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 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 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 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 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 mergers and their effect on network structure

The Airline Deregulation Act of 1978 introduced high-level competition into the US domestic industry. The resulting network changes have created a deluge of research, largely focused on the hub-and-spoke structure. Over 15 years have passed since deregulation, and the industry still appears somewhat unsettled. Recent concerns of domestic carriers include downsizing of some hubs, and discussions of further consolidation of operations. Mergers may be the answer for airlines with shrinking markets within the US transportation system. This study examines the effect on network structure created by the merger of two carriers from the perspective of hub structures, accessibility and geographic coverage.     

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。     

Network competition in the open aviation area

In 2008 the ‘joint open aviation area’ between the US and EU will become reality. It is expected that competition will increase. The reaction of the airlines depends on the possibility to make profits in ‘new’ markets (markets that can now be entered). This, in turn, depends on network characteristics. In this paper we find that full liberalization of international markets by means of a bilateral agreement results in higher welfare than the formation of an alliance. Carriers, however, will also in fully deregulated aviation markets most likely opt for an alliance. This is a result of a built-in competitive effect of hub–spoke networks. Only in markets where the reservation price is very high (e.g. to London Heathrow), hub–spoke airlines may enter a competitive game. Low-cost airlines, which do not operate extensive hub–spoke networks, may find it profitable to enter new markets.     

Airline ownership and control: A corporate governance perspective

Most countries require substantial domestic equity ownership of designated national airlines, yet changes in international capital markets have significantly altered the way control rights associated with equity are exercised. We argue that in a context of aviation deregulation and liberalization, a new generation of aviation financiers has appeared whose incentives and competence for control diminishes the relevance of the nationality provisions contained in most bilateral agreements. The paper describes recent developments in ownership and control and its impact on airline management.     

我国航空公司不正常航班调度管理现状及优化策略

随着我国航空运输市场竞争的加剧,如何未雨绸缪,统筹有限资源的合理利用,做好不正常航班的应急调度工作,尽力降低突发事件对航空公司正常运营造成的影响,缩短恢复正常运行的时间,降低航班应急处置成本,减少对航空公司声誉的影响,已成为航空公司运营中必须认真研究的一个重要问题。     

基于可拓物元模型的航空公司效益评价研究

根据我国航空公司的运营状况,选择运输总周转量、载运率和每吨公里耗油作为效益评价指标体系。为了达到效益综合评价的目的,将可拓物元模型应用到航空公司的效益评价领域,用关联函数来表示航空公司效益的优劣,通过对航空公司效益的综合水平评价,分析企业效益不佳的原因,并根据评价结果提出相应的改进措施。     

Hub competition and travel times in the world-wide airport network

The aim of this work is to measure the competition between airport hubs based on an analysis of travel times in the world-wide airport network. By considering the minimum travel time required to connect each pair of airports, it is possible to create new measures of hub competition, separating the effects of hub position and temporal coordination. This analysis was carried out at the global level, considering all 232 airports with more than 3 million seats yearly offered in departure flights in 2008, and also in relevant geographic markets. The results show a high level of competition among the most important world airports, but the major airports of Europe have a geographical advantage in relation to world markets over the major American and Asian airports. We also show that airports located in different continents often compete for the same origin–destination markets. Geographical position appears to be the most important variable explaining hub performance. Secondary hubs show a higher degree of specialization towards specific markets.     

The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline

Middle Eastern airlines are changing the dynamics of international aviation as Emirates, Qatar Airways and Etihad Airways are quickly emerging as the new global challengers. The region’s airports are also undergoing a rapid transformation to remain in line with the exponential traffic growth that is forecast. This paper examines the relentless growth of Emirates, and investigates the various strategies that underpin its core competencies, which are responsible for its 20 years of consecutive profitability. The paper establishes that the underlying formula for Emirates’ success is largely attributed to its hub and spoke operation, competitive cost structure and the strong leverage of its brand.     

Airline services marketing by domestic and foreign firms: differences from the customers’ viewpoint

Based on a survey of 1014 passengers of five European airlines, this paper reveals differences between passengers on the Turkish domestic airline and those on four foreign airlines on the same flight destinations with respect to demographic profiles, behavioral characteristics, understanding of airline service dimensions, and satisfaction levels. Differences between the two passenger groups are highlighted in terms of age, sex, education, occupation, sector affiliation, location of domicile, travel purpose, travel frequency, service expectations, and satisfaction levels. It is concluded that the differences in consumer profiles and expectations are valuable clues for domestic and foreign airline firms in understanding their consumers and in designing their marketing strategies.