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Cobb-Douglas function application for productivity analysis in the airline industry: the case of Gol Airlines

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Author(s): Ernesto Tiaki Kuroda | Alan Joseph Kalfas | Rogéria de Arantes Gomes Eller

Journal: Journal of Transport Literature
ISSN 2238-1031

Volume: 6;
Issue: 2;
Start page: 169;
Date: 2012;
Original page

Keywords: productivity | Cobb-Douglas function | air transportation

ABSTRACT
This article aims to analyze the application of the Cobb-Douglas function as a tool for productivity analysis in the airline industry. A series of data from Gol Airlines was selected to estimate a production function using variables that represent capital and labor inputs. The data set was analyzed in three parts: first, from the first quarter of 2003 through the acquisition of Varig, in the second quarter of 2007; the second period after considering the acquisition of Varig, and the last one, considering the whole period from 2003 to 2009. The results show that the acquisition of Varig reduced the productivity observed by the reduction of the participation of labor in the results measured in revenue passenger kilometers. This effect is due to the increase in the number of workers in the new company, with no resulting increase in production. The results are consistent with the economic theory, although the period of analysis must be considered as a short term.
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