Passenger reactions to market deregulation: First results from the experience of the Greek islands market

The move towards deregulated transport markets is generally expected to increase competition thus producing benefits for the passengers. This paper examines the effect of competition between of air and sea transport following deregulation within the Greek Aegean region. Comparison of market surveys conducted over three periods identifies how passengers respond to this process. Findings suggest that competition between modes is increasing, although the final form of the market remains to be seen.     

Mutual influence across routes using a common airport: The case of the domestic market in Japan

This paper empirically investigates the mutual influence of traffic volumes across routes serving the same airport. Regression analysis using the data on Japan's domestic air transport market reveals that an increase in passengers on a given route has a positive effect on the number of passengers on other routes that share an endpoint airport with the given route. This result implies that a change in policy for an airport is likely to influence routes that do not serve that airport as well as the routes that do.     

Boat or airplane? Passengers’ perceptions of transport services to islands. The example of the Greek domestic leisure market

Tourism is often the main economic activity of islands, making transport services vital. Recent research indicates that direct competition between air and sea transport tends to increase for the leisure market segment. This paper looks into the characteristics and perceptions of leisure passengers in an effort to identify the effect they have on modal choice. By examining the Greek Aegean region as a case study, the findings identify differences in passenger perceptions, which can influence modal choice and competition.     

Airline competition on the route between Amsterdam and London

Although liberalization in European air transport business was formally completed with the implementation of the third package of the EU, today the free market effects of abandoning the bilateral system are not yet very manifest. The experiences in the United States indicate that it can last for over a decade before more or less stable competitive positions are set according to liberalized market conditions. The Amsterdam-London route was among the first routes which was liberalized on a bilateral basis. The development of airline competition on this route gives a rather good insight in what might be expected on other European routes the following years. In the ATRG paper, emphasis is laid upon the following competition characteristics: the number of airlines serving the London routes; the frequency offered by these airlines; the average aircraft size; the air fares charged. Special attention is paid to the relative attractiveness of the various airports in the Londen Area. Also the entrance of start-up carriers that offer no frills, no thrills services is covered.     

Clustered airline flight scheduling: Evidence from airline deregulation in Korea

This paper explores the impacts of competition level on airline scheduling in the Korean domestic short-haul routes where a hub-and-spoke system is not the optimal air transport network strategy. The empirical findings using the Korean airline panel data for the period 2006–2010 suggest that competition leads to less differentiated departure flight times as expected from spatial competition theory. Unlike the previous study on the U.S airline industry, the degree of this tendency for less differentiation differs across the type of routes: the Jeju island routes (leisure type) and the inland routes (business type), in the deregulated period. Following the May 2008 Deregulation Act we find an increasingly clustered pattern of airline scheduling in the Jeju island routes where there have been competitive pressures associated with new low cost entrants. This recent evidence would imply that airline carriers strategically schedule departure flight times and allocate flights between routes as competition increases in the deregulated period.     

Air deregulation in China and its impact on airline competition 1994–2012

China’s air transportation has experienced rapid growth and major reforms in the past three decades, some of which have been partially successful and are still ongoing today. The paper aims to analyze China’s air deregulation experience over the last two decades and its impact on airline competition from a geographical perspective. After the establishment of the “Big Three” in 2002, the paper reveals that there has been a trade-off between the extent of deregulation and airline competition in China because the central government has tended to strengthen the “Big Three” rather than totally open the market to private and locally owned airlines. The paper uses each airline group as the basic unit of analysis and reveals that (1) the air market has been more concentrated in the “Big Three” as a result of the process of air deregulation; (2) airline competition in over two thirds of the airports and one half of the routes has increased in the last 18 years, but the core airports and trunk routes are chiefly dominated by the “Big Three”. The peripheral airports and thin routes have been operated by private and locally owned airlines; and (3) regionally, airline competition has occurred in most airports of the eastern region, and it is more intense than in the central and western regions. But even here, competition in the eastern region has however decreased in 1994–2012. The three main contributions of the paper are: (1) the use of two measures of competition in the airline market; (2) the analysis of the historical evolution of competition; and (3) an understanding the role of the geography of competition in the Chinese airline market.     

A Cournot model for analysing the effects of an open skies agreement

In the last decades there has been a gradual liberalisation of international air transport markets through the implementation of open skies agreements which seek the deregulation of the air transport industry and consequently the functioning of the market in a freer way. The objective of this work is to study the effects of an open skies agreement in order to understand if the airlines and the consumers will benefit after the market deregulation. With this purpose, we develop a Cournot model to compare the initial situation (without agreement) and the situation after the implementation of the open skies agreement.Based on the model developed we conclude that after market liberalisation the prices on international market segments where competition increases should decline, thus benefiting consumers. Regarding the incumbent airlines in the market, an open skies agreement should jeopardize the airlines that fail to operate new routes, leading to decreased profits.     

Economic influences on air transport in Vietnam 2006–2019

Vietnam has emerged from a long and complex post-colonial experience as a fast-growing economy now embedded in the complex network of economic linkages in the Asia-Pacific region. Those linkages involve trade, foreign direct investment, and tourism. Their underlying geography is reflected in the geography of Vietnam's air transport linkages. An early set of air connections with ASEAN neighbours, especially Singapore and Malaysia, are still significant, though routes to South Korea and China are now more important. Within the country, the colonial structure of Hanoi as a political capital, and Saigon (now Ho Chi Minh City) as a trading city, provided the framework for domestic air transport linkages. Here too the geography has shifted to include a set of smaller cities, especially those with tourism activities. The Hanoi-Ho Chi Minh City corridor is still dominant, and now ranks as one of the busiest domestic routes within the Asia-Pacific. These outcomes confirm the effect of economic development on air transport in Vietnam.     

Mapping causalities of airline dynamics in long-haul air transport markets

The introduction of low-cost air transport services to short-haul routes has significantly shaped the structure of this market segment. Recent research investigates and discusses the transferability of the low-cost carrier business model to long-haul routes and identifies respective challenges such as lower cost advantages over the competing full-service network business model. Our paper complements the existing research with a review of airline dynamics in long-haul air transport markets and the subsequent development of a causal loop diagram of the transatlantic air transport market using systems thinking. The objective of this paper is to provide an overview of specific characteristics regarding airline operations in the transatlantic air transport market to investigate the market potential of long-haul low-cost carriers competing with full-service network carriers in this market. We implement these characteristics in a causal loop diagram which comprises the most important elements of and causalities within the long-haul air transport market that affect the development of these elements. These include the generation of transatlantic air transport demand, passenger choice, and airline ticket price and fleet development. The causal loop diagram serves as a framework for qualitative investigation of the market potential of long-haul low-cost services. The paper proves systems thinking to be a feasible approach to map causalities based on knowledge from scientific literature.     

An airline's management strategies in a competitive air transport market

Over the last decade, the demand for domestic and international flights in Korea has increased substantially. To meet the strong flight demands, several low cost carriers have begun to offer flight services. In addition, full service carriers have been motivated to establish their own subsidiary low cost carriers to maintain their market share against rival low cost carriers. This paper studies the management strategies of three kinds of airlines - full service carrier, its subsidiary low cost carrier and rival low cost carrier - based on game theory in the competitive air transport market. Each airline is assumed to act as a player and chooses strategies regarding airfare, flight frequency, and the number of operating aircrafts for specific routes while maximizing its own profits. Demand leakages between the airlines are considered in the flight demand function according to the selected strategies of all airlines. Through various game situations reflecting realistic features, this study provides managerial insights that can be applied in the competitive air transport market.     

The carbon emissions of selected airlines and aircraft types in three geographic markets

Various carbon calculators developed by airlines and carbon offset companies have become available since the environmental impact of the air transport industry started to receive strong attention. This paper details a prototype methodology for carbon calculation emission levels in the three air transport markets; the UK domestic routes, the intra-EU routes serving UK and the North Atlantic routes that enables the assessment of key environmental performance differences between air carriers whereas they would be measured as identical using the often used DEFRA-type measurement approach. The results show differences in airlines' strategies such as aircraft type used, load factors and seat configurations.     

Passenger airline choice behavior for domestic short-haul travel in South Korea

When the Seoul-Busan line of South Korea's high-speed rail system, dubbed the Korea Train Express (KTX), entered service in November 2010, it was expected that this line would compete with air transport services for short-haul domestic journeys. Therefore this is a study about passengers' choice behavior when traveling short-haul domestic routes in South Korea. It utilizes MNL and NL logit models with selected variables, and the data required for the analyses were gathered through Stated Preference (SP) Techniques. The main SP survey was conducted for three weeks at departure lounges in Incheon International Airport in May 2012. The results reveal that fare, access time and journey time are significantly important with respect to passenger choice. The results further indicate that business travelers are more willing to pay than non-business travelers to reduce access and journey time. It is also noteworthy that reducing access time is more important than reducing journey time for short-haul domestic travelers. The conclusion is that it is significantly important for airline planners or local authorities that want to increase their local market share to invest in relatively fast access modes.     

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.     

Airport curfew and scheduling differentiation: Domestic versus international competition

This study investigates the strategic flight departure scheduling on domestic and short-haul international routes from regional airports in Korea. Airport-level data were constructed for non-stop routes from 2010 to 2018. This study examines the effects of changes in scheduling constraints induced by airport night curfews on domestic and international routes through competition intensity. The empirical findings suggest that competition leads to less differentiated flight departure times on domestic routes from the two regional airports. However, competition leads to more differentiated flight departure times on international routes from Daegu airport, which has a new night curfew, while a clustered departure pattern is found for international routes from Cheongju airport. An obvious pattern of differentiated departure times is found after the easing of night curfews in 2014, along with the expansion in LCCs.     

Performance evaluation of China's air routes based on network data envelopment analysis approach

Air routes are among the most important elements of civil aviation transport. Airlines' operations are mainly dependent on the structure and layout of air routes. This paper first divides the production process of air routes into two stages, allocation and transport, based on air route operational characteristics. Then, two network data envelopment analysis (DEA) models are proposed to analyze the efficiency of the system, allocation, passenger transport, and freight transport of 477 air routes. The research result demonstrates that the different constraints on intermediate measure in the network DEA models do affect the air routes’ efficiency significantly; Most air routes have high allocation efficiency and passenger transport efficiency, while they have low freight transport efficiency. Furthermore, the efficiencies of 82 airports are also analyzed after aggregating the efficiencies of the air routes.     

Airline merger and competition in Japan: A conduct parameter and theoretical price approach

In 2003, Japan Airlines and Japan Air System merged to become an equal rival to All Nippon Airways, which had significant market power in the domestic air transportation market in Japan. This paper examines the merger effects on the competition structure of the air transportation market using conduct parameter and theoretical price approaches. We test to see if the merger changed the market structure because there had been a leader–follower relationship among three carriers before the merger, and we had an equal competitor relationship between two carriers after the merger.     

铁路、民航客运市场竞争焦点及对策探讨

由于民航在机场建设和航线开发上的不断发展,使750～1500km范围内的客运市场成为与铁路竞争的焦点。随着民航票价的下浮,运营成本和人工成本的进一步降低,将对铁路形成更大的挑战。为此,铁路必须明确客运市场竞争重点,通过采取加强管理、降低戍本,继续提速改造、提高运输质量等措施,提高铁路的综合竞争力。     

Price rivalry in airline markets: a study of a successful strategy of a network carrier against a low-cost carrier

In the post-liberalization period, competition has increased in airline markets. In this context, network carriers have two alternative strategies to compete with low-cost carriers. First, they may establish a low-cost subsidiary. Second, they may try to reduce costs using the main brand. This paper examines a successful strategy of the first type implemented by Iberia in the Spanish domestic market. Our analysis of data and the estimation of a pricing equation show that Iberia has been able to charge lower prices than rivals with its low-cost subsidiary. The pricing policy of the Spanish network carrier has been particularly aggressive on less dense routes and shorter routes.     

Impact of high-speed rail on market concentration and Lerner index in China's airline market

China has become the second largest air transport market in the world since 2005. Its total length of high-speed rail (HSR) tracks in operation has been greater than that of all other countries combined since 2012. HSR poses a significant challenge to the Chinese airline industry, especially on major airline routes. The impacts of HSR on two market-competition measures, namely, the Herfindahl–Hirschman Index (HHI) and the Lerner index, are examined in this study. In general, the entry of HSR had the effect of reducing market power measured by both the unweighted and weighted Lerner indexes. However, the Lerner index and HHI of the routes with parallel HSR services remained consistently higher than those of the routes without parallel HSR services.     

Spatial evolution of airport traffic and air transport liberalisation: the case of Greece

This paper explores the evolution of airport passenger traffic in Greece over the period 1978–2006. The country is a member of the European Common Aviation Area, but despite air transport liberalisation, spatial concentration of traffic and asymmetry remain high and have not decreased significantly over time. Greece is still short of traffic generated by low-cost carriers especially outside the main metropolitan airports. The paper argues that further dispersion of traffic could be possible primarily in the mainland if low-cost carriers decide to dynamically enter the Greek market. Potential benefits for regional and tourism development should induce policy makers to work towards this direction.