Flying More Efficiently: Joint Impacts of Fuel Prices, Capital Costs and Fleet Size on Airline Fleet Fuel Economy

We investigate the factors that affect airlines' choice of fleet fuel economy using aircraft-level data for 1267 airlines in 174 countries. Larger and newer aircraft are usually more fuel-efficient. Controlling for the effect of aircraft size and age, we find that the technically achievable fleet fuel economy improves with the size of airlines and the price of fuel and worsens with higher capital costs. The elasticity of fuel economy with respect to the price of fuel is between −0.07 and −0.13. We find evidence for regional differences in fleet fuel economy that are attributable to the adoption of distinct groups of technologies.