New behavioural economics and its influence on USA passenger airline management and policies

Abstract

The essay examines the history of interactions between academic thinkers and the application of their ideas to airline management and policy. Many studies of the history of transport focus on developments in engineering hardware and business models underlying its use, together with historical biographies of the key individuals involved. Here I deviate from this to look at how, over the past half-century or so, ideas emanating from the new behavioural economics have permeated the way air transport markets, and their regulation, have developed. I consider the outcomes on air carriers and their markets of efforts at combining psychology and economics into matters concerning airline management and policy formulation. It looks at the ways in which the traditional economic framework that dominated much of the thinking about commercial air transport from the 1920s has been challenged over the past 50 years and the implications of this for carriers and passengers.