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Abstract: This paper applies an inventory transshipment modeling approach to investigate the air cargo revenue management problem for an airline operating in a two-segment network. Building upon an extension of the classic two-location inventory transshipment model, we develop a framework to optimize an airline’s cargo overbooking decisions in a two-segment network setting. We find consistent evidence indicating that network-based global optimization always leads to greater expected profits than does local (i.e., market by market) optimization. Further, the magnitude of profit improvement is found to be most significant when local shipments have a relatively higher freight yield compared to flow-through shipments. Finally, our results indicate that global optimization contributes to greater profit improvement as offloading penalty costs become higher. [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]

This paper provides a partial summary of the 2003 ATRS (Air Transport Research Society) Global Airport Benchmarking Report which uses the annual data for 2000–2001. The objective of the ATRS benchmarking report is to measure and compare the performance of several important aspects of airport management and operation: productivity and efficiency, unit costs and cost competitiveness, financial results. The report also examines the relationships between various performance measures and airport characteristics in order to better understand the observed differences in airport performance. This particular paper extracted from the benchmarking report focuses on measuring and comparing operating efficiency performance of the world’s major airports. In particular, the paper presents the results on the airports’ Variable Factor Productivities (VFP) after removing the effects of the variables beyond managerial control. In the process, it identifies the effects of various factors influencing airport’s VFP, and computes a ’residual’ VFP index as an indicator for airports’ operations efficiency. [Copyright &y& Elsevier]

Abstract: This paper investigates the impacts of complementary alliance on airfares. The conventional wisdom argues that complementary airline alliances reduce airfares for passengers on the flow-through routes as a result of the elimination of double marginalization and efficiency gain. On the other hand, since complementary alliances help improve connecting services through one-stop check-in, better schedule coordination, etc., passengers are willing to pay higher prices for the enhanced services. That is, complementary alliances have both positive and negative effects on airfares for flow-through tickets that counteract each other. The net impact, therefore, is uncertain, a priori. Our theoretical model shows that the overall effects of complementary alliances on airfares depend on the relative strengths of the airfare reducing effects due to cooperative pricing setting and the increased willingness to pay for services improvements. Our empirical analysis based on data from the North trans-Pacific markets in October 2007 finds that member airlines of Star Alliance and Skyteam Alliance appear to charge significantly higher prices for through-tickets than the sum of segment fares on complementary routes, whereas for oneworld Alliance members, the upward and downward effects on airfares seem to counterbalance each other. Moreover, the price markup for through ticket is higher for business passengers than for leisure passengers. [Copyright &y& Elsevier]