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 planelevel
data for 1267 airlines in 174 countries. Larger and newer planes 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.