The role of London airports in providing connectivity for the UK: regional dependence on foreign hubs

In a context of ongoing debate about the future UK aviation policy and its implications for regional economic development, this paper discusses the role of London Heathrow and the South East airports in providing connectivity for the UK, with particular focus on the international markets that originate from regional UK airports. Using an MIDT dataset of worldwide passenger itineraries served by the European airport network during May 2013, we first establish whether London Heathrow can currently be considered the most important hub for the UK, in terms of traffic generation, connectivity, and centrality, while also measuring the dependence of UK regions on foreign airports and airlines to remain connected with the rest of the world. Results show that, despite the competition, London Heathrow benefits from its massive traffic generation to remain the most central gateway for overall UK air transport markets. However, when only regional markets are considered, significant dependence on foreign hubs appears in many destinations, particularly to Asia–Pacific or the BRIC countries where above 80% of passengers use transfer flights. These results fit nicely with the observed trends of seat de-concentration and hub-bypassing in the airline industry. While dependence on foreign hubs can be interpreted as a sign of vulnerability, there is also the argument that bypassing Heathrow allows regional airports to develop new markets and reduce the level of congestion in the London airport system.     

Airport–airline vertical relationships,their effects and regulatory policy implications

This paper examines the forms and effects of vertical relationships between airports and airlines with a focus on the North American and European aviation markets. We find that such vertical relationships enables those participating to achieve various benefits and may be formed as a competitive response to other competing airport–airline alliances. In some cases, vertical airport–airline relationships strengthen the hub status of major airports, leading to increased employment and service quality in local markets. On the other hand, preferential treatment of a particular airline by an airport may enhance that airline’s market power, allowing it to dominate the airport and charge hub premiums. The competition and welfare implications of airport–airline vertical alliances can be complicated and two-sided, subject to the influences of other factors such as the market structures of the airline and airport markets.     

Hub airport slot Re-allocation and subsidy policy to speed up air traffic recovery amid COVID-19 pandemic --- case on the Chinese airline market

With international air travels largely banned around the world amid the global COVID-19 pandemic, many gateway and hub airports have more ideal slots available for reallocation. Airport traffic recovery replaces airport congestion to become the primary challenge of major airports around the world. With the pandemic well controlled domestically in China, the government liberalizes the hub airport slots for those previously forbidden services to the small/regional airports. This paper thus analytically examines the effect of this slot liberalization. The government subsidy to the small airports has also been considered. It is found that the slot liberalization can speed up airport traffic recovery for both hub and small airports. The hub airport slot liberalization leads to a lower level of minimum subsidy to sustain the survival of the small airports. Given any fixed level of subsidy to the small airport, both the total airport traffic and social welfare would improve with the slot liberalization at the hub airport. When the government can adjust the level of subsidy after liberalizing the hub airport slots, the subsidy could be excessive, if the government emphasizes too much on airport traffic recovery. This would, however, harm the overall social welfare.     

Is spatial dispersal the dominant trend in air transport development? A global analysis for 2006–2015

The economic performance of a city or region is considered to be intertwined with its air travel capability. It is thus important for planners and stakeholders to understand the changes in the global aviation network. This study investigates the global aviation network, taking 10 years worth's OAG data from the years 2006–2015 and examines whether a spatial dispersal trend dominates the development of the aviation industry. It considers the aviation network at the airport level, and the airport–city level, which may consist of one or more airports. After clarification of the various definitions of concentration, we find that there appears a trend toward a dispersal pattern in the global aviation network at the airport level. On the other hand, there appears a slight concentration at the airport–city level. Besides, there have been some major capacity expansions at airports in the Middle East and East Asia, while the capacities of some traditional hubs in Europe and North America have become increasingly constrained since the 2008 global financial crisis. Furthermore, our study provides further observations consistent with the phenomenon of bypassing of traditional hubs, especially mega-hubs. Competition for passengers among hubs and secondary airports, especially in multi-airport cities, is discussed.     

Effects of competition and policy changes on Chinese airport productivity: An empirical investigation

This paper investigates the influence of competition and aviation policy reform (for example, the airport localization program and listing airports on stock markets) in China on the efficiency of Chinese airports. By using Data Envelopment Analysis, we estimate both the productivity level and its growth for 25 sample Chinese airports. After controlling for hub status and other airports' characteristics, we find that: (i) publicly listed airports are significantly more efficient than non-listed airports; (ii) airports with more competition are more efficient than their counterparts; (iii) the airports' efficiency and the technical progress are positively correlated with the airport localization program; and (iv) the impacts of open-skies agreements and airline mergers on the airports' efficiency are statistically insignificant.     

A comparative study of airport connectivity in China,Europe and US: Which network provides the best service to passengers?

This paper investigates the connectivity of the airport networks in China, Europe and US. Our aim is to analyze which network is most beneficial to final passengers in terms of travel time and which of the network features lead to such a result. A time-dependent minimum path approach is employed to calculate the minimum travel time between each pair of airports in the three networks, inclusive of flight times and waiting times in intermediate airports. We evaluate each fastest indirect connection in terms of waiting times and routing factors to consider the effect of the hubs’ coordination and locations. The Chinese network provides the quickest travels for passengers, but this performance is explained by a small number of airports per inhabitant. The US network is the most coordinated when considering indirect connections. The EU network provides the most homogeneous level of service when comparing airports of different sizes.     

The opening of direct flights across the Taiwan Strait: the impact on the global role of Taiwan’s international airport

Scheduled direct flights between Taiwan and Mainland China were halted for six decades and restarted in December 2008. The Taiwan’s government has a policy of developing Taoyuan International Airport (TPE), the major international airport in Taiwan, as one of main hubs in East Asia, based on the airport’s access to Mainland China. To assess whether the airport is progressing toward meeting the set expectation, this study evaluates the changes in airline networks of the TPE after the opening of direct flights across the Taiwan Strait. The time-dependent earliest arrival time algorithm is applied to global flights in 2004, 2008, and 2012. Empirical evidence demonstrates that providing direct flights across the Taiwan Strait has significantly increased accessibility from TPE to airports in China, but did not improve the centrality of TPE. Additionally, the transfer dependency of TPE on other airports is increasing significantly. This result was based on two major reasons: the first involves the Chinese government’s refusal to allow Chinese citizens to use airports in Taiwan as transfer points to and from other countries and the second reflects the competitiveness among airports and airlines in the region. The key finding is that political exclusion of airline use by external governments via travel regulations adversely influences the development of an airport as a global hub.     

What hurts the dominant airlines at hub airports?

This paper estimates a frequency equation to explain the determinants of network airline service levels at their hub airports. Drawing on European data for 2002–2013, we find that network airlines reduce frequencies when the share of low-cost airlines increases both on the route and at the hub airport. On the contrary, frequency choices of network airlines are not affected by competition from low-cost airlines operating in nearby secondary airports. We also find some evidence that mergers in Europe may result in a re-organization of the route structure in favor of the hubs of the larger airline.     

Operational performance evaluation of international major airports: An application of data envelopment analysis

This paper uses data envelopment analysis to assess the operational performance of 20 major airports around the world. It is found that the form of ownership and the size of an airport are not apparently correlated with operational performance of airports. In contrast, the existence of a hub airport, the location of the airport, and the economic growth rate of the country in which the airport is located are all related to the operational performance of airports. The 20 airports are put into four groups according to their efficiency values.     

Estimating the sensitivity of small airport catchments to competition from larger airports: A case study in Indiana

An accurate estimation of airport catchment area enables airlines and airport operators to make informed decisions and to target potential markets precisely. This study uses the state of Indiana as a case study to estimate traffic leakage from the local airport, Indianapolis International Airport (IND), to two large hub airports in Illinois, the neighboring state of Indiana, namely Chicago O'Hare International Airport (ORD) and Chicago Midway International Airport (MDW). By using a decision making model that considers flying cost and access cost, this study simulates from local passengers' perspective which origin airport delivers the most cost effective flight itinerary. Using the top 20 routes of IND in 2018 as model inputs, the catchment area of two Chicago based airports in Indiana with variable coverage is plotted for different traveling scenarios. The analysis shows that an airport catchment area is sensitive to location, service level and traffic volume of competing airports nearby, as well as purpose of travel (business or leisure), number of travelers in a group (single, couple, family or multiple), length of trip, destination (domestic or international), preference of airlines (network carrier or budget carrier), and frequent flyer program status (premier member or general member). These findings could be valuable to all three aforementioned airports as well as airlines serving these airports when allocating operational and marketing resources. More importantly, this study creates a generic model that could be used by virtually any airport to estimate scenario-based catchment area using readily available itinerary and spatial data without resorting to expensive passenger surveys.     

Substitution and complementarity in aviation: airports vs airlines

In this paper a model concerning substitution and complementarity on the linkage between airport facilities and airlines from the viewpoint of pricing policy is formulated. This model is used to analyze whether airport pricing policies, e.g. to ensure cost recovery, are compatible with competition for transfer passengers. It is found that airports with a high volume of demand can pursue cost recovery and still be the most preferred hub. Airports with a low level of demand will not be the preferred hub, even if the larger airport charges higher taxes to recover costs.     

Japan's capital Tôkyô and its airports: problems and prospects from subnational and supranational perspectives

This paper deals with air passenger traffic and airport competition in Japan and East and Southeast Asia. The focus is on the airports serving Tôkyô, and the question whether they will be able to meet the future transport needs of a ‘global city’. The concentration of the paper is on two topics: an analysis of the position of the capital region airports within the Japanese airport hierarchy and an examination of the competition between Tôkyô and the major metropolitan airports in East and Southeast Asia. The paper provides insights into the basic problems and perspectives of Japanese airport policies, the current conflicts concerning the goals and strategies of airport development in Tôkyô and the complex interests of key actors.     

A comparison of indirect connectivity in Chinese airport hubs: 2010 vs. 2015

Airport hubs’ indirect connectivity is important for any aviation network. Indirect connectivity describes the capacity of airport hubs to provide indirect connections over the airline network. As the Chinese aviation industry has experienced development, this paper offers a comparative analysis of indirect connectivity for Chinese airport hubs between 2010 and 2015. We investigate wave-system structures, weighted indirect connectivity (WIC) and indirect connections of the top ten airport hubs in China. In the spatial analysis, this paper surveys the spatial patterns of indirect connections at four important airport hubs. Beijing-Capital airport has strong indirect connectivity worldwide. Pudong and Hongqiao airports worked together to maximize the spatial coverage of Shanghai. Guangzhou-Baiyun airport has sufficient indirect connections across southern China, and it intends to expand its spatial influence into northern cities.     

Statistical modelling of runway incursion occurences in the United States

Runway incursions are an important aviation safety concern; between 2002 and 2015 there were 16,785 runway incursions at United States airports ranging in size from small general aviation (GA) to large commercial airline hubs. When examining airports with the 50 highest incursion count over the past 5 years, the predominant categories were large hubs, which accounted for 21 airports and general aviation (GA) airports which accounted for 16 airports. In June 2015, the Federal Aviation Administration (FAA) announced the Runway Incursion Mitigation (RIM) program to identify airport risk factors that might contribute to a runway incursion and develop strategies to help airport stakeholders mitigate those risks. Different size airports serve different aircraft fleets, serve different operating volumes, and have different resources available (both funds and technologies) for incursion mitigation. Therefore, it is valuable to determine the correlating factors that affect incursions at different size airports. This paper uses econometrics based modelling techniques to identify statistically significant factors in data provided by the (FAA) public web sites on runway incursions. The model identified statistically significant variables that correlate with incursions, based on severity, for airports categories defined by the National Plan of Integrated Airport Systems (NPIAS).The model results indicate that operational incidents (OI) are more likely at large hub airports. In contrast, at GA/non-hub airports, pilot deviations (PD) were significant for less severe incursions (severity C and D). Only one variable, “number of years since 2002”, was found to be significant for all the three airport categories; this variable was correlated with severity A incursions and indicated a statistically significant reduction in severity A incursions, despite an overall 80% increase in incursions between 2002 and 2015.     

Supply-and-demand models for exploring relationships between smaller airports and neighboring hub airports in the U.S.

Airport passenger leakage is the phenomenon of air passengers choosing to travel longer distances to access more extensive air services offered by airlines at an out-of-region hub (or, substitute) airport, instead of using their local airports. Airport leakage can cause further reduction in services offered by airlines at a local airport, thereby causing even further leakage, and so on, which can significantly impact an airport's role in the growth of the local economy. This paper explores the geographic and operational attributes of local-and-substitute airport pairs in the United States, explicitly accounting for the interactive feedback relationship between passenger volumes and air service characteristics that contribute to the onset, persistence, and exacerbation of airport passenger leakage. A two-stage least squares regression model of air passenger demand at small- and medium-sized airports is first presented, where local passengers may travel by vehicle to larger, out-of-region hub airports. The results confirm that airfare and passenger volume relationships exist between the local and substitute airport pairs included in the dataset, and that lower airfares at the substitute airport have a greater impact on airport choices made by larger travel groups. They also suggest the existence of positive feedback in that if an airport attracts increasingly smaller passenger numbers with fewer air services and fewer air services with fewer passengers, without external intervention airport leakage impacts may be irreversible and exacerbate over time. A conceptual market share equilibrium analysis is used to illustrate the mechanisms of a direct two-way feedback relationship between passenger volumes at a local airport and air service characteristics at both the local and substitute airports. With data, this quantitative framework can help guide airport planners in further assessing and verifying suspected passenger leakage issues at their airport. The results suggest that without intervention, airport leakage impacts may be difficult to reverse; further exacerbating the trend are technological advancements that make driving cheaper and easier (connected and autonomous vehicles). However, the results can also guide planners in choosing the types and degrees of infrastructure investments and airline incentives that may be used to expand or retain air services to attract passengers.     

The determinants of aeronautical charges of U.S. airports: A spatial analysis

Using U.S. airport data from 2009 through 2016, this study examines the determinants of aeronautical charges of large and medium hub airports and accounts for the spatial dependence of neighboring airports in a spatial panel regression model. Our results show that U.S. airports' aeronautical charges are spatially dependent, and neighboring airport charges are positively correlated, implying that U.S. airports are in price competition with each other even though they are government-owned infrastructure. Additionally, we find evidence of airport cost recovery through non-aeronautical revenues. This may be indicative of the airport's cross-subsidizing aeronautical operations with non-aeronautical revenues. In addition, we found the airports that share revenues with airlines charge lower aeronautical fees than those that do not share revenues. We also found that more congested airports charge higher aeronautical fees.     

Entry patterns of low-cost carriers in Hong Kong and implications to the regional market

This study aims to provide a better understanding of Asia's low-cost carriers (LCCs) by empirically analysing their route entry patterns in Hong Kong. Two alternative models have been tested, namely a standard probit model and a generalized least squares estimation. Consistent findings from the two models suggest that LCCs in Asia have a preference for large markets with big populations, high incomes and high traffic volume. On the other hand, the dominance of incumbent full service airlines (FSAs), fierce route competition and the lack of secondary airports are not critical to the growth of LCCs. However, government regulations and airport access are main impediment factors. Despite the adoption of long-distance low-cost models by the region's airlines, geographic distance still plays an important role in LCCs' entry decisions. For the growth of low-cost travel and associated benefits in the tourism industry and overall economy, it is important for governments in the region to liberalize aviation markets, provide sufficient airport capacity, and promote efficient allocation of airport slots.     

Estimating airport efficiency of New Zealand airports

New Zealand's airport industry has experienced substantial growth over recent years, but few studies have analysed the operational efficiency of New Zealand airports. This paper aims to extend the study of Francis and Lyon (2007) by exploring the efficiency and productivity changes of New Zealand's major airports between 2010 and 2012, using slacks-based measure (SBM) model and the Malmquist productivity index (MPI). The findings suggested that the majority of New Zealand airports increased efficiency and productivity during the period under investigation, but should decrease scale of operations in order to operate at their most productive size. Decomposition of the MPI showed that most New Zealand airports experienced gains in efficiency but, in terms of technology, they have regressed. Four significant factors (i.e. airport hub status, airport operating hours, airport ownership, and the Rugby World Cup 2011) were identified by the Simar–Wilson bootstrapping regression analysis as explaining variations in airport efficiency. Importantly, the significant effect of the Rugby World Cup 2011 (a major sport tournament) on New Zealand's air transport demand and airports' efficiency has been demonstrated in this research.     

Connectivity levels and the competitive position of Spanish airports and Iberia’s network rationalization strategy, 2001-2007

This paper examines the connectivity of the Spanish airport system between 2001 and 2007. Over the period, network carriers considerably strengthened the connectivity between Spanish airports and major European hubs. Although OneWorld is still the dominant alliance in Spain, SkyTeam and Star achieved a larger connectivity share through the growth of indirect services provided through their northern European hubs. In addition, the network rationalization strategy of Iberia and its decision to concentrate operations at Madrid-Barajas had important implications for the connectivity of other Spanish airports. Low-cost carriers have boosted direct connectivity from secondary Spanish airports.     

A border effect in airport choice: Evidence from Western Europe

Some commentators suggest that air travelers are reluctant to use a foreign airport as a point of departure for their journey. Such reluctance has implications for marketing and policy measures, especially in border regions and in smaller countries, such as the Netherlands and Belgium. In this study, we tested this supposed barrier effect of national borders with empirical data.Our research is based on a subsample (n = 4083) of a large-scale survey among German, Dutch and Belgian adults. Participants were asked about their most recent flight, preferences regarding long-distance travel, and general travel behavior. The survey information about the most recent trip was linked to the Official Airline Guide with data from 18 airports in the Western European region. On average, however, only 10 airports offered a direct connection to the destination of the respondents’ most recent flight. A conditional logit model with varying choice sets allowed us to model only the relevant airports per respondent, while accounting for other known determinants in airport choice, such as travel time, airline competition, and number of available flights.The model results confirmed our expectations: people strongly prefer a departure airport situated in their own country. The model predictions suggest that without the border effect the share of people in our sample departing abroad would rise from 7.7% to 18.7%. Experience (with multiple airports as a point of departure) mitigates the barrier effect of the border. The performance of our model is good: the median probabilitie for the chosen alternative is 68%. Our research stresses the importance of the barrier effect of borders in airport choice: even when traveling across borders in the European sky, national borders remain important.