Air transport economics

The multiple facets and contradictions of air transport make it a fascinating area of research for economists: airlines develop international activities but operate on markets that have been under strong government regulation for more than 70 years. They provide a perishable service with a largely fixed capacity but face fluctuating demand that is linked to on economic circumstances. Airlines compete vigorously, but their main providers are a duopoly (Airbus-Boeing) and quasi-monopolies (airports) whose capacities are chronically insufficient.

Airlines have thus been driven to develop original strategies that are specific to the sector. For example, they have experimented with new solutions for pricing and capacity management, with the invention of revenue management, a technique that is now spreading to many sectors. They have entered alliances in order to extend their networks over the whole planet without breaking the restrictive regulations.

The research activities carried out by the DEVI members in Air Transport Economics aim to explain these features. They explore for example the effects of market regulations or the lack of airport capacity on actors’ strategies and the evolution of airline networks. The impact of regional deregulations (South-east Asia) on air transport actors and regional economics have also been analysed.