The Impact of Passenger Mix on Load Factors in the Airline Industry
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We explore how the dramatic increase in the share of leisure travel has changed aircraft utilization in the U.S. airline industry. We argue that the growth in leisure travel—which is due to increases in household income and to airline deregulation—has been responsible for an increase in airlines’ load factors. Because of data limitations, we use cross-sectional variation in the mix of passenger types to identify the effect of passenger mix on load factors. We find that routes that have a greater share of leisure travelers also have higher load factors. We use this evidence to argue that the growth of leisure travel since airline deregulation is an important driver of aircraft utilization and other characteristics of the U.S. airline industry.
KeywordsAirlines Capacity utilization Firm strategy Industrial organization Load factors Transportation economics
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