ABSTRACT

Seemingly since the beginning of aviation history there has been discussion and speculation on the remarkable inability of the industry to generate profits. This is even more so the case now, when a number of the world's airlines are bankrupt. The failure of aviation, or at least of airlines, to produce a reasonable rate of return on investments has been a fact pondered by many at great length but never satisfactorily understood. Somehow the industry seems to violate the most basic principles of economics and business. The question as to how this is the case and how the industry managed to survive, let alone actually grow and prosper so far, is the subject of this book. It details the historical performance of the industry and critically explores the various theories proposed to explain its lack of profitability. Summarizing the analysis, the book also looks to the future, combining lessons from the past and recommendations regarding the better management of airlines. In conclusion it offers a prediction on the future of the global airline industry.

chapter |10 pages

Introduction

part I|74 pages

How Bad Is It?

chapter 1|19 pages

Reality of Losses

chapter 2|29 pages

Decomposing the Elements of Losses

chapter 3|22 pages

Forecasting

part II|40 pages

Reasons for Losses: The Nature of the Beast (Exogenous Factors)

chapter 4|9 pages

Cyclicality

chapter 5|5 pages

Ease of Access to Capital

chapter 6|5 pages

Cost of Aircraft

part III|51 pages

Reason for Losses: Self-Inflicted (Endogenous Factors)

chapter 9|26 pages

Labor

chapter 10|9 pages

Bad Management

chapter 11|13 pages

Pricing

part IV|22 pages

Reason for Losses: Overregulation

chapter 12|13 pages

Government Regulation

chapter 13|6 pages

Public Ownership of Airlines

part V|39 pages

How Can the Industry Be Profitable?

chapter 14|29 pages

Prescription for Health

chapter 15|7 pages

Summary and Conclusions