Passenger output and labor productivity in the US airline industry after deregulation: A profit function approach

This study examines passenger output and labor productivity in the US airline industry after deregulation using a generalized puss normalized quadratic profit function. Specifically, various elasticity estimates of passenger output and employee numbers. with respect to the number of airplanes, are derived during the post-deregulation period. The empirical results provide evidence on the differing ability of airlines to enhance their passenger output and alter employment numbers after deregulation. Our findings, combined with other empirical studies on productivity of the domestic airline industry. point to the complex effects of deregulation on the airline industry and public policy toward the industry in the future.