ON ECONOMICS OF AIR TRANSPORTATION: TOWARDS A NEW TEXTBOOK

ABSTRACT:

This paper may be considered as a short introduction to a textbook on economics of air transportation to be published by Dr. Brahim MANSOURI and Dr. El Mostafa KAINALLAH, through an international editing house. Following some introductory remarks, it deals with the economics of transportation as a sub-discipline of economics that is largely underexplored, especially in the developing countries.

Then, the paper outlines how the textbook will be organized in four chapters in order to address issues of air transportation economics on the microeconomic, mesoeconomic and macroeconomic fronts as well as in a political economy perspective. The structure of the textbook in four chapters dealing respectively with microeconomics, mesoeconomics, macroeconomics and political economy of air transportation, is designed to follow the same structure as in any textbook of general modern economics. Nonetheless, the concepts as well as analytical and empirical approaches to deal with economics of air transportation will be somewhat different, notably because of specificities tied to the brunch of air transportation economics.

The textbook is expected to fill the gap in this research arena and then to help to better understand the sector of air transportation with respect to the whole economy. Through such project, we modestly aspire to contributing to build up a newly advancing brunch of economics with new concepts as well as new analytical and empirical approaches, with the hope that our kind readers will fruitfully help us with their comments and suggestions.


0- INTRODUCTION:

As known in any science, the ideal is to learn generalities first, before any attempts to be specialized in pieces of science. This is what is unanimously termed “The Funnel Theory” (Théorie de l’entonnoir, in French-;-´-or-نظرية الْقِمْع ‘Nadhariat Al-Kimaa’, in Arabic), that is a pattern to grasp whole scientific ideas to help to understand specific ones.

Like in medicine where new doctors should understand general medicine first, before any specialization in specific medicinal studies like cardiovascular disease medicine, genecology and obstetrics, otolaryngology and so forth, the economic profession needs first to grasp general economics before any specialization in particular economic investigations such as finance, economics of education, urban economics, economics of transportation and so on.

It imports also to point out that even specifically specialized studies in social sciences and humanities may lead to some “sub-specializations”. This is the case for instance of economics of higher education within the whole specialty of education economics´-or-economics of cancer within the holistic specialty of health economics.

In line with the above-so-called “funnel theory”, one may be interested in economics of transportation. Like in other research arenas, this specialty may help to build a tale of subspecialties such as economics of road transportation, economics of rail transportation and economics of air transportation. The present paper deals with economics of air transportation. Within the profession of economics, this research field has received less attention in the recent theoretical and empirical literature-;- and even the specialty of transportation economics as a whole seems to be widely underexplored, particularly in the developing world.

Note here that economics of transportation is a specific brunch of the profession, with particular concepts and methodological tools. More importantly, the subspecialty of air transportation economics seemingly appears to be a hard science, especially because it should embrace a particular variety of concepts and “boxes of tools” with different meanings, even though it seems something that the concepts and methodological instruments are the same as those used in economics in general and transportation economics in particular (Mansouri and Kainallah, 2019a, 2019b).

Our developments above have motivated us some months ago to deal with air transportation economics as a new economic brunch all the more we have extensively written on the subject, thanks notably to publications of research papers in international indexed journals and reviews, and participations to conferences and workshops (see for instance, Kainallah, 2018-;- Kainallah and Mansouri, 2018-;- Mansouri and Kainallah, 2018-;- Mansouri and Kainallah, 2019a-;- Mansouri and Kainallah, 2019b). Such motivations have encouraged us to write a seemingly innovative textbook on air transport economics to be published by a known editing house.

The present paper should be considered as a comprehensive introduction to the expectedly published textbook. The remainder of the paper is organized as follows:

- Section 1 deals with economics of transportation in general, as an important brunch of economics, with the major objective of better grasping this specific research arena, before any dealing with the sub-brunch of air transportation economics-;-

- Section 2 tries to derive the importance of the textbook decomposition into four major chapters, namely “Microeconomics”, “Mesoeconomics”, “Macroeconomics”, and, finally, “Political Economy” of Air Transportation-;-

- Ultimately, section 3 concludes and opens the door for further research efforts and outcomes in this specific field.

1. ECONOMICS OF TRANSPORTATION: WHAT DOES IT MEAN EXACTLY?:

Economics would be probably the scientific discipline where brunches more dramatically proliferate over time, at least in comparison with relevant social sciences and humanities. As in economics in general and its various sub-disciplines in particular, it is important to note that the basic law widely used by economists is the so-termed law of supply and demand (Loi de l’offre et de la demande). This means unambiguously that even in economics of transportation, we need to use such law everywhere when dealing with economics of the sector, together with corresponding concepts such as those tied to markets, prices, optimization, equilibrium, production, consumption and so on.

Note nevertheless that economics of transportation is a very particular sub-discipline within economics. Specificities of such brunch of the profession may be summarized as follows:

- In economics of transportation, it imports to take into account time of any journey of transport. This means that unlike in other sectors of economic activity, one should associate a monetary value´-or-a borne cost to any elapsed time in the transportation process-;- even though time is also somewhat important in other processes of resource allocation.

- The use of road networks is seen to produce considerable extensions of the journey time. This phenomenon is generally called “congestion”´-or-“traffic jam”.

- The construction and maintenance of transport infrastructure such as roads, railways, ports and airports turn to be very costly for the collectivity. Moreover, the users of such costly infrastructure pay only small amounts of the borne costs.

- Activities of transportation take up too much space like in the cases of roads and railways, requiring thereby much time to expropriate land owners as well as to build up the necessary infrastructure.

- The transportation sector creates much pollution and consumes higher amounts of energy.

- Transportation is widely considered as a service rather than a good-;- and it is rarely demanded for itself but as an intermediary product associated with other economic activities such as production, consumption and leisure. Therefore, transportation may be grasped only with respect to the whole economic activity and the people’s way of life.

- Another characteristic of the sector is that it encompasses a higher capitalistic intensity, especially because of motorization and use of other aspects of technical capital such as roads, railways, vans, locomotives and airplanes. The sector also uses specific kinds of labor, including the labor supplied by truck drivers, railwaymen and pilots, as well as specific inputs such as fuel and electricity.

- The sector of transportation has also infrastructure with longer life in comparison with other sectors of economic activity.

- Collective decisions in the sector will be fruitful only after several decades, even after several centuries, as documented from historical experiences of the industrial revolution, especially in Europe and on the other side of the Atlantic Ocean, notably in North America.

- The time needed for various infrastructures of transportation is longer. Due to technical factors, much time is needed to build up complex channels of transport. Also, sociopolitical factors may delay the route of a transportation channel such as a road, a railway´-or-an airport.

2. THE FOUR CHAPTERS OF THE TEXTBOOK: MICROECONOMICS, MESOECONOMICS, MACROECONOMICS AND POLITICAL ECONOMY OF AIR TRANSPORTATION

All economists know that, in terms of the magnitude of aggregation, the profession shifts at the bottom of the hierarchical economic analysis from individual behaviors towards higher degrees of aggregation, to ultimately reach the well-known realm of macroeconomics. The bottom of the analytical hierarchy is called microeconomics, that is a sub-discipline concerned with the economic behaviors of individuals, households and firms. The subsequent stage in the analytical hierarchy is what is generally called mesoeconomics, that is a sub-discipline dealing with the economic behavior of some weakly aggregated entities such as sectors and geographic areas, like cities and localities. Finally, the higher degree of analysis concerns macroeconomics, that is the whole behavior of the domestic economy.

Note however that aggregation is not often a simple addition of individual quantities´-or-values. Indeed, from microeconomics to mesoeconomics and then to macroeconomics, many quantities and values turn to be non-additive: for instance, productions of firms cannot be added because of the existing interdependencies between them-;- and prices, in the same manner as temperatures in a given area, cannot be added, and then the correct measurement of prices is to compute a general price index in a domestic economy, in an economic sector´-or-in a given region.

Besides these three levels of economic analysis, namely microeconomics, mesoeconomics and macroeconomics, economists may be interested in the political economy within a given domestic economic system, economic sector´-or-region. Generally speaking, political economy (Economie politique) aims at studying production, consumption, investment, trade and income distribution, and their links to government and law. It builds up and uses economic theories and methods to better understand different economic, social and political systems. It is also concerned with how public policies are designed and implemented to influence economic activity. Since individuals and groups have different interests in how economic and social development may be managed, the discipline of political economy turns to be a complex research area, with broader range of competing interests.

Moreover, modern political economy also involves the well-known game theory (Théorie des jeux). The reason which is behind the economy-game theory nexus is that groups in the bosom of the society are always gaming for finite resources and power in a context of-limit-ed goods and services, and should determine which actions will lead to the most profitable outcomes, with thorny difficulties in characterizing the winners and the losers of such actions.

Being aware of the fact that economics of transportation is a specific sub-discipline, the textbook to be published will deal with economics of air transportation on the microeconomic, mesoeconomic and macroeconomic fronts as well as political economy perspective. Therefore, the textbook will be organized in four chapters:

- Chapter 1 deals with microeconomics of air transportation, with further effort to understand consumption, production, prices, markets and structure of competition, especially within local airports, like in any general textbook of microeconomics, while taking into consideration the specificities of the sector-;-

- Chapter 2 outlines a comprehensive framework to better understand economics of air transportation in a mesoeconomic perspective, addressing issues related to key concepts, especially with respect to local issues of the sector, particularly in the Moroccan red city of Marrakech and beyond-;-

- Chapter 3 deals with macroeconomics of air transportation, with efforts to aggregating prices and quantities, consumption and production, and exploring relationships between air transportation and tourism on the one hand and standard macroeconomic variables such as economic growth and investment on the other hand-;-

- Chapter 4 discusses the political economy of air transportation, attempting to grasp linkages between this specific sector and government, law and regulation-;- with additional effort to better understand the rules of the game within the sector in the framework of the well-known game theory. This will help to better understand barriers to reforms of the sector in relationship to the game of actors as winners and losers.

3. CONCLUDING REMARKS AND PERSPECTIVES FOR ADDITIONAL RESEARCH:

This paper has attempted to the new brunch of air transportation economics in a suitable research framework. First, it defines the holistic sub-discipline of transportation economics and tries to highlight its specificities vis-à-vis the whole discipline of economics. It then puts out how the upcoming textbook on economics of air transportation will be written in four chapters dealing successively with microeconomic, mesoeconomic, macroeconomic and political economy issues of the sector.

The publication of such book has received our particular attention several months ago. It is expected that the seemingly innovative textbook in this research arena will fill the gap in this domain, especially to build up a new economic brunch with new concepts as well as new analytical and empirical approaches.

REFERENCES:

• Kainallah, El Mostafa, (2018), Transport aérien et performances touristiques : La place du low cost dans le cas spécifique de Marrakech et le cas général du Maroc, PhD thesis, Faculty of Juridical, Economic and Social Sciences, Hassan I University, Settat, Morocco.

• Kainallah, El Mostafa and Mansouri, Brahim (2018), “Impact of Low Cost Transportation and Special Events on Touristic Performances: An Empirical examination for Marrakech Destination”, Asian Academic Research Journal of Social Sciences and Humanities, Vol. 5, Issue 8, August.

• Mansouri, Brahim and Kainallah, El Mostafa (2018), “Sky Liberalization and Touristic Outcomes in Morocco”, International Journal of Commerce, Business and management, Vol. 7, N° 4, July-August.

• Mansouri, Brahim and Kainallah, El Mostafa (2019a), “Airport Passengers and Hotel Accommodation in Marrakech: Does the “Regular-Charter-Low Cost” Differentiation Matter?”, Asian Academic Research Journal of Social Sciences and Humanities, Vol. 6, Issue 1, January.

• Mansouri, Brahim and Kainallah, El Mostafa (2019b), "Des variables qualitatives aux variables quantitatives : les événements politiques, sociaux et sécuritaires affectent-ils les arrivées de la diaspora marocaine ?", Paper to the international conference on qualitative and quantitative methodological issues in social sciences and humanities, Faculty of Letters and Humanities, Cadi Ayyad University, Marrakech, Morocco -;- forthcoming in a collective book: Driss Ait Lhou (-dir-.) (2019), Proceedings of the International Conference on Quantitative and Qualitative Methodological Issues in Social Sciences and Humanities.

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