Commercial Airlines Failure: A Transaction Cost Economics and Agency CostsAnalysis and Empirical Evidence

摘要

Over the last two decades or more, the aviation industry has gone through recurringrnprofits cycles with bankruptcies and near collapse of not only small size commercialrnairlines but often large airlines once thought to be invincible, for example UnitedrnAirlines, Continental Airlines and Swiss Air, to name a few. To date the explanationsrnfor these failures often fall in one of two groups - either external events such as SARSrnand 9/11 or the high fixed costs of network carriers or spikes in variable costs such asrnoil. However, with firms in other industries exposed to events such as SARS and 9/11rnand low cost carriers also now beginning to collapse these explanations are not therncomplete story and potentially not the main driving force of commercial airline firm.rnThe arguments can be classified as based on the neoclassical theory of the firm as anrnefficient production function.rnThis paper employs transactions cost economics and agency costs (costly contracting)rntheory of the firm framework rooted in the pioneering works of Alchian and Demsetzrn(1972) and Jensen and Meckling (1976), Coase (1937) and Williamson (1975, 1985)rnto provide a potentially compelling explanation with anecdotal evidence for what mayrnbe characterised as a market failure in the commercial airline industry. We show thatrnthe profit cycles experienced in the commercial airline industry over the last 25 yearsrnis not caused mainly by unexpected changes in operating costs and revenues but byrnthe more fundamental problem of failure of the airline firm because the scope ofrnairline firm products and services in an increasingly liberalized global air transportrnmarket is no longer economically efficient from a transaction cost and agency costrnperspective.