European airline industry: a cost analysis and economic performance evaluation

Abstract

The European liberalisation process introduced in the air industry has radically changed the conditions in which carriers operate ill this market. The main objective of this paper is to study the cost structure of airlines, in order to evaluate how the liberalisation process has affected the productive efficiency of European carriers. By studying the existence of economies to scale or cost complementarities, we try to predict how airlines will respond to the new framework set by the European Commission.