دانلود رایگان مقاله تغییر هزینه هواپیمایی و مسافر

abstract

Since the start of the Millennium airline costs have been highly volatile, mainly due to large fluctuations in jet fuel prices. An important question for airlines and regulators is whether airlines are able to pass through cost changes to their prices. Little empirical evidence on the pass-through of costs exists. In this paper, we investigate which pass-through rates are most likely. According to economic theory, the passthrough of costs depends strongly on the type of cost increase (firm-specific or sector-wide) and market conditions (monopoly, oligopoly, perfect competition). In monopolistic markets, the shape of the demand curve also matters (linear, constant elasticity, log, power function). A pass-through rate of 100% is often assumed based on the reasoning that the aviation sector is highly competitive. We analyse market concentration in all airline markets in the world, and generally find a high level of concentration. Additionally, different airlines offer different products based on a variety of factors, including service, flight frequency, legroom, bags allowed on board, flight time and transfer time. Therefore, most aviation markets can be characterised as differentiated oligopolies. As airlines choose their quantities first (flight schedules) and adapt their prices to demand (yield management), we consider the Cournot model the best choice. In such markets, firmspecific cost changes will be passed through by a rate of less than half while sector-wide cost changes are passed through by a rate of more than half. In specific situations, the pass-through rate may be different. Examples are limited airport capacity (congestion), crosssubsidization, and the extent to which there is a level playing field.

6. Conclusions

According to economic theory, the pass-through of airline cost changes strongly depends on the type of cost change (firm-specific or sector-wide) and market conditions. In monopolistic markets, most or all of a cost change may be passed through, depending on the shape of the relationship between prices and demand. In more competitive situations, sector-wide cost changes may also be passed through to a large extent, although not necessarily fully. In these competitive situations, cost changes that affect only one competitor will only be passed through to a small extent. In aviation, a pass-through rate of 100% is often assumed based on the reasoning that the aviation sector is highly competitive. Empirical evidence with respect to the pass-through of cost changes within the aviation industry is limited. We analysed market concentration in all airline markets in the world, and generally found a high level of concentration. Additionally, different airlines offer a variety of products in terms of, e.g., service, flight frequency, legroom, bags allowed on board, flight time and transfer time. Therefore, most aviation markets can be characterised as differentiated oligopolies. As airlines choose their quantities first (flight schedules) and adapt their prices to demand (yield management), we consider the Cournot model as the best choice. In such markets, firm-specific cost changes will be passed through for less than 50%, and sector-wide cost changes will be passed through by more, depending on market conditions.