Borenstein, Severin “Would Pricing Aviation GHGs Really Lower Efficiency or Profitability?: A Comment on Winchester et al, “The Impact of Climate Policy on U.S. Aviation” (June 2011), WP-216: Full Paper
In a recent working paper, Winchester et al (2011) used computable general equilibrium models to evaluate the impact on U.S. airlines of pricing greenhouse gases through a cap-and-trade program. In this comment, I raise two issues about the analysis itself, suggesting that the Winchester et al conclusions about fuel price changes and load factor changes are inconsistent with the basic economics of the industry. More importantly, I argue that the paper’s analytical conclusions do not suggest that including aviation in GHGs would be harmful to the efficiency or profitability of the industry.