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An Economic Analysis of U.S Airline Fuel Economy Dynamics from 1991 to 2015

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  • Matthew E. Kahn
  • Jerry Nickelsburg

Abstract

Airline transport generates a growing share of global greenhouse gas emissions but as of late 2016, this sector has not faced U.S. fuel economy or emissions regulation. At any point in time, airlines own and lease a set of durable vehicles and have invested in human and physical capital and an inventory of parts to maintain these vehicles. Each airline chooses whether to scrap and replace airplanes in their fleet and how to utilize and operate their fleet of aircraft. We model these choices as a function of real jet fuel prices. When jet fuel prices are higher, airlines fly fuel inefficient planes slower, scrap older fuel inefficient planes earlier and substitute miles flown to their more fuel efficient planes.

Suggested Citation

  • Matthew E. Kahn & Jerry Nickelsburg, 2016. "An Economic Analysis of U.S Airline Fuel Economy Dynamics from 1991 to 2015," NBER Working Papers 22830, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22830
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    References listed on IDEAS

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    1. Alessandro Gavazza, 2011. "Leasing and Secondary Markets: Theory and Evidence from Commercial Aircraft," Journal of Political Economy, University of Chicago Press, vol. 119(2), pages 325-377.
    2. Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.
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    10. Sallee, James M. & West, Sarah E. & Fan, Wei, 2016. "Do consumers recognize the value of fuel economy? Evidence from used car prices and gasoline price fluctuations," Journal of Public Economics, Elsevier, vol. 135(C), pages 61-73.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Some Airplane Energy Demand Economics
      by Matthew Kahn in Environmental and Urban Economics on 2016-12-01 22:55:00

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    Cited by:

    1. Spiritus, Kevin & Lehmann, Etienne & Renes, Sander & Zoutman, Floris T., 0. "Optimal taxation with multiple incomes and types," Theoretical Economics, Econometric Society.
    2. Greer K. Gosnell & John A. List & Robert Metcalfe, 2016. "A New Approach to an Age-Old Problem: Solving Externalities by Incenting Workers Directly," NBER Working Papers 22316, National Bureau of Economic Research, Inc.
    3. Csereklyei, Zsuzsanna & Stern, David I., 2020. "Flying More Efficiently: Joint Impacts of Fuel Prices, Capital Costs and Fleet Size on Airline Fleet Fuel Economy," Ecological Economics, Elsevier, vol. 175(C).
    4. Brueckner, Jan K. & Kahn, Matthew E. & Nickelsburg, Jerry, 2024. "How do airlines cut fuel usage, reducing their carbon emissions?," Economics of Transportation, Elsevier, vol. 38(C).

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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