Air Transport: International Comparisons of Labour Productivity

This paper compares labour productivity in the airline industry in the UK, the US, Germany and France. 1992 estimates have been produced for the countries as a whole and for individual airlines within these countries. Scheduled and non-scheduled services were considered and revenue weights were used to aggregate freight and passenger services. The UK had a productivity lead over the other countries of between 12 and 30%. The measures here were compared with an alternative estimation method used by McKinsey (1992). The causes of productivity differences were examined with regression analysis. This analysis suggests that the predominant causes of higher relative productivity are load factor, stage length and ownership. Non Technical Summary. This paper presents comparisons of labour productivity in the airline industry in the UK, the US, Germany and France. 1992 Estimates have been produced comparing both the countries as a whole and individual airlines within these countries. The estimates given in this paper suggest that the UK had a productivity lead over the other countries of between 12 and 30%. Within the UK, British Airways performed better than all but 4 of the US airlines examined, British Midland on the other hand was inferior to all but one. British Midland performed better relative to the other European airlines than relative to the US airlines. Labour productivity is estimated as output per employee. However the measurement of output is not entirely straightforward as the airline industry is dual-output. Passenger and freight services are provided along side each other, needless to say both these services need to be accounted for when determining productivity levels. As these services are measured in different units the two services cannot simply be summed together, some means of aggregating the two is required. The procedure followed in this paper was to use a revenue weighted system. A measure of relative 3 prices was computed using country k's prices relative to country j. This price measure is then used to deflate passenger and freight revenues this enables the two to be summed together. These weighted revenues totals are divided by employment levels to determine productivity levels. Both scheduled and non-scheduled services were taken into account. Data were taken from the annually published Civil Aviation Statistics of the world (ICAO 1992 and 1993). This publication presents a comprehensive data set including an airline by airline breakdown of passenger kilometres, freight kilometres, passenger load factors and revenues. The …