Influential factors on Chinese airlines’ profitability and forecasting methods

We establish profit models to predict the performance of airlines in the short term using the quarterly profit data collected on the three largest airlines in China together with additional recent historical data on external influencing factors. In particular, we propose the application of the LASSO estimation method to this problem and we compare its performance with a suite of other more modern state-of-the-art approaches including ridge regression, support vector regression, tree regression and neural networks. It is shown that LASSO generally outperforms the other approaches in this study. We concluded a number of findings on the oil price and other influential factors on Chinese airline profitability.     

The role of turboprops in China’s growing aviation system

The Chinese aviation system is in a period of rapid growth, with significant growth in second tier and emerging cities. Lower density cities could be well served by regional aircraft, either regional jets or turboprops, which offer different qualities and a different future for Chinese aviation. Turboprops offer a high level of fuel efficiency compared with regional jets which may improve the cost economics for carriers and reduce the air quality and climate impacts of a growing aviation system in a region where air quality and greenhouse gas emissions are a serious concern. However, regional jets are known for their superior quality of service and faster travel speeds. We begin with a spatial analysis of existing Chinese short-haul aviation networks and find that turboprops are deployed in limited number and are dispersed throughout the country. Their limited use, however, is not because of their cost economics. For the existing regional jet network we estimate the trade space of fuel and time for the replacement of regional jets with turboprops and find that all regional jet routes in China would generate savings if replaced with turboprops. We next establish future short-haul aviation routes between new and emerging airports and estimate the likelihood that a turboprop will be used. The finding that the most viable turboprop markets are spatially dispersed through the country validates considering turboprop investment at the state-level as a component of the established Chinese aviation sustainability initiative.     

Impacts of COVID-19 on aircraft usage and fuel consumption: A case study on four Chinese international airports

COVID-19 pandemic starting in early 2020 has greatly impacted human and industrial activities. Air transport in China shrank abruptly in February 2020, following a year-long gradual recovery. The airline companies reacted to this unprecedented event by dramatically reducing the flight volume and rearranging the aircraft types. As the first major economy that successfully controls the spread of COVID-19, China can provide a unique opportunity to quantify the medium-long impacts on the air transport industry. To quantify the corresponding changes and to elucidate the effects of COVID-19 in the wake of two major outbreaks centered in Wuhan and Beijing, we analyze twelve flight routes formed by four selected airports, using the Automatic Dependent Surveillance-Broadcast (ADS-B) data in 2019 and 2020. Our results show that the total flight volume in 2020 reduced to 67.8% of 2019 in China. The recovering time of flight volume was about 2–6 months, dependent on the severity. In order to unwind the severe challenge, airlines mainly relied on aircraft B738 and A321 between February and June in 2020 because the fuel consumption per seat of these two aircraft types is the lowest. Besides, fuel consumption and aircraft emissions are calculated according to the Base of Aircraft Data (BADA) and the International Civil Aviation Organization's Engine Emissions Databank (ICAO's EEDB). At the end of 2020, the ratios of daily fuel consumption and aircraft emissions of 2020 to 2019 rebounded to about 0.875, suggesting the domestic commercial flights were nearly fully recovered. Our results may provide practical guidance and meaningful expectation for commercial aircraft management for other countries.     

Long-term forecasting of fuel demand at theater entry points

Managing the distribution of fuel in theater requires Army fuel planners to forecast demand at the strategic level to ensure that fuel will be in the right place, at the right time, and in the amounts needed. This work presents a simulation approach to forecasting that accounts for the structure of the supply chain network when aggregating the demand of war fighters across the theater over the forecasting horizon. The resulting empirical distribution of demand at the theater entry point enables planners to identify forecast characteristics that impact their planning process, including the amplitudes and temporal positions of peaks in demand, and the estimated lead time to the point of use. Experimentation indicates that the forecasts are sensitive to the pattern of war fighter demand, the precise structure of the in-theater supply chain network, and the constraints and uncertainty present in the network, all of which are critical planning considerations.     

Carbon and energy prices under uncertainty: A theoretical analysis of fuel switching with heterogenous power plants

European power producers have a major influence on the EU ETS, given that both their CO₂ emissions and their EUA (European Union Allowance) allocations account for more than half of the total volumes of the scheme. Fuel switching is often considered as the main short-term abatement measure under the EU ETS. It consists in substituting combined cycle gas turbines (CCGTs) for hard-coal plants in power generation. Thereby coal plants run for shorter periods, and CO₂ emissions are reduced. This paper provides the first theoretical analysis of fuel switching, in a context where power plants involved are not equally efficient. We begin with a preliminary work using illustrative examples and sensitivity analyses, which enables us to observe how differences in the efficiency of power plants impact the cost of fuel switching, and how this is related to the level of switching effort. Based on this, we build a theoretical model taking into account the effect of differences in the efficiency of power plants involved in fuel switching. We also investigate the effect of the timing of fuel switching abatements, within the temporally defined environment of our dynamic model. Results demonstrate that the gas price and uncontrolled CO₂ emissions act together on the carbon price. We show that the influence of the gas price on the carbon price depends on the level of uncontrolled CO₂ emissions, due to heterogeneity of power plants that are used in the fuel switching process. Furthermore, we show that the time of occurrence of uncontrolled emissions matters so that shocks have a stronger impact when they occur in a period that is closed to the end of the phase.     

A choice experiment on fuel taxation and earmarking in Norway

Pigouvian taxes are efficient — but unpopular among voters — and hence often politically infeasible. Earmarking of revenues has been widely reported to increase public support for taxes, but earmarking is generally not the most efficient use of the revenues. This trade-off between efficiency and political feasibility is the motivation for our primary research objective: to quantify the effect of earmarking on support for fuel tax rises. Our secondary research objective is to investigate why earmarking increases support. Using data from a representative sample of the Norwegian voter population (N = 1147), we estimate models of voter preferences for fuel taxes using logistic regression models. Our results show that, in the absence of earmarking, the majority of voters would like to reduce fuel taxes, but earmarking the revenues for environmental measures has a substantial effect on voter support for fuel tax increases, garnering a majority for increases of up to 15% above present levels. Further analysis indicates that a prime reason why earmarking for environmental measures is popular is that it increases the perceived environmental effectiveness of the tax, and hence its legitimacy as an environmental rather than a fiscal policy instrument.     

The implications of fossil fuel supply constraints on climate change projections: A supply-side analysis

Climate projections are based on emission scenarios. The emission scenarios used by the IPCC and by mainstream climate scientists are largely derived from the predicted demand for fossil fuels, and in our view take insufficient consideration of the constrained emissions that are likely due to the depletion of these fuels. This paper, by contrast, takes a supply-side view of CO₂ emission, and generates two supply-driven emission scenarios based on a comprehensive investigation of likely long-term pathways of fossil fuel production drawn from peer-reviewed literature published since 2000. The potential rapid increases in the supply of the non-conventional fossil fuels are also investigated. Climate projections calculated in this paper indicate that the future atmospheric CO₂ concentration will not exceed 610 ppm in this century; and that the increase in global surface temperature will be lower than 2.6 °C compared to pre-industrial level even if there is a significant increase in the production of non-conventional fossil fuels. Our results indicate therefore that the IPCC’s climate projections overestimate the upper-bound of climate change. Furthermore, this paper shows that different production pathways of fossil fuels use, and different climate models, are the two main reasons for the significant differences in current literature on the topic.     

Should I advertise on the interstate?

The highway logo signing program has existed for over 20 years. Since its inception, most motorists have become accustomed to relying on these blue signs to provide information on services available at each highway exit. However, there is little, if any, literature that examines the program as an advertising source, and no formal literature that addresses the signing program from the perspective of the independent business owner. This paper provides service business owners with information about the highway logo signing program, and is directed toward independent owners who are considering the signing program as an advertising source. A five step process is described that owners can follow to first determine if the venue is viable, and then if the investment is value-added for them.     

An utility-based decision support sustainability model in slow steaming maritime operations

This paper analyses slow steaming sustainability initiatives and generalizes the traditional discrete cost-based decision support model into novel continuous utility-based models. Two models based on logarithmic and linear utility functions are developed for risk-averse and risk-neutral decision makers respectively. The models, considering fuel consumption, carbon emission, and on time delivery, are applied to a Trans-pacific trade service route. A sensitivity analysis is conducted on parameters of sailing distance, expected transit time, quantity, and emission policies. The model contributes to ship liners on the optimal speed decisions in continuous utility-based slow steaming operations.