A quantitative cross-modal analysis of transportation firms’ transaction costs – Are airlines any different?

This paper applies a top-down approach to transaction cost measurement to identify the size of the transaction sector within types of transport firms in Britain, including rail and bus operating firms but also and importantly of airlines. Whilst this cross-sector analysis shows differences for a snapshot in time, it also reveals changes of transaction costs over time. Our results suggest that airlines employ a relatively large number of transaction staff. However, in contrast to the train and bus operators, airlines in Britain have managed to reduce the level of their transaction costs substantially over time both in relation to output and operating cost.

► We quantify transaction costs of different modes of transport in Britain, including airlines.
► Aviation is a very service oriented but rapidly changing industry.
► Our results confirm that airlines employ a relatively large number of transaction staff.
► Contrary to the other modes, airlines reduced the level of transaction costs considerably over time.
► Opening up of airline markets and increased range of business models are drivers of this reduction.