A Study On Economies Of Scale Of China’s Listed Airlines Based On Translog Cost Function

With the deregulation of the air transportation industry and the increasing competition in the global aviation market,to control the operating costs and improve the production efficiency are the key to maintain the airline profitability.How to use the economies of scale correctly is an important problem of airlines,which not only affects the operation status of airlines in the future,but also relates to the survival and development of airlines.The study of economies of scale is of great significance for airlines to improve production efficiency.This paper first reviews the relevant literature of domestic and foreign scholars on the economies of scale of air transportation industry,and finds that most of the literature has been studied from the perspective of traditional economics,but it is difficult to distinguish the economies of scale from the economies of density due to the unique network economy of air transportation industry.This paper separates the density economies from the economies of scale based on the perspective of transport economics,introduces operating variables into the traditional translog cost function to distinguish economies of scale and density,using the financial data and operating data of China’s listed airlines from 2005 to 2019 to measure the factor cost elasticity,economies of scale of the air transportation industry and its influencing factors.The results of the study show that the economies of scale and density of China’s air transportation industry are 1.2728 and 1.2280,respectively,the economies of scale of state-owned airlines and private airlines are 1.2994 and 1.2374,and the economics of density are 1.2386 and 1.2139,respectively.The former is better than the latter.The reason is that state-owned airlines have natural advantages in terms of capital and personnel,and are more competitive with high-quality routes and time resources.Regression analysis results show that asset scale has no significant impact on economies of scale;the number of bases and average size of aircraft types have a significant positive impact on economies of scale;an appropriate reduction in the fleet commonality index is conducive to enhancing market adaptability and therefore systemic reduce operating costs;the growth of economies of scale is faster than that of density economies,indicating that the rapid development of China’s air transportation industry mainly comes from the rapid expansion of the scale of the airline network.