China's economic rise and its implications for logistics: The Australian case

China's economic rise has had a significant impact on the global economy in terms of trade patterns and orientation. Much has been done to quantify the impact of China's economic rise on international trade, but very little has been done to assess its implications for logistics. In this paper, we examine the effects of China's continued economic rise on the Australian logistics sector. Unlike previous work that used partial equilibrium models, we use a computable general equilibrium (CGE) model. This allows us to capture the direct and indirect ramifications of trade and other economic developments associated with China's economic rise. The results are mixed between sub-sectors, but overall the Australian logistics sector would potentially benefit significantly from China's continued economic rise. However, these potential benefits will hinge partly on the Australian logistics sector's ability to respond to these opportunities.     

Regional disparity analysis of Chinese freight transport CO2 emissions from 1990 to 2007: Driving forces and policy challenges

Freight transportation and logistics act as the artery of the national economy. With a booming economy, China's freight transport sector has experienced dramatic growth in recent decades and has become a key driving force of China's CO₂ emissions. Therefore, effective and efficient mitigation policies in the freight transport sector are critical for China to promote CO₂ emission mitigation strategies. In contrast to other countries, China's challenge stems not only from technical issues but also from regional socioeconomic disparities, which in turn require the implementation of locally oriented policies. For this reason, an analysis based on regional disparity is of vital importance for future policy making. However, to date, there have been few pertinent studies on the freight transportation sector. To fill this gap, this paper aims to conduct an in-depth comparative study of CO₂ emission characteristics and the driving forces in the freight transport sector in China's three regions (covering 31 provinces) from 1990 to 2007. The log mean Divisia index method (LMDI) is employed to analyse the driving forces, and the Gini coefficient is used to investigate regional inequity. Additionally, regional disparity is explored in-depth based on the analytical results and practical concerns. The results highlight that economic structure is a key driving force for emissions change and reveal significant regional disparity and inequity in freight transport emissions. The results are critical for future policy-making to address regional concerns.     

The economics of Africa's floriculture air-cargo supply chain

This article examines the economics of Africa's emerging air cargo supply chains, taking floriculture as a case study. Floriculture is an important employer, and earner of foreign exchange for several regions of central/southern and eastern Africa including more recently Ethiopia. Air transportation often plays a critical role when the supply-chain involves high-value, non-durable, relatively light-weight, and compact consignments such as flowers, and geographically when regions are difficult to access by other trunk modes. The success of air cargo chains, however, depend as much on the quality of surface modes serving various “last mile” access and egress functions, as well as efficient nodal interchange points and the availability of suitable airport and airline capacity. The last, because of the important role of belly-hold space, includes consideration of passenger as well as cargo specific services. To meet the needs of Africa's floriculture sector, a variety of supply-chain models have emerged that embrace air and surface links, as well as storage at various points in the chain. The paper considers the nature of these chains, the reason d'être for their structures, and their limitations.     

The logistics of air cargo co-mingling at Ted Stevens Anchorage International Airport

This paper discusses the current efforts to bring further deregulation to international air cargo operations. This is done in the context of a special set of operations, known as co-mingling, which is allowed at Ted Stevens Anchorage International Airport. Co-mingling involves air cargo being transferred to another airplane that may or may not be in the initiating carrier's fleet. After the transfer is completed the cargo proceeds based on the second plane's pre-determined routing. This paper sets co-mingling in context with co-terminalization and cabotage operations by outlining the limitations of what the United States Department of Transportation actually mandated. While the operations are unique to the State of Alaska they do set a precedent for unilateral reform of international air cargo operations on the part of the US government. An economic appraisal of co-mingling operations is provided and is shown to be a source of efficiency gains for the US air cargo market.     

Wellness Tourism in China: Resources,Development and Marketing

China's natural and cultural resources are the foremost offerings of the country's wellness tourism sector. Although wellness tourism in China is in its infancy, it can offer new opportunities in, and strengthen the overall competitiveness of, China's tourism industry. To achieve this, the assessment and development of wellness tourism resources in China are required. This study examines the potential for wellness tourism development in terms of resources and promotion from the point of view of wellness tourism experts. It surveys professionals working in tourism, health and education in China. The results reveal that environmental assets, including fresh air, clean water and natural features, are considered the most important attributes for the development of wellness tourism in China and that the promotion of wellness tourism can best be achieved through advertising in mass media, governmental support and organizing new regional events. The study implications and future research directions are discussed. Copyright © 2012 John Wiley & Sons, Ltd.     

Measuring imported case risk of COVID-19 from inbound international flights --- A case study on China

With COVID-19 spreading around the world, many countries are exposed to the imported case risk from inbound international flights. Several governments issued restrictions on inbound flights to mitigate such risk. But with the pandemic controlled in many countries, some decide to reopen the economy by relaxing the international air travel bans. As the virus has still been prevailing in many regions, this relaxation raises the alarm to import overseas cases and results in the revival of local pandemic. This study proposes a risk index to measure one country's imported case risk from inbound international flights. The index combines both daily dynamic international air connectivity data and the updated global COVID-19 data. It can measure the risk at the country, province and even specific route level. The proposed index was applied to China, which is the first country to experience and control COVID-19 pandemic while later becoming exposed to high imported case risk after the epidemic centers switched to Europe and the US afterward. The calculated risk indexes for each Chinese province or region show both spatial and temporal patterns from January to April 2020. It is found that China's strict restriction on inbound flights since March 26 was very effective to cut the imported case risk by half than doing nothing. But the overall index level kept rising because of the deteriorating pandemic conditions around the world. Hong Kong and Taiwan are the regions facing the highest imported case risk due to their superior international air connectivity and looser restriction on inbound flights. Shandong Province had the highest risk in February and early March due to its well-developed air connectivity with South Korea and Japan when the pandemic peaked in these two countries. Since mid-March, the imported case risk from Europe and the US dramatically increased. Last, we discuss policy implications for the relevant stakeholders to use our index to dynamically adjust the international air travel restrictions. This risk index can also be applied to other contexts and countries to relax restrictions on particular low-risk routes while still restricting the high-risk ones. This would balance the essential air travels need and the requirement to minimize the imported case risk.     

Reform and opening up: Way to the sustainable and harmonious development of air transport in China

The global air transport has been undergoing wings of change in the past 30 years as a result of deregulation and liberalisation. During this period, the air transport in China has also been undergoing significant transformation and rapid growth following the reform and opening up policy of China since 1978, the same year when the USA enacted the Airline Deregulation Act. Although China has become the world's second largest air transport system since 2006, few studies have analyzed the growth pattern and policy evolution of this important market. This paper critically reviews the development of the air transport policy of China and examines the challenges in the 21st Century. Such an investigation leads to the following conclusions: (A) the reform of China's civil aviation has been based on the national policy in socialist market economy as well as the liberalisation of air transport; (B) the substantial growth in the last three decades has been driven by economic growth as well as the transformation of China's transport industry. (C) In order to sustain the rapid and continuous development in civil aviation, China should continue to implement scientific management and development, deepen the reform and opening up and continue liberalisation.     

A model of air cargo liberalization: passenger vs. all-cargo carriers

This paper employs a multi-market oligopoly model to examine the effect of cargo liberalization on competition between all-cargo carriers and mixed passenger/cargo carriers. We find that if home carriers engage in the joint production of cargo and passenger services, whereas foreign carriers produce the two outputs separately, then unilateral cargo liberalization by the home country will reduce home firm profits and increase foreign profits, and raise air fares for passenger travel when foreign competition in the passenger sector is limited. Our analysis suggests that the separation of air cargo and passenger rights might be fraught with difficulty in Asia due to the characteristics of its air cargo market, in which most passenger carriers have substantial cargo businesses and operate “combi” fleets.     

Are tourist arrivals stationary? Evidence from BRIC countries

In this study, we attempted to analyse whether the shocks to tourist arrivals in BRIC countries are temporary or permanent, by analysing the stationary characteristics of the data in panel framework. We found that, for Brazil, Russia and India, tourist arrivals are stationary process, whereas for China it is non-stationary process. This implies that shocks to the tourism sector in Brazil, Russia and India have only temporary effect, whereas the shocks to China's tourism sector have permanent effects.     

Estimating the impact of COVID-19 on air travel in the medium and long term using neural network and Monte Carlo simulation

The COVID-19 pandemic has had a substantial impact on the airline industry. Air travel in the United States declined in 2020 with significantly lower domestic and international flights. The dynamic change and uncertainty in the trend of COVID-19 have made it difficult to predict future air travel. This paper aims at developing and testing neural network models that predict domestic and international air travel in the medium and long term based on residents' daily trips by distance, economic condition, COVID-19 severity, and travel restrictions. Data in the United States from various sources were used to train and validate the neural network models, and Monte Carlo simulations were constructed to predict air travel under uncertainty of the pandemic and economic growth. The results show that weekly economic index (WEI) is the most important predictor for air travel. Additionally, daily trips by distance play a more important role in the prediction of domestic air travel than the international one, while travel restrictions seem to have an impact on both. Sensitivity analysis results for four different scenarios indicate that air travel in the future is more sensitive to the change in WEI than the changes in COVID-19 variables. Additionally, even in the best-case scenario, when the pandemic is over and the economy is back to normal, it still takes several years for air travel to return to normal, as before the pandemic. The findings have significant contributions to the literature in COVID-19's impact on air transportation and air travel prediction.     

Network development of low-cost carriers in China's domestic market

This paper examines China's LCC market and assesses the network development patterns from a geographical perspective. Overall, a nationwide LCC network has been formed with each individual LCC focusing on their own markets with limited overlap to avoid cut-throat competition. Spring Airlines has developed an advanced network supported by its core bases including Shanghai in East China, Shijiazhuang in North China, Shenyang in Northeast China and Shenzhen in South China. China United has developed a network radiating from Beijing. West Air and Lucky Air seem to be developing a hub-and-spoke network that contributes to the tourism industry in West China. The LCC network is affected by seasonal variations, especially for the routes to tourism destinations such as Haikou, Sanya and Xiamen. Hub cities, however, experience less seasonal impact. This research also finds that routes between 600 and 1800 km account for a large proportion of the LCC markets. Aviation policy, local government's subsidization and the expansion of the high-speed rail network have helped shape the landscape of China's LCC sector.     

Air cargo revenue management under buy-back policy

Few researches address the application of financial “buy-back” concept in the air cargo revenue management. This paper examines the air cargo booking and execution procedure to measure the applicability of the buy-back policy in the air cargo revenue. By applying buy-back policy during the period of order release and order execution, a revenue model is built which incorporates Hellermann's capacity option model into the Black-Scholes pricing model. The results demonstrated that buy-back policy not only answers the questions of whether to buy-back, when to buy-back and how much to buy-back, but also increases the revenues of both asset provider and intermediary. Further study is extended in the overbooking and partial buy-back scenarios. The buy-back policy showed better performance in these two scenarios compared with current approach.     

Government support to airlines in the aftermath of the COVID-19 pandemic

This paper assesses government support measures to the air transport sector following the outbreak of the coronavirus disease (COVID-19) pandemic from two points of view. First, it explores the factors that shape governments’ willingness to support airlines. This is followed by a discussion on the various types of support that may be provided and how country-specific parameters influence the choice of measures. Second, it analyses the implications of government support in three dimensions relevant to air transport policy: competition and liberalisation, airline ownership and control, and environmental sustainability. The analysis suggests that most governments give a high priority to maintaining air transport connectivity in order to protect economic activity and jobs, in aviation itself and in related sectors such as tourism. The trade-off between ensuring connectivity and maintaining competition after the COVID-19 pandemic is a challenge with several political and economic dimensions. The re-orientation of public policy in the aftermath of the pandemic may limit the relative importance of the policy priorities that shaped the evolution of the air transport sector before the crisis, especially those related to climate change and the environment. The role of government and public authorities at all levels – especially the type and duration of measures affecting transport operations – will be crucial for the future development of the aviation industry.     

Istanbul Airport (IGA) and quest of best competitive strategy for air cargo carriers in new competition environment: A fuzzy multi-criteria approach

Our paper determines the best competitive strategy that can be implemented by existing and potential air cargo carriers in the Turkish Air Cargo Industry with the operationalization of Istanbul Airport (IGA) and reveals the competitiveness level of the industry for four bases. We look at the competitiveness levels by analyzing the competitive environment of the industry nationally and internationally both before and post IGA (estimated). We use fuzzy TOPSIS (FTOPSIS) based on the Fuzzy AHP (FAHP) to handle vagueness, which is inherent in the nature of new competition conditions integrating the framework of Porter's five forces analysis. In our study, we use the five forces as our main criteria (with a total of 19 sub-criteria) and the competitive strategies as our alternatives. Our results reveal that the cost-focused strategy is the best competitive strategy that can be implemented by existing and potential carriers in the industry. Another significant result underscores the fact that IGA increases the competitiveness level of the Turkish Air Cargo Industry both nationally and internationally to a fairly high level. Also, the threat of potential competitors is first among the five forces in the industry's new conditions. Our study fills the gap in the literature on the effects of major structural changes in an air cargo industry on the competition among carriers.     

Evolution trends of the network structure of Spring Airlines in China: A temporal and spatial analysis

Both the sustainable development of China's economy and the deregulation of the China air transport market have acted as a spur for the halting development of low-cost carriers (LCCs) in China. To analyze the development trends of LCCs' network in China, this paper took Spring Airlines, the only LCC in China as an example. First, the winter flight plans of Spring Airlines from 2005 to 2013 were collected. Secondly, the development trends of air transport network of Spring Airlines were explored with methods of mathematical statistics and social network analysis. Additionally, the development trends were analyzed from the levels of navigable cities, air routes and air transport networks. The results show that although Spring Airlines actively launched air routes between tourist cities with non-class I airports, its network has been transformed from a star structure into a complex one with multi-hubs. The development process of the Spring Airlines network can be separated into three stages. In addition, the problems and evolution trends of its network are discussed further.     

The effects on tourism of airfare subsidies for residents: The key role of packaging strategies

Airfare subsidies for residents in remote tourism destinations can negatively affect the local tourism industry. In this paper, we study the effects of airfare subsidies on a remote region's tourism sector with a theoretical model of air transport and tourism service transactions involving a remote tourism region, the rest of the country and the rest of the world. We show that firms' widespread packaging strategies in tourism markets, i.e. selling tourism packages composed of air transport and tourism services at a single price, acts as hidden price discrimination, since the packages are cheaper than buying the services separately. Thus, in the presence of higher airfares due to a subsidy, the tourists not entitled to the subsidy have incentives to switch to a cheaper alternative, namely tourism packages. Consequently, a packaging strategy can lessen or even avoid the negative impacts of the subsidy on a region's tourism sector.     

Analyzing air cargo flows of international routes: an empirical study of Taiwan Taoyuan International Airport

Air cargo demand is an important aspect of the operation and planning of private and public agencies responsible for airports. While most existing studies in this field include only geo-economic characteristics of airports and their hinterlands as explanatory variables, this study develops a gravity model of air cargo flows by trying to incorporate more factors that might influence international air cargo flows of an airport. The model is developed based on the panel data of air cargo services on scheduled routes at Taiwan Taoyuan International Airport during the years 2004-2007. The results indicate that population, air freight rate and three dummy variables, including the regional economic bloc of the “Chinese Circle”(an informal partnership between Hong Kong, Macao, Taiwan and mainland China), the Open Sky Agreements and long established colonial links, are key determinants of international air cargo flows from/to Taiwan. These results suggest a wider array of factors needs to be considered in policy.     

The growing influence of low-cost carriers in Northeast Asia and its implications for a regional single aviation market

This paper provides an overview of the development of the low-cost carrier (LCC) sector in China, Japan, and South Korea. It is the first paper that documents LCC contributions to the passenger traffic and cheaper fares in Northeast Asia (NEA)'s intra-markets. We argue that a single aviation market can facilitate the growth of the LCC sector, which in turn will make a significant contribution to the NEA connectivity, mobility, and integration. In addition, with a single aviation market, NEA countries can adopt a proactive, unified approach in negotiating air transport agreements with the major aviation partners to maximize the interests of this region as a whole, which will further provide valuable growth opportunities for the LCCs.     

The Northeast Asian air transport network: is there a possibility of creating Open Skies in the region?

Unlike in the US and the European Union aviation markets, the Northeast Asian markets are still very fragmented. As a result, the passenger and air freight collection/distribution systems in the region are very inefficiently organized. The primary reason for the inefficient and inconvenient air carrier networks in the region is the restrictive bilateral air services agreements between Asian countries. This paper documents the nature and extent of the restrictive bilateral agreements among China, Japan and Korea, evaluates several bilateral or trilateral approaches for liberalizing the regional air transport markets, and makes a proposal which would increase substantially the probability of achieving an Open Skies market in the region. In particular, the current approach to liberalize the bilateral air services agreements among China, Korea and Japan has limitations even in the medium term because of China's and, to a less extent, Japan's reluctance to remove price and capacity restrictions. Therefore, as an institutional solution we propose to create bi-national (for bilateral negotiations) or tri-national (for trilateral negotiations) ‘Trade and Transport Facilitation Committees’, that can pursue a practical avenue to tie air transport negotiations with those of other goods and services trade.     

Criteria for services of air cargo logistics providers: How do they relate to client satisfaction?

This study investigates the factors that influence client satisfaction with logistics outsourcing, taking into account the client's subjective attitude towards service criteria for air cargo logistics providers. We define the construct of service criteria of air cargo logistics providers, provide an empirical validation of the construct, develop scales for service criteria and client satisfaction with desirable psychometric properties, and explore theoretical and practical applications. Empirical evidences support five key service criteria factors of importance; delivery value, knowledge innovation value, service value-added, information value, and performance satisfaction value. Four key client satisfaction factors are reliability, agility, customization, and flexibility. A significant relationship between the service criteria of air cargo logistics providers and client satisfaction is also identified.