Search

Abstract This paper examines the US airline industry in terms of the relationships between the three largest full service carriers, American Airlines, Delta Airlines and United Airlines, and the set of regional carriers that are contracted to provide feeder services to them. The evolution of the regional carriers and the full service carriers are compared and recorded and the current industry structure and size is described. The paper uses the full set of Official Airline Guide (OAG) schedules for 2017 to analyse the industry structure and scale, overlap and seasonality in service provision among the groups of carriers and to understand the network organisation and capacity deployment strategy of the largest network carriers in the US market. The analysis provides evidence to explain how the large airlines are improving their cost and financial performance as well as significantly improving their operational efficiency through the achievement of high overall load factors. The sophistication in each airline’s schedule design and service delivery is highlighted. [ABSTRACT FROM AUTHOR]

In this paper, the efficiency of the major US all-cargo carriers, both integrated and non-integrated, is measured and compared through a stochastic frontier analysis based on a translog cost function. Because of the high volatility of all-cargo traffic, especially since the 2008 economic crisis, and the increasing market share of integrators, this industry requires more detailed analysis. By using stochastic frontier analysis in this study, a distinction between random deviations from the production frontier and actual differences in technical efficiency is made. We find that smaller carriers react more flexible to a crisis and that non-integrated carriers are more efficient than the integrators when they are analysed jointly, which is however complicated by their different business models. These findings are not only useful for academics and industry actors, but also for policy makers, since air cargo contributes significantly to the profitability of airlines and airports. [ABSTRACT FROM AUTHOR]

Abstract: This paper analyzes the welfare effects of slot controls on major US airports. We consider the fundamental tradeoff between benefits from queuing delay reduction and costs due to simultaneous schedule delay increase to passengers while imposing slot limits at airports. A set of quantitative models and simulation procedures are developed to explore the possible airline scheduling responses through reallocating and trimming flights. We find that, of the 35 major US airports, a more widespread use of slot controls would improve travelers’ welfare. The results from our analyses suggest that slot caps at the four airports that currently have slot controls (Washington Reagan, Newark, New York LaGuardia, New York John F. Kennedy) are set too high. Further slot reduction by removing some of the flights at these airports could generate additional benefits to passengers. Slot controls can potentially reduce two thirds of the total system delays caused by congestion. A number of implementation and design issues related to the use of slot controls are also discussed in the paper. [Copyright &y& Elsevier]

Abstract: The purpose of this paper is to examine whether the manipulative or strategic behaviors of slot-holding carriers have resulted in restricted market entry and service expansion by other carriers, especially rival carriers, at the four US airports that have secondary slot markets. Airport congestion and flight delays at many major airports have become a serious problem. It has been suggested that a secondary slot market is one of the most practical options for addressing airport congestion, which would increase the possibility of competitive entry and efficient use of scarce resources. A secondary slot market would work in the same manner as a congestion toll system or an auction system, provided that carriers’ manipulative or strategic behaviors do not have serious effects on slot trading. However, the empirical effects of slot markets have not been investigated systematically. This paper examines empirically whether carriers’ manipulative or strategic behaviors have impeded effective functioning of slot markets. Slot transfer data from four US airports between 1994 and 1999 were examined using regression analysis. Results of the analysis are mixed, suggesting that the most effective way of congestion management depends on conditions unique to each airport, and that subsequent interventions should reflect those conditions. [Copyright &y& Elsevier]

This paper examines China's considerations in reaching the 2004 and 2007 Air Service Agreement Protocols with the United States (US) and the impacts of such policy on the China–US market from the perspective of China. Analysis shows that the 2004 and 2007 protocols have profound impacts on the China–US market. The two protocols have been associated with phenomenal traffic growth and intensified competition. Passengers also benefit from much more choice in terms of both airlines and routing. Over time, Chinese carriers' operating performance and financial performance have gradually improved after the liberalization expressed in the protocols. However, the industry's hub-building initiatives are still seriously challenged by competing hubs in Seoul and Tokyo which have diverted substantial number of passengers moving between the China and US markets. Such issues have to be addressed in order to create a win–win outcome for both countries. [ABSTRACT FROM AUTHOR]

In recent years, US airlines have unbundled ancillary fees from base air fares. As a result, the carriers have implemented a variety of fees on a range of optional services. Among these, checked baggage fees now represent a significant source of airline revenues. This paper assesses the impact of baggage fees on passenger demand and airline fares. We study a sample of US domestic routes over the period 2007–2010 where passengers have a choice between carriers that charge fees for checked baggage and Southwest Airlines, which allows passengers one or two “free” checked bags. A system of simultaneous equations is estimated. Our results show that, on an average route, a $1 increase in baggage fee leads to a loss of 0.7 passengers and is associated with a $0.11 reduction in fare levels. Interestingly, an equivalent increase of $1 in fares results in a much greater decline in passengers (eight times greater). Therefore, our results support the idea that substituting additional baggage fees for higher fares may be a beneficial strategy for carriers in terms of generating revenues and maintaining market share. [ABSTRACT FROM AUTHOR]

Analysis of the causes underlying runway incursions is fundamental for the development of effective mitigation measures. However, there are significant weaknesses in the current methods to model these factors. This paper proposes a structured framework for modelling causal factors and their relationship to severity, which includes a description of the airport surface system architecture, establishment of terminological definitions, the determination and collection of appropriate data, the analysis of occurrences for severity and causes, and the execution of a statistical analysis framework. It is implemented in the context of U.S. airports, enabling the identification of a number of priority interventions, including the need for better investigation and causal factor capture, recommendations for airfield design, operating scenarios and technologies, and better training for human operators in the system. The framework is recommended for the analysis of runway incursions to support safety improvements and the methodology is transferable to other areas of aviation safety risk analysis. [ABSTRACT FROM AUTHOR]

In this paper we use simulation to analyze how flight routing network structure may change in different world regions, and how this might impact future traffic growth and emissions. We compare models of the domestic Indian and US air transportation systems, representing developing and mature air transportation systems respectively. We explicitly model passenger and airline decision-making, capturing passenger demand effects and airline operational responses, including airline network change. The models are applied to simulate air transportation system growth for networks of 49 airports in each country from 2005 to 2050. In India, the percentage of connecting passengers simulated decreases significantly (from over 40% in 2005 to under 10% in 2050), indicating that a shift in network structure towards increased point-to-point routing can be expected. In contrast, very little network change is simulated for the US airport set modeled. The simulated impact of network change on system CO 2 emissions is very small, although in the case of India it could enable a large increase in demand, and therefore a significant reduction in emissions per passenger (by nearly 25%). NO x emissions at major hub airports are also estimated, and could initially reduce relative to a case in which network change is not simulated (by nearly 25% in the case of Mumbai in 2025). This effect, however, is significantly reduced by 2050 because of frequency competition effects. We conclude that network effects are important when estimating CO 2 emissions per passenger and local air quality effects at hub airports in developing air transportation systems. [ABSTRACT FROM AUTHOR]

Abstract: Researchers are applying more holistic approaches to the feedback control of the air transportation system. Many of these approaches rely on economic feedback, including the cost of delays to the airlines. Establishing an accurate mechanism for estimating the cost of a delays for each portion of a flight (gate costs, taxiing in and out costs, and en-route costs) is useful for many aspects of modeling airline behavior and for better understanding the likely impact of regulations. Cook et al. (2004) developed a rigorous methodology and collected data for estimating the components of airline delay costs for various segments of a scheduled flight. The model, based on confidential information from European airlines for 12 types of aircraft ca. 2003, was not transparent with regards to how each of the major components of cost (crew costs, fuel costs, maintenance, depreciation, etc.) impacted that total. This paper describes the development of an airline cost model, based on the Eurocontrol model. The airline cost model explicitly identifies the components of airline costs, is based on US airline cost data, and includes 111 aircraft types. The new model is designed to allow costs to be updated whenever the basic costs change. It considers the type of the aircraft when making calculations, both from the perspective of fuel burn and other costs and uses publically available data on burn rates and block-hour direct operating costs (BHDOC) to obtain these estimates. A case-study analysis of airline costs of operation at 19 major US airports is provided. [Copyright &y& Elsevier]

Abstract: This study investigates economies of scale in the US airline industry using annual data, from 1987 to 2009, on the largest airlines. The paper estimates both a translog and Cobb–Douglas model of both an economic and transportation definition of economies of scale. The study shows that the results from models based on the two definitions are remarkably similar except during rapid growth in output and that the largest US airlines operate under modest scale economies. [Copyright &y& Elsevier]

Abstract: This paper applies the -convex model in order to investigate the technical efficiency of a representative sample of US airlines over the period 1998–2010. The results are mixed and reveal that US airlines’ efficiency can be influenced by the size of the airline, mergers and acquisitions, and by time. Policy implications are derived. [Copyright &y& Elsevier]

Abstract: This paper identifies a source of price discrimination utilized by airlines – price discrimination based on the day-of-the-week that a ticket is purchased. Using unique transaction data, we compare tickets on the same airline and route that are purchased on different days of the week, after controlling for the day of week of travel, the ticket restrictions, the demand characteristics of the flights, and the number of days in advance that the ticket is purchased. We find that fares are 5% lower when purchased on the weekend. We conjecture that this is a form of price discrimination. If airlines believe that weekend purchasers are more likely to be price-elastic leisure travelers, then they may offer lower prices on weekends when the mix of purchasing customers makes demand more price elastic. This conjecture is supported by the finding that the weekend purchase effect is distinctly larger on routes with a mixture of both business and leisure customers than on routes that disproportionately serve leisure customers. We illustrate that this pricing practice can have important impacts on airline profits. These results have implications for other industries that have the ability to change prices daily based upon the types of customers who purchase on a specific day. [Copyright &y& Elsevier]

Abstract: The paper investigates the linkages between customer service, customer satisfaction, and firm performance in the US airline industry. In particular, the moderating effects of market concentration and firm dominance on the service–satisfaction–performance relationship are examined. Our major finding is that market concentration dampens the relationship between customer satisfaction and airline profitability. Although the same moderating relationship was not found for market power, these results, combined, indicate that airlines can increase profits in concentrated markets without providing for the same, concomitant increases in customer satisfaction as airlines operating in more competitive markets. From a public policy perspective, our results point to the importance of regulators monitoring airline actions, such as mergers and alliances, that serve to increase the concentration of markets, but may result in lower levels of customer satisfaction. [Copyright &y& Elsevier]

Abstract: This paper tests the mutual forbearance view in the context of airline alliances in the international air travel market. Using passenger booking and airfare data on transpacific routes, we find consistent evidence for the positive association between multimarket contact and airfares. Our results also suggest that multimarket contact between non-aligned airlines is associated with higher airfares, whereas multimarket contact between airlines in the same alliance has no additional upward impact on airfares. Moreover, it is shown that higher airfares tend to exist when airlines have greater multimarket contact on open-skies routes. In restrictive (non-liberal) international markets, however, multimarket contact may not affect airfare. [Copyright &y& Elsevier]

Abstract: US airline passengers increasingly have access to flight delay information from online sources. As a result, air passenger travel decisions can be expected to be influenced by delay information. In addition, delays affect airline operations, resulting in increased block times on routes and, in general, higher carrier costs and airfares. This paper examines the impact of flight delays on both passenger demand and airfares. Delays are calculated against scheduled block times as well as against more idealized feasible flight times. Based on econometric estimations, welfare impacts of flight delays are calculated. We find that flight delays on a route reduce passenger demand and raise airfares, producing significant decreases in both consumer and producer welfare. Since producer welfare effects are estimated to be three times as large as consumer welfare effects, we conclude that from an economic efficiency rationale, airlines should be required to pay for the bulk of flight delay remediation efforts. [Copyright &y& Elsevier]

Abstract: This paper reviews product debundling trends that have occurred in the US airline industry. Multiple sources of ancillary fees related to ticketing refunds and exchanges, checked baggage, on-board pets, preferred and/or advanced seating assignments, frequent flyer ticket redemptions, and day of departure standby policies are reviewed. Despite the fact that both low cost and network carriers stress the importance of future ancillary fees in their investor reports, our assessment suggests that these fees will be more broadly adopted by low cost carriers. We anticipate that many network carriers will eliminate ancillary fees, particularly as they begin to recognize how these fees can impact other system performance objectives such as minimizing the number of misconnecting passengers. We estimate that the debundling phenomenon has diluted revenues to the US Airport and Airways Trust Fund by at least 5%. [Copyright &y& Elsevier]

Abstract: An essential element of demand modeling in the airline industry is the representation of time of day demand—the demand for a given itinerary as a function of its departure or arrival times. It is an important datum that drives successful scheduling and fleet decisions. There are two key components to this problem: the distribution of the time of day demand and how preferred travel time influences itinerary choice. This paper focuses on estimating the time of day distribution. Our objective is to estimate it in a manner that is not confounded with air travel supply; is a function of the characteristics of the traveler, the trip, and the market; and accounts for potential measurement errors in self-reported travel time preferences. We employ a stated preference dataset collected by intercepting people who were booking continental US trips via an internet booking service. Respondents reported preferred travel times as well as choices from a hypothetical set of itineraries. We parameterize the time of day distribution as a mixture of normal distributions (due to the strong peaking nature of travel time preferences) and allow the mixing function to vary by individual characteristics and trip attributes. We estimate the time of day distribution and the itinerary choice model jointly in a manner that accounts for measurement error in the self-reported travel time preferences. We find that the mixture of normal distributions fits the time of day distribution well and is behaviorally intuitive. The strongest covariates of travel time preferences are party size and time zone change. The methodology employed to treat self-reported travel time preferences as potentially having error contributes to the broader transportation time of day demand literature, which either assumes that the desired travel times are known with certainty or that they are unknown. We find that the error in self-reported travel time preferences is statistically significant and impacts the inferred time of day demand distribution. [Copyright &y& Elsevier]

Abstract: Although there are hundreds of airports that support commercial air passenger traffic in the United States (US), not all areas are equivalently served by the commercial air transportation system. Locations in the US differ with respect to their level of access to the commercial air network and their overall accessibility within the system. Given the complexity of the domestic commercial air passenger network and supporting infrastructure, past research has only been able to provide a limited assessment of locational accessibility within the United States. To address these complexities, this paper proposes a new metric that incorporates measures of access to air transport as well as accessibility within air transportation networks. Using a comprehensive dataset on scheduled airline service, the developed approach is then applied to the US domestic commercial passenger air transportation network to explore geographic differentials in accessibility. Results suggest marked differences between core-based statistical areas throughout the US. [Copyright &y& Elsevier]

Abstract: This paper examines the pricing behaviors of United States air carriers in domestic markets. With quarterly observations in 2000 and 2005, we use a heteroskedasticity-adjusted Instrumental Variable technique to investigate the carriers’ pricing strategies. The results show differential pricing strategies practiced by United States air carriers. American, United, Continental, and Northwest Airlines have higher airfares than Delta and Southwest Airlines in 2005. In 2000, all the carriers, except Delta have the same relationships with airfares. Furthermore, the findings suggest that the carriers’ pricing strategies can vary under the same market condition, indicating that carriers’ managerial decisions may influence their airfares. [Copyright &y& Elsevier]

Abstract: Using data envelopment analysis and the Malmquist productivity index, this paper examines changes in the productivity of the major United States passenger airlines from 2000 to 2004. The analysis finds that there was a significant improvement in the productivity of the carriers at transforming labor, fuel and passenger seating capacity into available seat-miles during this period. Most of the productivity improvements came about from the efficiency laggards catching up with the efficiency leaders in the industry. To a lesser extent, the adoption of new technologies improved productivity over this period. [Copyright &y& Elsevier]

Abstract: This paper presents a new model and solution methodology for the arrival slot reallocation problem faced by airlines when responding to a ground delay program (GDP). The objective is to reassign the flights in the GDP to time slots made available by the Federal Aviation Administration (FAA) such that flight delay and passenger missed connection costs are minimized. The problem is formulated as a dynamic program and solved with the help of branch and bound. Using data provided by American Airlines, initial tests showed that while the results were good for relatively small instances, as more flights were included, computation times grew exponentially. Given that the problem needs to be solved quickly in practice, the methodology was incorporated in a rolling horizon framework where larger problems are split into smaller subproblems and solved sequentially. This led to some degradation in solution quality but there was still considerable cost savings compared to the initial slot assignments proposed by the FAA. Computational experiments with both real and randomly generated data confirmed that problems of practical size could be solved within 5min. [Copyright &y& Elsevier]