I had mixed feelings after reading this book. It was too rigorous to be pop economics or something you would find in airport bookstores, yet it did not have the depth of top-notch textbook quality either; it tells you how things work rather than why they exist, which is a more fundamental question. The author wanted to describe the global aviation industry and how it affects, as well as is affected by, global economic events. He also wanted to place aviation in a context of modern economics and social responsibility by explaining the externalities, both positive and negative, that the airline industry generates. To this end he has succeeded.
The four parts that make up the book could each stand alone but, I found, have a sensible sequence. Part 1 describes the basic economics of the demand and supply for air travel as well as airline pricing strategies, while part 2 includes chapters on a wide range of topics including market structure, different business models, and key strategic variables, as well as the unique features of the bilateral agreements for international market access. It also discusses alliances, regulation, and deregulation of markets and safety and security. Part 3 contains a description of the positive and negative externalities produced by the industry—the economic stimulus provided by aviation through connectivity, but with the costs of noise pollution and emissions. Part 4's topics deal with transportation infrastructure and key elements of the aviation supply chain. We learn how infrastructure, airports, and air traffic control systems can have a significant impact on how well airlines perform operationally and financially.
The book differs considerably from others in this limited field. Other texts focus almost exclusively on airlines and rarely consider the importance of infrastructure or the upstream providers of airframes and aircraft engines. This book offers a taste of a supply chain perspective of global aviation and how airlines fit into that supply chain. Other texts also contain numerous charts and tables, with various statistics that quickly become outdated. This book does not; it has ten or so tables and charts that support a point rather than simply provide information. Another distinguishing feature of this book is the introduction of rigorous economics descriptions and explanations of key economic measures such as a Herfindahl-Hirschman index. The book has an industrial organization perspective and is by far the most up-to-date in terms of citing and using the most recent literature of air transport economics. An extensive list of references is provided at the end of the book but, surprisingly, very few are cited within the text.
Business historians will find this book of value. Although its title is The Economics of Airlines, the book is more the economics of aviation, because it goes outside the airline firm and considers the upstream and downstream supply chain connections. The book also spends some time describing various of the remedies that have been put in place to overcome some market imperfections not only within the airline industry but also with aviation infrastructure; authors are identified by name but not by reference.
The book provides an up-to-date picture of the airline industry through the lens of an economic way of thinking. Even those with no formal economics training can grasp the fundamental economic relationships; in this respect the author has done an excellent job. It is a book written for the body public and certainly those in government and in businesses that affect or are affected by the airline industry. It could also be used as a framework in courses focused on air transport, to supplement a more general transportation economics course, or in courses looking at some key industries in an economy. For the interested reader it provides a comprehensive understanding of the economic forces at work in the aviation sector.
