight and Level: Practical Airline Economics

This text examines the poor performance of airlines in the early 1990s - as output ran too far ahead of demand, and the yield earned on output sold was insufficient to cover costs. In any industry, operating expenses are a function of output and unit cost, whilst operating revenues are a function of sales and unit price. The difference between operating expenses and revenue is operating profit or loss. The study examines the basic economics of supply in the air transport industry, before going on to discuss market structure, contestability theory, and barriers to entry. It then goes on to examine unit costs, with chapters on costs and their classification, airline cost drivers and their management, and network structures and strategies. A chapter on the basic economics of demand for air transport is followed by chapters on market segmentation and demand forecasting. There is further analysis of airline pricing, yield management, and load factors.