The Performance of European Full Service Airlines after Liberalisation: An Econometric Analysis

Deregulation in the airline industry has forced full service airlines to change their strategies in order to respond to increasing challenges. In this paper, an econometric analysis of the possible determinants of economic performance of full service airlines after liberalization has been carried out. A fixed effects model was used and the performance of ten European full service airlines has been analyzed over a period of 11 years. Variables considered in this analysis were the number and type of aircraft in the fleet, the number and type of destinations, investments, number of employees and alliances. The analysis suggests that full service airlines should adjust fleet composition and re-organize operations on their routes in order to react to the increasingly competitive environment.