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Airlines not afraid to mangle numbers as well as words…
Away we go again. The US carriers, not content to mangle the language by calling for less competition in the name of more competition also want to mangle the numbers. They are claiming, in a puff piece of terrible, unthinking reporting, that their market share is down by 5%. Interestingly, the science and economics says that it is 1%, oh, and by the way, the fares are down too, which is good for the economy, not bad.
The academic study is here: http://www.aviationadvocacy.aero/images/Library/Speeches_Articles/2015-01-03%20Prof.%20Dresner%20et%20al%20-%20TheImpactOfGulfCarrierCompetitionOnU.S.Airlines%20-%20preview.pdf
The conclusions, on page 21, are worth repeating in full:
The empirical results suggest that these effects are small but statistically significant; that is a 1% growth in total Gulf carrier traffic to or from the U.S. is associated with a less than 0.1% drop in U.S. carriers’ international passenger traffic and a less than 0.1% decrease in air fares. From a consumer perspective, the latter is, of course, a desirable outcome of increased competition in international aviation markets. U.S. carriers, however, are likely worse off following Gulf carrier entry.
The bigger error here is to say that market share is down, without noting that the actual market size is up. Add in all the passengers that cannot fly on US carriers to various parts of India, Asia and Africa and you can see that the market is improving.
There is one truth that cannot be denied – if passengers are opting to travel two-thirds of the way around the globe instead of over the Pacific using US carriers, that says more about the airlines than it does about the passengers.
