Estimation and Comparison of Trans-log Cost Function of Aviation Industry between Japan and Australia

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The summarize of my full research report is as follows. Chapter 1 discussed on the deregulation about the Australian three airlines policy. The theoretical support for such "deregulation" policy is provided by the model of contestable market theory. Chapter 2 tried to discuss the deregulation on the air transportation industry in Australia from the view of public policy. The efficiency and profitability of the two Commonwealth-owned carriers, Qantas and Australian Airlines, are discussed. Chapter 3 provides a review and empirically tests of the available evidence concerning the question of economies of scale following the deregulation of the Japanese airline industry in 1985. It has been pointed out that the Japanese airline industry has had the economies of scale until deregulation. The degree of scale economies is tested on the three Japanese major carriers, Japan Airlines (JAL) ; All Nippon Airways (ANA) ; Japan Air System (JAS). It is proved that the three air carriers in Japan have the scale economies in their cost structure. Chapter 4 gave a translog type empirical tests on the Japanese aviation industry. It has pointed that the Japanese aviation industry has its own economies of scale. This chapter examines how it has changed after the deregulation on December 1985 using translog type cost function. Chapter 5 discusses the method and problems of the productivity measurement of Japanese and Australian airline industry. In the main parts (chapter 4) of this report, the translog type cost function estimation is used. However, in the other researches the data envelopment analysis (DEA) and stochastic production frontier methods were sometimes used. These methods are introductory explained.