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

34 Pages Posted: 14 Nov 2016 Last revised: 23 Nov 2016

See all articles by Matthew E. Kahn

Matthew E. Kahn

University of Southern California; National Bureau of Economic Research (NBER)

Jerry Nickelsburg

University of California, Los Angeles (UCLA) - Anderson Forecast

Date Written: November 2016

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

Kahn, Matthew E. and Nickelsburg, Jerry, An Economic Analysis of U.S Airline Fuel Economy Dynamics from 1991 to 2015 (November 2016). NBER Working Paper No. w22830. Available at SSRN: https://ssrn.com/abstract=2868929

Matthew E. Kahn (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jerry Nickelsburg

University of California, Los Angeles (UCLA) - Anderson Forecast ( email )

110 Westwood Plaza, Suite C525
Los Angeles, CA 90095-1481
United States

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