Air transport globalization, liberalization and sustainability: post-2001 policy dynamics in the United States and Europe

Against a context of international crisis in the air transport industry, this paper examines the implications of the ways in which strategies developed by key air transport stakeholders, as well as the contemporary dynamics of the globalized, liberalized market place, impact directly on sustainability issues. More specifically, the paper has two objectives. First, it discusses the policy ramifications of the interrelationships between the concepts of globalization, liberalization, and sustainability within the air transport industry. Second, the paper explores the import of these interrelationships as they interconnect with stakeholder strategies in the differing geopolitical contexts of the US and EU. Particular attention is given to airline network and frequency strategies. The paper concludes that while the financial sustainability of the airline industry is the overwhelming concern today, if this is essentially the short-term crisis that the airline industry claims it to be, the longer-term predictions of air transport growth will again bring environmental sustainability issues to the fore.     

A case study: The impact of low-cost carriers on inbound tourism of Saudi Arabia

This study investigates the impact of low-cost carriers (LCCs) on Saudi Arabia's tourism demand. It also provides an understanding of the relationship between air transport development and tourism development in the Gulf region. The Box–Jenkins SARIMA-X models were employed to model and forecast international tourist arrivals to Saudi Arabia, using monthly international tourist arrivals to Saudi Arabia from July 2010 to December 2015. The forecasting models were significantly accurate, with lower values of MAPE, MAP, and RMSE. The findings suggest that an increase in airline capacity, religious travel, and airline competition are associated with the increasing international tourist arrivals to Saudi Arabia. This also indicates that there is a positive relationship between air transport development and tourism development. Further aviation liberalisation in the Gulf region is discussed to give opportunities for the region's LCCs to increase their share of the increasing air travel demand, thereby enhancing tourism development.     

Growth and internationalisation strategies in the airline industry

This paper analyses the international growth of the global air transport sector to identify factors that determine the emergence of transnational companies and different forms of international expansion in the airline industry. An analysis of the market structure is conducted to understand why traditional, full service airlines have adopted alliances and code sharing to internationalise their business, while low-cost carriers prefer more direct methods to enter new foreign markets.     

The demand for US air transport service: a chaos and nonlinearity investigation

This paper examines the behavior of the US airline industry's service demand. Monthly aggregate data for the industry are analyzed. While we find strong evidence of nonlinear dependence in the air transport service time series, the evidence is not consistent with chaos. We also show that GARCH models successfully explain the nonlinear structures in the US airline industry's service series. Finally, within-sample forecasts of air transport demand from the GARCH models outperform those of simple autoregressive models.     

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.     

Introduction to the special issue: Air transport in the Global South

Research on the development and impacts of air transport has hitherto focused mainly on developed countries in the Global North, and relatively little on less developed countries in the Global South. The seven papers of this Special Issue of the Journal of Transport Geography aim to address this imbalance and encourage further research on air transport development in the Global South. In recent years, the Global South has witnessed significant changes in air transport networks and policies, with implications for economic growth, spatial development and airline business models. This Special Issue explores some challenges to air transport development in the Global South for countries in Africa, South America, the Middle East and Asia, including links between air transport and economic development, the evolution and key drivers of air transport growth and the spatial distribution of passenger airline networks, and the development and impact of low-cost carriers. It also identifies opportunities for future research in this growing area.     

International arrivals to Australia: Determinants and the role of air transport policy

Air transport policy, national income, bilateral trade volume, distance, common language and immigration are significant determinants of international arrivals to Australia. The close link between aviation policy and the number of international travellers might suggest that Australia has benefited from the liberalisation of the airline industry globally in recent decades.     

Where does flygskam come from? The role of citizens’ lack of knowledge of the environmental impact of air transport in explaining the development of flight shame

A growing number of citizens are concerned about the environmental impact of air transport, and aviation has become synonymous with high carbon emissions and global warming, which has led to the development of flygskam (or flight shame) in Europe. While its impact on air traffic remains unclear, flight shame has forced the airline industry to react and better understand its origin. In this research, building on the growing literature on industry and organizational stigma, we assume that flight shame can be partly explained by a distorted public perception of the environmental impact of air transport. Accordingly, we investigate the level of knowledge of the environmental footprint of air transport. Based on a sample of 1018 French respondents, we reveal that more than 90% of respondents overestimate the share of air transport in global carbon emissions. We also show that 98% of the respondents underestimate the reduction in carbon emissions per passenger. Finally, we investigate the awareness of the measures taken by the industry to curb its carbon emissions and highlight, for instance, that 70% of respondents overestimate the fuel consumption of the newest generations of aircraft. Based on these results, we draw lessons for airlines and for the air transport industry to help cope with flight shame in Europe.     

The spatial and temporal dimensions of the interdependence between the airline industry and the Chinese economy

The airline industry contributes largely to the economic development of a region. At the same time, the fortunes of the industry can also be affected by regional economic change. This paper uses geographically weighted correlation analysis to investigate the spatial heterogeneity and temporal change of this interdependence as seen in China over the years from 2005 to 2016. The results show that the interdependence between the airline industry and provincial economies is non-stationary, generally with a spatial variation along the east-west axis across China's provinces. Further, the temporal change in the interdependence was affected by specific economic changes, such as the global crisis of 2008, when it weakened. Specifically, air passenger activities in the eastern provinces were more sensitive to some economic changes of 2012, while air freight activities in the western and central provinces were more sensitive to the global economic crisis of 2008. The size of urban agglomeration and regional GDP also influence the spatial heterogeneity of this interdependence with weaker links as GDP increases. It is possible that liberalization of the airline industry could enhance the interdependence in advanced regions. Thus, our results provide significant policy implications for a joint focus on the development of the regional economy and the airline industry.     

The long-haul low-cost airline business model: A disruptive innovation perspective

This paper analyzes the impact of the long-haul low-cost (LHLC) airline business model on the air transport industry from a disruptive innovation perspective. We argue that the LHLC business model is set to stay; it is bound to penetrate the mass market that has, to date, been occupied by incumbent network carriers. It will thus lead to significant strategic adaptations in the long-haul air travel market where incumbents are well advised to prepare their responses. We provide a set of strategic response options along the categories of avoiding, accepting and embracing the LHLC business model that can be used by incumbents to defend their competitive positioning in the long-haul air travel market. This paper provides guidelines for airline managers to (re)evaluate the strategies of their own organizations facing the emergence of a potentially disruptive innovation in their industry.     

Best practice benchmarking: a route to competitiveness?

This paper examines the use of best practice benchmarking as an approach to performance improvement in the airline industry. The case study draws upon phenomenological evidence from the aircraft maintenance section of Britannia Airways. A range of benchmarking issues, which could be applied to different divisions of an airline are highlighted. In particular, inter disciplinary team building, employee involvement, relationships with other industry players and identification of `best in class'. Airline alliances and the global trend towards economically deregulated air transport are identified as factors likely to increase the adoption of benchmarking as a route to competitiveness.     

Restructuring the Alitalia business model

This paper analyzes the performance of the Italian airline company, Alitalia, after the deregulation in the air transport industry in the European Union. Company performance is analyzed using Tornqvist indices. The evidence shows as Alitalia productivity slowdown has been caused by the company failure to support an increase in input with a supply-oriented strategy.     

The competitive landscape of air transport in Europe

Competition between airlines and airports increased significantly since the deregulation of the intra-European air transport market in 1997. The passenger has a wider choice in terms of routings and departure airports than twenty-five years ago and pays a lower price. In this paper we investigate in which parts of Europe airline and airport competition are most intense and how the competitive landscape has changed since the liberalisation of the intra-European market.Competition levels are modelled for all air transport markets available to consumers in each western-European municipality using a Multinomial Logit (MNL) model. This allows us to determine how competitive the air transport product available to consumers in each of those municipalities truly is and how competition levels have changed. As opposed to most other competition studies we take all viable direct and indirect flight alternatives into account, as well as competing alternatives from nearby (adjacent) airports. This makes it the most extensive analysis of competition in the European aviation industry performed to date.As expected the results show that airline competition, allowing for grouping of the airlines belonging to the same alliance together, has in general increased since the liberalisation of the intra-European market. This can mainly be ascribed to the rise of the low cost business model. The spatial analysis however shows an uneven outcome. Changes in airline competition are most pronounced in areas that were previously not well served, such as the more remote regions in the United Kingdom, Spain and Italy. In Germany airline competition is lagging behind due to the strong dominance of the STAR alliance. In large parts of Scandinavia, but also in parts of France and Spain, airline competition is considerably less. These areas are often served only by a handful of airports and/or airlines, limiting airline choice and therefore competition.     

Latent class models of international air carrier choice

This paper uses a market segmentation approach to identify airline passengers’ potential segments and preferences toward international air carriers. The modeling approaches consist of the stated preference method and the latent class model. The stated choice experiments were designed based on service attributes in the international airline choice context. Empirical data was collected from airline passengers who have flown from Taipei to Tokyo or from Taipei to Hong Kong. The latent class model accommodating preference heterogeneity outperforms the multinomial logit model as indication of a better approach to analyze airline choice behavior. The latent class model with individual socioeconomic and trip characteristics in segment membership functions also improved model fit relative to the corresponding latent class model without individual characteristics. The values of willingness to pay for service attribute improvements vary across international air routes and segments. Passengers are willing to pay more for better service quality. In order to develop effective marketing and operational strategies for the international air travel market, this study highlights the importance of exploring airline choice behaviors by routes and segments.     

Measuring the potential for self-connectivity in global air transport markets: Implications for airports and airlines

One of the strategies that air travellers employ to save money is self-connectivity, i.e. travelling with a combination of tickets where the airline/s involved do not handle the transfer themselves. Both airports and airlines, particularly low-cost carriers, have recently started catering to the needs of this type of passengers with the introduction of transfer fees or the development of self-connection platforms. The evidence provided by the existing literature, however, suggests that the degree of implementation of these strategies falls short of its true potential. In order to investigate how much self-connectivity could be observed in global air transport markets, this paper develops a forecasting model based on a zero-inflated Poisson regression on MIDT data. We identify the airports that have the highest potential to facilitate self-connections, as well as the factors that hinder or facilitate the necessary airline agreements at major locations. The results from this paper have many implications in regards to the widespread implementation of self-connection services and the future of the air travel industry.     

Policy issues and planning of UK regional airports

The principal motivation for this paper is to examine the policy issues for UK regional airports within the air transport system with particular reference to airport airline relationships. The geography of airline route networks is considered a key factor that determines location of the pressure for infrastructure development. Regional airports policy is considered in this context. The problems of the resultant concentration of air traffic has largely been ignored up until now and so this paper seeks highlight the issues this presents to policy makers. The paper reviews the changing regional airport ownership patterns and examines a range of implications. It then explores the policy implications for the future regulation and development of the air transport system. The authors contend that regulation and the planning system are the only two remaining policy levers for government to guide privately owned airlines, privately owned airports and commercialised airports towards national policy goals.     

‘Africanisation’ of South Africa’s international air links, 1994–2003

In the first decade of democratic rule in South Africa scheduled commercial passenger flights across the country’s borders more than doubled. Additional flights served new African air passenger markets and secondary airports in established markets. Overseas flights increased more slowly, serving a diminishing number of overseas countries and cities. In 1994 the Republic was linked directly by air with more overseas than African countries and cities; within a decade the pattern reversed. The changing geography of South Africa’s international air links reflects developments in the international airline industry, and South Africa’s increasingly prominent political and commercial role in Africa.     

Air transport and tourism—Perspectives and challenges for destinations,airlines and governments

Air transport and tourism are interlinked. Tourism is a driving factor for and, in some cases, a stimulator of change in air transport; most notably the development of new business models such as charter airlines. On the other hand, air transport opened new destinations and tourism forms such as long-haul excursions. Here these interlinks are analyzed in a system model. For the strategic development of destinations, a clear airline policy and air access strategy seems to be necessary. For airlines an assessment and understanding of the business models of destinations is essential. By shaping the external regulative environment of air traffic, government may influence air traffic as well as tourism.     

From hub to tourist destination – An explorative study of Singapore and Dubai's aviation-based transformation

The growth of air transport networks and deregulation have allowed small, low-populated places like Singapore and Dubai to become major international tourism destinations. Both have used tightly combined airline, airport and tourism strategies to help achieve this. Here we analyse developments in Singapore and Dubai by examining interactions between their airlines, airports, governments and tourism authorities, and how integrated management strategies leveraged their aviation traffic hubs to develop tourism destinations.     

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.