The effect of low-cost air transportation on the local economy: Evidence from Southern Italy

This paper investigates how the entry of low-cost carriers in Southern Italy has supported local and regional economic development in different ways: spreading the traffic demand during the year, increasing the rate of international tourism, generating new jobs and improving the income of the area. The evidence of traffic de-seasonality is quantified by an index, resulting in a decrease to all those airports specialized in low-cost services. Additionally, an assessment shows that the net impact driven by a low-cost route on the local economy is about €14.6 million per year.     

Supply-and-demand models for exploring relationships between smaller airports and neighboring hub airports in the U.S.

Airport passenger leakage is the phenomenon of air passengers choosing to travel longer distances to access more extensive air services offered by airlines at an out-of-region hub (or, substitute) airport, instead of using their local airports. Airport leakage can cause further reduction in services offered by airlines at a local airport, thereby causing even further leakage, and so on, which can significantly impact an airport's role in the growth of the local economy. This paper explores the geographic and operational attributes of local-and-substitute airport pairs in the United States, explicitly accounting for the interactive feedback relationship between passenger volumes and air service characteristics that contribute to the onset, persistence, and exacerbation of airport passenger leakage. A two-stage least squares regression model of air passenger demand at small- and medium-sized airports is first presented, where local passengers may travel by vehicle to larger, out-of-region hub airports. The results confirm that airfare and passenger volume relationships exist between the local and substitute airport pairs included in the dataset, and that lower airfares at the substitute airport have a greater impact on airport choices made by larger travel groups. They also suggest the existence of positive feedback in that if an airport attracts increasingly smaller passenger numbers with fewer air services and fewer air services with fewer passengers, without external intervention airport leakage impacts may be irreversible and exacerbate over time. A conceptual market share equilibrium analysis is used to illustrate the mechanisms of a direct two-way feedback relationship between passenger volumes at a local airport and air service characteristics at both the local and substitute airports. With data, this quantitative framework can help guide airport planners in further assessing and verifying suspected passenger leakage issues at their airport. The results suggest that without intervention, airport leakage impacts may be difficult to reverse; further exacerbating the trend are technological advancements that make driving cheaper and easier (connected and autonomous vehicles). However, the results can also guide planners in choosing the types and degrees of infrastructure investments and airline incentives that may be used to expand or retain air services to attract passengers.     

Regional aviation and economic growth: cointegration and causality analysis in Australia

Air transport is a critical link to regional, rural and remote communities in Australia. Air services provide important economic and social benefits but very little research has been done on assessing the value of regional aviation. This research provides the first empirical evidence that there is short and long run causality between regional aviation and economic growth. The authors analysed 88 regional airports in Australia over a period of 1985–86 to 2010–11 to determine the catalytic impacts of regional air transport on regional economic growth. The analysis was conducted using annual data related to total airport passenger movements – for the level of airport activity, and real aggregate taxable income – to represent economic growth. A significant bi-directional relationship was established: airports have an impact on regional economic growth and the economy directly impacts regional air transport. The economic significance of regional air transport confirms the importance of the airport as infrastructure for regional councils and the need for them to maintain and develop local airports. Funding should be targeted at airports directly to support regional development.     

Travel agent monitoring and management

This paper assesses the influence of travel agents on the demand for scheduled services from regional airports. A telephone survey, following up one conducted in 1992, reveals an improvement in agent information provision for a scheduled service from Cardiff to Brussels. Reasons for improvements include the length of time the service had operated and the marketing of the service under the BA brand. One-fifth of agents still gave inaccurate advice. The importance of airports and airlines monitoring the performance of their distribution channels is explored. New opportunities offered by the Internet to improve distribution channel effectiveness are presented.     

Changes in land use typology of global airports: An empirical investigation with implications for the aerotropolis concept

Aerotropolis is an urban development concept characterised by the concentration of land uses fostering economic activities around airports. However, limited empirical evidence exists about the formation of aerotropolises and their effects on the productivity of airports. This study addresses the gaps by examining changes in land use patterns around 75 major airports globally, using data extracted from Google Earth for two time periods: 2004 and 2014. A Two-Step cluster analysis technique was applied to identify natural groupings of the airports in terms of their land use patterns for both periods. Changes in cluster membership were observed between the periods to examine the process of aerotropolis formation. A multivariate multiple linear regression (MMLR) model is estimated to identify factors contributing to aerotropolis formation process. Finally, the effects of the aerotropolis formation process on airport productivity is estimated in a two-stage least square (2SLS) regression model. Cluster analysis results show that airport land side development can be classified into three groups: Island airports (surrounded by largely vacant land), Waterfront airports (adjacent to a large body of water), and Built form airports (well-developed residential, commercial and industrial land uses). Overall, built-up areas increased by 2.1% between 2004 and 2014, and only three airports transitioned from Island to Built form – suggesting a weak evidence of the aerotropolis formation process. Developable land surrounding the airports and city population growth rate contributed significantly to this process, which consequently contributed to the productivity of airports. In conclusion, aerotropolises are a promising concept, yet unreal. It needs to be integrated with city plans to direct development, and thereby, to make it a reality.     

Current accounts of Japanese airports

The paper examines the current account of 41 major airports. When we exclude depreciation costs, only seven airports are profitable. When depreciation is excluded, only three airports are making profits. Airports managed by local governments are very difficult to sustain financially without subsidies. Airports with more than 5.2 million passengers are profitable when depreciation is taken into account, however most local airports have fewer than 2.5 million passengers. When depreciation costs are excluded, airports need at least 2.7 million passengers to be viable.     

Air transportation and urban-economic restructuring: competitive advantage in the US Carolinas

The theoretical agenda of this paper is to bring airports and airline operations more squarely into the mainstream of the urban and regional development literature. The paper examines the spatial and temporal patterns of air passenger flows by airport in the US Carolinas. An emphasis is placed on articulating the linkages that exist between airport operations at the local level, the structural composition of the regional economy, and the competitive strategies of the airline industry. Particular attention was paid to administrative and auxiliary employment levels because it is a knowledge-based producer service that tends to seek out markets that offer high levels of air service connectivity to other places. A major finding in this paper is that those US Carolina airports that experienced significant gains in air passenger volume (e.g., Charlotte and Raleigh-Durham) tended to experience comparable gains in the employment levels of administrative and auxiliary workers, particularly in the manufacturing sector.     

Characterization of delay propagation in the air traffic network

We build a delay propagation network based on Bayesian Network approach to study the complex phenomenon of delay propagation within a large network consisting of the 100 busiest airports in the United States. Through topological analysis and probability analysis, we investigate the characterization of delay propagation among airports and the impact of different types of airports on delay propagation. Results indicate that the cumulative degree distribution of the delay propagation network follows an exponential function and flight delays take at most one transhipment to go from each airport to any other airports on average. For each individual airport, the effects of delay propagation are associated with airports size (traffic flow), small airports are easily affected by other airports while large airports are more affecting downstream airports but fewer affected by upstream airports. Finally, we show how the number of affected airports changes as a function of the delayed airports based on different simulation strategies.     

Evaluating the multi-period operating efficiency of international airports using data envelopment analysis and the Malmquist productivity index

For the most part, airports are publicly or semi-publicly owned and operated with fixed assets. As such, airports have been often considered little more than infrastructure providers for airlines. However, as airports have begun to offer a variety of ancillary services including passenger transfers, re-fueling, parking, and shopping, they no longer play second fiddle to airlines. To come into their own, a growing number of airports realized their need to develop competitive strategies that can attract more air traffic and generate greater revenue. Such strategies start with the assessment of their competitiveness in terms of operating efficiencies relative to others. To help airport authorities identify major drivers for enhancing the airport operational efficiency and the subsequent competitiveness, this paper evaluates the comparative efficiencies of international airports for a multi-year period (2006–2011) using data envelopment analysis intended for dynamic benchmarking and Malmquist productivity index built on time-series analysis. Our study indicates that the productivity of an airport was influenced by exogenous factors such as shifts in government policies and technological advances rather than endogenous factors driven by improvements in managerial practices.     

The spatial distribution of employment around major Chinese airports

This paper examines the spatial distribution of employment around major Chinese airports. While the impacts of airports on employment have been debated within the European and North American contexts, airport-related urban development in China has been less well studied. Such an analysis is also timely given rapid urban and airport development in Chinese cities. Focusing on fifty-nine major airports in mainland China, employment centers are identified using gridded enterprise registration information. Our analysis suggests that there are few airports with nearby employment centers. However, planned airport economic zones (AEZs) with stronger policy support, longer periods of development, and located in major cities are more likely to have employment clusters. Furthermore, employment centers that do exist near airports are more likely specialize in manufacturing, transportation and logistics, and wholesale and retail trade rather than in financial and business services.     

Spillover effects of the development constraints in London Heathrow Airport

In this article we assess the growth impact of London Heathrow’s development constraints on other airports in the UK. To test the relationship we use a two-stage methodology yielding an estimate of a congestion spillover effect. Our data are passenger traffic from 1990 to 2012 containing both intercontinental and European air traffic. For intercontinental air traffic, our results show high congestion spillover effect between Heathrow and Gatwick airports, and significant but lesser effect to Stansted airport. We also find significant congestion spillover effects from Heathrow to the spatially more distant Manchester and Birmingham airports, showing the extensive spatial impact of Heathrow’s development constraints. For European air traffic, controlling for low-cost air carrier growth, only two airports show significant congestion spillover effects: Gatwick and London City Airports. Illustrating that low-cost carriers do not operate from Heathrow, so its limitations cannot affect the predominant low-cost air traffic in other airports. The novel methodology we present in this paper can be applied to congestion research in general to assess regional and modal spills within networks.     

Relevance of airport accessibility and airport competition

Airport accessibility is an important criterion for airport competition. The relevance of airport accessibility and airport competition was studied in this paper based on the panel data collected from nine large airports in Jiangsu province, China from 2005 to 2014. The results showed that the cost of expense, time and fatigue for the arrival at the airport are proposed to quantify levels of fastness, economy and amenity for the passengers to arrive at airport. The airport accessibility is significantly affected by airport passenger traffic and airline frequency. The passenger traffic can be increased by 2% with 1% increase of airport accessibility based on the analysis results of the nine large airports in Jiangsu province.     

How did COVID-19 impact air transportation? A first peek through the lens of complex networks

The current outbreak of COVID-19 is an unprecedented event in air transportation. This is probably the first time that global aviation contributed to the planet-wide spread of a pandemic, with casualties in over two hundred countries. As of August 23rd, 2020, the number of infected cases has topped 23 million, reportedly relating to more than 800,000 deaths worldwide. However, there is also a second side of the pandemic: it has led to an unmatched singularity in the global air transportation system. In what could be considered a highly uncoordinated, almost chaotic manner, countries have closed their borders, and people are reluctant/unable to travel due to country-specific lock-down measures. Accordingly, aviation is one of the industries that has been suffering most due to the consequences of the pandemic outbreak, despite probably being one of its largest initial drivers. In this study, we investigate the impact of COVID-19 on global air transportation at different scales, ranging from worldwide airport networks where airports are nodes and links between airports exist when direct flights exist, to international country networks where countries are contracted as nodes, and to domestic airport networks for representative countries/regions. We focus on the spatial-temporal evolutionary dynamics of COVID-19 in air transportation networks. Our study provides a comprehensive empirical analysis on the impact of the COVID-19 pandemic on aviation from a complex system perspective using network science tools.     

The impact of airport capacity constraints on future growth in the US air transportation system

This paper simulates airline strategic decision making and its impact on passenger demand, flight delays and aircraft emissions. Passenger flows, aircraft operations, flight delays and aircraft emissions are simulated for 22 airports in the US, under three airport capacity scenarios. The simulation results indicate that most system-wide implications for operations and environmental impact seem to be manageable, but local impacts at congested hub airports may be significant. The response of the air transportation system to avoid airports with high delays could significantly impact passenger demand and air traffic for these and directly dependent airports. The simulations also suggest that frequency competition effects could maintain flight frequencies at high levels, preventing a significant shift toward larger aircraft, which would otherwise reduce the impact of the capacity constraints.     

Intermodal integration in air transportation: status quo, motives and future developments

Soaring air traffic, increasing urban expansion and airports operating at full capacity are reasons that have caused a discussion about improvements in airport landside access systems. One approach to better match customer demands and address airport congestion is to facilitate the intermodal integration of airports. Building on a survey on intermodal passenger air transportation, we elaborate on the current and future situation at major airports. Our findings indicate a high modal concentration and dependence on individual access modes. However, while airport managers intend to reduce the share of these modes, they plan to increase that of high-occupancy airport access modes. We analyze the underlying motives that cause airports to extend their connections to surface infrastructure. In a case study, we assess an intermodal best practice solution for the integration of air and rail.     

Base abandonments by low-cost carriers

This paper is the first attempt to systematically investigate the phenomenon of base abandonments by low-cost carriers (LCCs) in the world, from 1997 to 2014. Our results identify 109 cases where the LCCs decreased their presence in airports by at least 50 per cent in terms of offered seats. In 28 cases, the LCCs completely abandoned the airports. The incidence of downsizing is significantly reduced for important base airports. The abandonment by LCCs can be reversed, even though this is not very likely; in only 7.3 per cent of cases the same LCCs recovered full capacity. The impact on airports of LCC abandonments depends on the carrier level of dominance. The presence of middle size alternative airports increases the likelihood of downsizings.     

Competition and countervailing power: Evidence from the China Eastern and Shanghai Airlines merger

This paper examines the motives and effects behind the horizontal merger between China Eastern and Shanghai Airlines in 2009. We develop testable hypotheses, incorporating into a unified framework the two merging airlines, their domestic and international competitors, and relevant airports along the supply chain. We employ an event study methodology and show that domestic competitors gain whereas international competitors lose. Our results suggest that the sources of gain for the merging firms are market power in domestic markets and efficiency improvement in international markets. Further, as a hub for the merged airline, Shanghai Airport experienced positive abnormal returns. Our results do not support the hypothesis that the merged airline gains countervailing power towards airports. Our event study findings are robust to alternative estimation periods and samples, and are consistent with analyst forecasts and long-run operating performances.     

Managing New Zealand's airports in the face of commercial challenges

This paper explores commercial issues surrounding managing airports in New Zealand. Airport managers face pressures from changing airport–airline relationships, low cost airlines, proposed new airports and the growing importance of non-aeronautical revenues in achieving commercial goals. New Zealand's airports have moved from an operating environment within which all the principal airports were owned and managed by central government to one where airports are run as commercial entities under a variety of ownership structures. New Zealand has a high dependence on air transport and for its size, a very developed regional airport network.     

Productivity growth and biased technological change in Japanese airports

In this paper, the productivities of Japanese airports over the period of 1987–2005 are analyzed using the Malmquist index, and technological bias is investigated. During this period, airports on average became less efficient and experienced technological regress. Our results indicate that the traditional growth accounting method, which assumes Hicks neutral technological change, is not appropriate for analyzing changes in productivity for Japanese airports.     

The impact of national macro-environment exogenous variables on airport efficiency

Our paper tests the extent to which airport efficiency is affected by national macro-environmental factors. The literature on airport performance measurement is extensive but has tended to focus mainly on estimating the effects on efficiency from what are mostly endogenous variables. We undertake a two-stage analysis of 59 international airports observations in the Europe and Asia-Pacific regions. The first stage involves the use of Data Envelopment Analysis (DEA) to measure the efficiency of these airports. This is followed by a second stage, where we use a Truncated Regression model that incorporates the Simar and Wilson bootstrapping technique to test the extent to which a set of macro-environmental factors affect airport efficiency. Results reveal that a state's air transport sector output, institutional quality and robustness, the macro-economic environment, safety and security, and human development, all have a significant influence on the performance of airports. The result of this study fills the gap in the literature related to the non-discretionary variables affecting the performance of airports. It also suggests that policymakers and airport managers consider the identified factors when benchmarking airports.