The Economics of Airlines

This updated and expanded third edition explains the economic realities of the airline industry and the challenges that the sector now faces to decarbonise aviation.

The airline industry is fundamental to the workings of the global economy. Yet, ironically for an industry of such sheer scale and economic muscle, profit margins are razor thin and many airlines struggle to break even. The precarious economics of the sector were fully revealed when Covid-19 grounded flights across the world prompting many national carriers to seek government bailouts, while smaller airlines collapsed. The third edition of this standard introduction to the economics of the airline industry has been fully updated and expanded to include new material on decarbonising aviation, aircraft leasing, the application of AI technology, changes to the international regulatory architecture, blocked mergers and the challenges facing Boeing, the cargo market, the growth of ancillary revenues, as well as further analysis of the impact of the pandemic on passenger numbers and the concept of delayed demand. The book remains a comprehensive introduction to the economics of airlines, how carriers compete, how they develop their business, and how demand and cost structure, coupled with the complex regulatory regime, produces the industry we see today.