A basic equation of air-lift pump performance is derived from a simple momentum equation. In the analysis, frictional pressure drop in two-phase flow is expressed by means of liquid volume fraction of the mixture, and slug flow is assumed in order to obtain the relationship between liquid volume fraction and flow rates of both phases. The results predicted by the analysis are compared with experimental data of other investigators as well as of the authors. Good agreement with experimental data is shown in the ranges of 25 mm≤D (inner diameter)≤100 mm, 4 m≤L (length of pipe)≤42 m and 0.4<σ (submergence ratio)<0.8. To give a clear explanation for pump characteristics, the efficiency of air-lift pump is subdivided into two components, the pipe efficiency and the ideal discharge efficiency. A procedure of a pump design is proposed.