The impact of airline business models on excess capacity

Abstract

Could airlines manage their excess capacity? This is a timely question, considering the likely growth in demand in the post‐pandemic period. As capacity reflects competitive priorities, business models can account for excess capacity. This study examines the impact of business models on excess capacity. The results show that capacity utilization decreased by 7%, although technical efficiency increased by 6%. As excess capacity differs across business models, airlines adopting the full‐service airline business model have higher capacity utilization than their competitors. This can be explained by the actions taken by full‐service airlines after the 2008 financial crisis.

Does capacity utilization crowd‐out research activity? Cross‐national evidence from firm‐level data

“…In addition to contributing to the stream of research on the determinants of R&D, we also add to the line of inquiry on the effects of capacity utilization. The literature has mainly focused on the determinants of capacity utilization (Dixit, 1980;Driver, 2000;Sarkar, 2009), with a view to gaining insights into firms' productivity and minimizing waste in the production process (see, for example, Goel & Nelson, 2021a;Karanki, 2023). This paper deals with the effects of capacity utilization, particularly on participation in research or R&D.…”