Full Cost of Air Travel in the California Corridor

The theoretical and empirical literature on the cost structure of the provision of air transportation is reviewed, and cost functions for air travel in the California corridor are specified and estimated. A full cost model is developed; it identifies and measures key cost components—fuser, carrier, infrastructure, time and congestion, noise, accident, and pollution costs. Applying the models to data for domestic air travel in the California corridor, the total long-run average cost is estimated to be 11 cents per passenger km traveled. The single largest cost category is owning and operating a plane. In general, because of large fixed-cost components, the average cost of infrastructure exceeds the marginal cost.

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