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.     

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.     

Airline choice and tourism growth in the Azores

This study examines the effect of airline choice on tourism growth in the Azores. The results reveal that tourism numbers increased sharply as more alternative choices emerged to visitors after the entrance of low-cost carriers due to airline liberalization. Moreover, different airline types attract different kinds of visitors, contributing to tourism diversification. In particular, low-cost airline tourists are younger than those who travel in full-service airlines or charter flights. They are also more likely to buy a last-minute ticket and to come from Iberian and French markets. Charter flights, however, are important choices for those traveling to the Azores from more distant markets such as Sweden and Denmark.     

Airline and railway integration

Most of the transport literature only looks at mode alternatives in competition with each other, rather than exploring the potential for cooperation. This paper examines this possibility by making the case for aircraft and high speed train (HST) substitution under conditions of intermodal integration. In the model suggested, airlines use railway services as additional spokes in their network of services from a hub airport to complement and substitute for existing aircraft services. Airlines benefit from the slots that are freed and they can support mode substitution. Society gains from the social and economic benefits of better integrated transport services at a lower environmental cost. This paper examines this model of integration at Heathrow airport against the background of UK air transport policy and assesses the benefits and limitations of it. The conclusion reached is that some railway infrastructure should also be seen as part of the air transport infrastructure.     

Airline strategies for aircraft size and airline frequency with changing demand and competition: A simultaneous-equations approach for traffic on the north Atlantic

Airport planners need to know the forecast demand on the facilities provided airside at airports. For this they need to know how airlines will deal with traffic in terms of the size of aircraft and frequency of service. In response to increasing demand, airlines may increase capacity by increasing the frequency of flights or they may choose to increase aircraft size. This may yield operating cost economies. If the airports they operate from are capacity constrained they will be limited in the extent that they can change frequency that will limit their ability to compete with the number of frequencies offered. Consequently, these airports are excluded as are major hubs as frequencies will be influenced by connecting passengers. Routes are identified on the north Atlantic that can be analysed and conclusions are suggested on the basis of three stage least-squares estimates for pooled time series-cross section data. An increase in passengers on the whole will result in a larger increase in frequency than in aircraft size but the impact of competition does not yield significant results due to the strategy of excluding certain categories of airport.     

Airline network structure and the gravity model

In this paper, we determine characteristics of the cost-minimizing airline network under economies of density. Airline demand is asymmetric and governed by the gravity model. Airline networks are restricted to those where each spoke city is assigned to a single hub and where hub cities are fully interconnected. The cost-minimizing network is a mixture of a point-to-point and a single hub network. Multi-hub networks where passengers change planes at more than one airport are found to be suboptimal.     

Airline overbooking models with misspecification

This paper looks at static overbooking models. In theory, a random show demand follows a binomial distribution with each reservation showing up independently and with the same probability. However, in practice, some overbooking models assume that the show demand is the product of the overbooking level and the random show-up rate. The decision model embedded in a commercial revenue management system is misspecified. We explore the consequences of the modeling error and find that the performance of the model with misspecification decreases as show-up probability decreases. Among our three choices of show-up rate distributions, normal, beta and deterministic, the beta model performs best. We also identify situations in which an airline might prefer the deterministic model to the normal model.     

Airline network structure under demand uncertainty

In this paper, we provide another reason that may explain the adoption of the hub-and-spoke network structure in the airline industry. We show that when an airline has to decide on its capacity before the demand conditions are perfectly known, a hub-and-spoke (h&s) network structure by pooling passengers from several markets into the same plane helps the firm to lower its cost of excess capacity in the case of low demand and to improve its capacity allocation in the case of high demand.     

Analysis of the Chinese Airline Network as multi-layer networks

This paper encapsulates the Chinese Airline Network (CAN) into multi-layer infrastructures via the “k-core decomposition” method. The network is divided into three layers: Core layer, containing airports of provincial capital cities, is densely connected and sustains most flight flow; Bridge layer, consisting of airports in Tier 2 and Tier 3 cities, mainly connects two other layers; and Periphery layer, comprising airports of remote areas, sustains little flight flow. Moreover, it is unveiled that CAN stays the most robust when low-degree nodes or high flight flow links are removed, which is similar to the Worldwide Airline Network (WAN), albeit less redundant.     

Airline emissions charges and airline networks

Emissions charges are an effective tool to control aviation carbon dioxide emissions. This paper investigates how airline emissions charges affect a monopoly airline's network choice. By considering simultaneously fully-connected, hub-spoke and mixed networks, we find that the impact of emissions charges on airline network configuration depends crucially on some relevant parameters, for example, the marginal benefit of the reduction of schedule delays and the disutility of additional travel time of connecting flights. Welfare analysis shows a discontinuity in the network configuration from the social planner's perspective and an inefficiency related to the airline's choice on mixed network.     

Airline in-flight entertainment: the passengers’ perspective

Following relaxation of economic regulation in many aviation markets, the competition amongst airlines has intensified in recent years. This has resulted in improvements in airline products, especially in the in-flight services. One of the areas on which airlines have focused their attention is the provision of personal in-flight entertainment (IFE). In 1998, airlines spent $1.8 billion on IFE. However, the industry is faced with a number of questions in relation to such levels of investment: Are the investments justified? Does IFE influence passengers’ choice of airline? Does IFE have a revenue-generating potential? What does the future hold as far as the IFE services are concerned? This paper addresses these questions based on a passengers survey and literature review. The results indicate that while IFE is not amongst the primary factors affecting passengers’ choice, it contributes greatly to passengers’ satisfaction with airline services. While provision of IFE can currently act as a differentiating factor, in the future it will become part of passengers’ expectations. It has also become apparent that, while IFE has the potential to generate some revenue, it would not be enough to cover the total costs associated with the installation and running of IFE systems. The impact of IFE would be felt, indirectly, through increase in passenger loyalty which should have a positive impact on airline revenues.     

Airline alliances: cooperating to compete?

This paper examines the formation of alliances in the contemporary airline industry, comparing this with developments in business collaboration in industry generally. It identifies the main forces driving airlines into alliances, before considering the strategies that airlines are adopting in marketing joint services, and the policies that governments are pursuing in relation to the impact of alliances on the intensity of competition. One of the main arguments advanced is that alliances increase competition in through-markets via hubs, and that they can be expected to have pro-competitive effects in narrowing price-cost margins on long-haul services, something that can be traded against any lessening of competition in short-haul hub-to-hub markets.     

Airline daily fare differentiation in a medium-size travel market

This paper examines variation in airline fares for trips in a medium-size travel market. It develops a conceptual model of fares offered, and uses daily information about fare, plane and flight characteristics, and trip characteristics easily available on the internet. Based on this information it estimates a two-way fixed effects model of airline fares. The results show large differences in fares among the airlines, large variation in daily fares offered, and provide evidence of fare differentiation in the travel market analyzed.     

Airline safety measurement using a hybrid model

Although air transport has a good safety record, public perception often focuses excessively on accidents. Safety is affected by many factors such as management, operations, maintenance, environment, aircraft design, and air traffic control. Quantitative measurement of the airline safety index is the goal of this paper. Some previous efforts to measure aviation safety have assumed the criteria to be independent, but this is not the case in the real world. Here a hybrid multiple criteria decision-making model to address dependent relationships among criteria, using a decision-making trial and evaluation laboratory along with an analytical network process, to decide the relative weights of criteria, showing inter-dependence and feedback.     

Airline alliances—who benefits?

The advent of global airline alliances in the 1980s gave rise to concerns that increased monopoly power of major carriers would lead to large and sustained producer surpluses. These global alliances now enjoy dominant market shares in the industry. This review examines some 15 years of alliance experience and finds no conclusive evidence that alliance membership has yielded monopoly profits to the airlines. Improvements in terms of load factors and general productivity levels have, for the most part, been accompanied by fare reductions of similar magnitude, resulting in only modest gains to the carriers.     

Airline alliances and partner firms’ outputs

This paper analyzes the effects of airline alliances on partner airlines’ outputs by comparing traffic changes on alliance routes with those on non-alliance routes. A theoretical model of an airline alliance is developed, and an empirical analysis is then conducted using panel data from four major alliances in North Atlantic markets during the 1992–1994 period. It is found that most of the partners have greater traffic increases on their alliance routes than those on their non-alliance routes, supporting a hypothesis derived from the theoretical model.     

Airline code-sharing and its effects on on-time performance

Although airline on-time performance has always received much attention, we are unaware of any empirical research that measures the on-time performance effects of domestic airline alliances. In this study, we empirically investigate the on-time performance effects of the largest domestic alliance—between Delta Air Lines, Northwest Airlines and Continental Airlines. We find evidence that code-sharing improves alliance partners' on-time performance and that the size of the codeshare effect on on-time performance depends on pre-alliance competition in a market, with the effect being larger in markets where the partners competed in prior to the alliance.     

Airline route developments: a review of history

Airline route networks can carry growing traffic volumes by using larger airplanes, by adding frequencies on existing routes, and by adding new routes. The natural expectation has been that growth will come in all three dimensions in the listed order of importance. The last 15 years of route growth suggests otherwise. Growth has been accompanied by shifts to smaller airplane sizes. New routes have been about as strong a development as added frequencies on existing routes. It seems that network growth patterns cannot be anticipated based on intuition alone. Such unexpected results require substantial evidence in support plus some explanation of the reasons why. This paper offers data and some explanations that begin the discussion.     

航空公司联盟合作的战略分析

20世纪90年代以来，随着信息网络技术革命的快速发展，世界经济的区域化、全球化已是必然趋势，跨国公司间的竞争日趋激烈，为了生存和发展，他们一方面积极提高自身的核心竞争力，另一方面主动与包括竞争对手在内的外部企业建立协作关系，通过建立联盟寻求发展新的立足点和增长点。在航空运输领域，自1978年美国国会通过航空公司放松管制法，对航空运输业带来了极其深远的影响，一方面为航空公司采取更为灵活的合作方式打开了方便之门：另一方面也导致空运业内竞争的日益加剧。运力过剩造成的利润下降已成为困扰世界空运业的主要问题。