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approximately onefourth of the world total, the international economic isolation of Iraq which followed that country's invasion of Kuwait has caused world crude oil prices to both soar, and become highly volatile, with the average per barrel price rising from less that $20 prior to the invasion to approximately $40 in October 1990a doubling in price in approximately two months.1

One manifestation of rising crude oil prices is a rise of significant proportions in the cost of fuels produced from crude oil. This research is concerned with the effects on transportation systems of increases of significant proportions in fuel costs. Although such fuel cost increases affect private automobile and truck use, urban mass transit systems, intercity and interstate bus, truck, and rail transportation systems, and maritime transportation systems, the most dramatic effects occur in the air transportation industry, particularly so in the passenger hauling segment of that industry. Thus, in this research, the effects on transportation systems of increases of significant proportions in fuel costs are examined

2through a focus on such effects experienced by the passenger hauling segment of the air transportation industry.

EFFECTS OF RISING FUEL COSTS ON THE

PASSENGER HAULING SEGMENT OF THE AIR TRANSPORTATION INDUSTRY

The effects of increases of significant proportions of fuel costs on transportation systems is a phenomenon with an historical precedent which is well within the memory range of most Americans, as the last experience with the phenomenon occurred only 11 years ago, in 1979.2 With respect to the passenger hauling segment of the air transportation industry, the simplistic approach to this phenomenon considers only the direct effects on the industry, which derive from rising operating costs, which sharply and negatively affect operating profits, and which derive from the necessity to raise fares, an action which exerts...