The impact of environmental variables on the efficiency of Chinese and other non-Chinese airlines

This paper explores the impact of an international focus, the proportion of cargo traffic, and the level of salaries on the operational efficiency of Chinese airlines and other non-Chinese airlines. Data envelopment analysis (DEA) is employed to evaluate the operational efficiency and a bootstrapped truncated regression is applied to explore the impact of environmental variables on efficiency. The results show that an international focus has a negative impact, while the level of salaries has a positive impact. Also, we demonstrate that there is an inverted U-shaped relationship between efficiency and the proportion of cargo traffic.     

What are passenger perspectives regarding airlines' environmental protection? An empirical investigation in Taiwan

Many airlines recognize the importance of environmental protection. The airlines implement a number of environment-friendly activities related to in-flight services and wish to trigger passengers' support and therefore inquire as to their preferences. Because these activities are not identical between airlines, it is not known which items are actually supported and which items are opposed. In this paper, major airline environmental protection activities were collated, and the Smart partial least square software was used to analyse data from 442 passengers who have experienced air travel in the past 3 years. The results showed that in general, passengers would prefer to choose airlines that supported environmental protection activities. However, several activity items would be rejected if passengers felt their rights or interests being compromised. It was also indicated that people from countries at different stages of economic development had varying preferences regarding their support of airlines' environmental protection activities, and the young generation had more concern about environmental protection than others. The findings of this research could be beneficial for airlines setting up their differentiated marketing strategies for enhancing both environmental protection efforts and business performance.     

Competition and cooperation between high-speed rail and air transportation services in Europe

New high-speed rail (HSR) lines may have an enormous influence on the provision of air services. The attention has been devoted to competition between both transportation modes but in some cases HSR services may also have an intermodal complementary role with air transportation. By taking a supply oriented empirical analysis, we study the impact of HSR on air service frequencies and seats offered by airlines in large European countries. We emphasize the distinction between routes with and without a hub airport as an endpoint and we also examine the influence of the location of the HSR station. We generally find direct competition between HSR and airlines, but we also provide some evidence that HSR can provide feeding services to long haul air services in hub airports, particularly in hub airports with HRS stations.     

Air route suspension: The role of stakeholder engagement and aviation and non-aviation factors

This study provides insight into how aviation and non-aviation factors affect the decision to suspend air routes. Using examples from Australian domestic routes, the paper analyses the business relationships and negotiation processes followed by airports, airlines, and destination management organizations (DMOs) to avoid air route suspensions. Data were collected through semi-structured interviews with key aviation and tourism stakeholders directly impacted by suspended routes. The outcomes of this paper demonstrate that while most of the major reasons for air route suspension in Australia are mentioned in existing literature and are linked to demand, other factors have not previously been deeply investigated, including how stakeholders can be involved to avoid air route suspension. The paper also explores and identifies strengths and weaknesses in the relationship among airlines, DMOs and airports.     

Hedging jet fuel price risk: The case of U.S. passenger airlines

Jet fuel accounts for a large portion of passenger airlines' operating costs, and airlines' earnings are susceptible to swings in the price of jet fuel. This study uses daily data over the past two decades to determine the minimum variance hedge ratio for airlines wishing to hedge jet fuel price risk with futures, while also establishing the best cross hedging asset. Airlines hedging with futures would create the most effective hedge by using heating oil futures contracts with a 3-month maturity. We also find that beyond the 3-month veil, increased time to maturity makes heating oil less effective as a cross hedge proxy for jet fuel. However, both in-sample analysis and Monte Carlo simulation results with daily data show that none of the 4 cross hedge proxies, including heating oil, can be considered highly effective.     

The choice of air carrier, flight, and fare class

This paper reports the development and interpretation of air traveler choice models to gain insights into the tradeoffs air travelers make when they choose among different carriers, flights, and fare classes. Such insights can be used to support carrier decisions on flight scheduling, pricing, seat allocation, and ticket restrictions. This paper develops a conceptual framework and applies it to the choice of carrier, flight, and fare class as a basis for analyzing air travel demand in a competitive market. Model estimation results are used to quantify the importance of carrier preferences, market presence, quality of service, frequent flyer program membership, schedule convenience, and fares on carrier travel demand. The empirical results provide measures of the premium that business and leisure travelers are willing to pay to avoid schedule delays, to choose a carrier in which frequent-flyer program they participate, and to obtain the amenities and freedom from travel restrictions associated with higher fare classes.