Airline’s choice of aircraft size – Explanations and implications

When facing a growth in demand, airlines tend to respond more by means of increasing frequencies than by increasing aircraft size. At many of the world’s largest airports there are fewer than 100 passengers per air transport movement, although congestion and delays are growing. Furthermore, demand for air transport is predicted to continue growing but aircraft size is not. This paper aims to investigate and explain this phenomenon, the choice of relatively small aircraft. It seems that this choice is associated mainly with the benefits of high frequency service, the competitive environment in which airlines operate and the way airport capacity is allocated and priced. Regression analysis of over 500 routes in the US, Europe and Asia provides empirical evidence that the choice of aircraft size is mainly influenced by route characteristics (e.g. distance, level of demand and level of competition) and almost not at all by airport characteristics (e.g. number of runways and whether the airport is a hub or slot coordinated). We discuss the implications of this choice of aircraft size and suggest that some market imperfections exist in the airline industry leading airlines to offer excessive frequency on some routes and too low frequency on others.     

High-speed rail and air transport competition and cooperation: A vertical differentiation approach

This paper considers vertical differentiation between air transport and high-speed rail (HSR) with different ranges of travel distance to analyze the air-HSR competition effects on fares, traffic volumes and welfare, as well as the conditions under which air-HSR cooperation is welfare-enhancing. The analysis is conducted in a hub-and-spoke network with a network carrier, an HSR operator, and a spoke airline, taking into account potential hub airport capacity constraint. We find that air-HSR competition in the connecting market may result in the network airline charging an excessively high price in the HSR-inaccessible market. This effect is present even when the HSR-inaccessible route is a duopoly-airline market. On the other hand, air-HSR cooperation increases fares in the connecting market, and an improvement in rail speed or air-HSR connecting time reduces airfare on the routes where HSR and the airline compete. When the airline cannot serve all the markets due to limited hub airport capacity, it would withdraw from the market in which it has less competitive advantage over HSR. Finally, air-HSR cooperation is more likely to be welfare-improving when the hub airport is capacity constrained, and when either air transport or HSR exhibits strong economies of traffic density.     

On the relationship between airport pricing models

Airport pricing papers can be divided into two approaches. In the traditional approach the demand for airport services depends on airport charges and on congestion costs of both passengers and airlines; the airline market is not formally modeled. In the vertical-structure approach instead, airports provide an input for an airline oligopoly and it is the equilibrium of this downstream market which determines the airports’ demand. We prove, analytically, that the traditional approach to airport pricing is valid if air carriers have no market power, i.e. airlines are atomistic or they behave as price takers (perfect competition) and have constant marginal operational costs. When carriers have market power, this approach may result in a surplus measure that falls short of giving a true measure of social surplus. Furthermore, its use prescribes a traffic level that is, for given capacity, smaller than the socially optimal level. When carriers have market power and consequently both airports and airlines behave strategically, a vertical-structure approach appears a more reasonable approach to airport pricing issues.     

Apron capacity at hub airports—the impact of wave‐system structure

At hub airports, dominant airlines/alliance coordinate their flights in time with the aim of increasing the number (and quality) of connections, thus producing a wave‐system in traffic schedules. This paper addresses the impact of concentrating aircraft into waves on airport apron capacity. Existing models for apron capacity estimation are based on the number of stands, stand occupancy time, and demand structure, differing between representative groups of aircraft served at an airport. Criteria for aircraft grouping are aircraft type and/or airline and/or type of service (domestic, international, etc.). Modified deterministic analytical models proposed in this paper also take into account the wave‐system parameters, as well as runway capacity. They include the impact of these parameters on the number of flights in wave, stand occupancy time, and consequently apron capacity. Numerical examples illustrate the difference between apron capacity for an origin–destination airport and a hub airport, under the same conditions; utilization of the theoretical apron capacity at a hub airport, given the wave‐system structure; and utilization of the apron capacity at a hub airport when point‐to‐point traffic is allowed to use idle stands. Furthermore, the influence of different assignment strategies for aircraft stands in the case of hub airports is also discussed. Copyright © 2016 John Wiley & Sons, Ltd.     

Flight delays,capacity investment and social welfare under air transport supply-demand equilibrium

This paper analyzes benefits from aviation infrastructure investment under competitive supply-demand equilibrium. The analysis recognizes that, in the air transportation system where economies of density is an inherent characteristic, capacity change would trigger a complicated set of adjustment of and interplay among passenger demand, air fare, flight frequency, aircraft size, and flight delays, leading to an equilibrium shift. An analytical model that incorporates these elements is developed. The results from comparative static analysis show that capacity constraint suppresses demand, reduces flight frequency, and increases passenger generalized cost. Our numerical analysis further reveals that, by switching to larger aircraft size, airlines manage to offset part of the delay effect on unit operating cost, and charge passengers lower fare. With higher capacity, airlines tend to raise both fare and frequency while decreasing aircraft size. More demand emerges in the market, with reduced generalized cost for each traveler. The marginal benefit brought by capacity expansion diminishes as the capacity-demand imbalance becomes less severe. Existing passengers in the market receive most of the benefit, followed by airlines. The welfare gains from induced demand are much smaller. The equilibrium approach yields more plausible investment benefit estimates than does the conventional method. In particular, when forecasting future demand the equilibrium approach is capable of preventing the occurrence of excessive high delays.     

Multiple hub network and high-speed railway: Connectivity,gateway, and airport leakage

This paper considers the relation between the role of airport as gateway (inter–intra transit airport) and the connectivity between air transport and high-speed rail (HSR) transport to discuss the possibility of a multiple gateway system with HSR. We deal with both international and domestic transport markets in the model analysis. In the international markets, only airlines compete against each other, while in the domestic market airlines and HSR compete against each other. The results suggest that the improvement of connectivity between air and HSR at the airport increases its international passengers, and therefore, that strengthens its role as gateway, for example, gathering more inter–intra transit passengers. However, the results also suggest that the demand of the area which the airport belongs to affects the role of airport as gateway.     

Airline competition and network structure

This paper studies airline networks and their welfare implications in an unregulated environment. Competing airlines may adopt either fully-connected (FC) or hub-and-spoke (HS) network structures; and passengers exhibiting low brand loyalty to their preferred carrier choose an outside option to travel so that markets are partially served by airlines. In this context, carriers adopt hubbing strategies when costs are sufficiently low, and asymmetric equilibria where one carrier chooses a FC strategy and the other chooses a HS strategy may arise. Quite interestingly, flight frequency can become excessive under HS network configurations.     

How could the collaboration between airport and high speed rail affect the market?

This paper discusses the possibility of collaboration between airport and high speed rail (HSR) to improve the airport’s gateway function. We apply the model which consists of three players, carriers, passengers, and the airport. In order to estimate the impact of the collaboration, we carry out some numerical computations with the model under the twin hub three zones network. Our results show that the collaboration between HSR and the smaller demand airport can reduce the congestion at the bigger demand airport, which suggests the collaboration can be preferable for carriers and passengers; it would improve the social welfare.     

Comparing the impact of future airline network change on emissions in India and the United States

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 CO₂ 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 CO₂ emissions per passenger and local air quality effects at hub airports in developing air transportation systems.     

Airport congestion pricing and passenger types

We consider a public and congested airport served by airlines that may have market power, and two types of travelers with different relative values of time. We find that in the absence of passenger-type-based price discrimination by airlines, it can be useful to increase the airport charge so as to protect passengers with a great relative time value from excessive congestion caused by passengers with a low relative time value. As a result, the socially efficient airport charge can be substantially higher than what we learned from the recent literature on congestion pricing with non-atomistic airlines.     

Differences in air passengers’ buying behaviour: findings from Korean and Australian international passengers

Abstract

This paper investigates how air passengers’ expectations, ticket price, airline service quality, value, passenger satisfaction and airline image determine their buying behaviour. To test the conceptual frameworks, path analysis was applied to data collected from Korean and Australian international passengers to examine differences between these two groups. Further analyses were undertaken on different passenger segments between national and foreign airline passengers. The results of the path analysis reveal that air passengers’ buying behaviour differs significantly between Korean and Australian international passengers. Results also reveal that the determinants of air passengers’ buying behaviour differ by airlines.     

Hub location in the South-Atlantic airline market: A spatial competition game

The paper analyzes the airlines’ hub location problem through a spatial competition game played in two stages. First, airlines sequentially choose the location of their hub and second, they compete offering direct or connecting services between each city-pair. Different outcomes in the first stage will affect competition in the second, and as a consequence, the market share that airlines can obtain.Given actual demand patterns, results of the model are applied to the South-Atlantic airline market. We study the subgame perfect equilibriums obtained as a result of competition in each city-pair to anticipate where airlines will probably locate their hubs once an “open skies” policy is adopted in this market.     

Role of the Railways in the Future of Air Transport

Abstract

The role of the railways in the air transport industry is usually limited to provision of access to airports. However, the development of high-speed rail networks and the congestion and environmental problems faced by the air transport industry suggest the railways could have a greater role in working with the airlines to provide an integrated transport service for medium-distance journeys (up to 800 km). Many air journeys involve two flights and a transfer at a hub airport. The alternative being investigated here would replace air journeys by a rail journey and a flight, and a transfer between them at the hub airport. Such integration could offer a positive alternative to aircraft on some routes and lead to railway journeys to airports becoming part of air transport services, and not only to provide access to them. Integration could therefore provide a better use of available air capacity rather than duplicating some high-speed rail routes and services.     

Control strategies for departure process delays at airport passenger terminals

This paper explores the characteristics of process delays at airport passenger terminals and establishes a queuing model for both passengers and baggage served by different connecting type facilities. The impact of delay propagation on other processes and flights is investigated using an analytical approach. In addition, the extra costs incurred on passengers, process operators, and airlines are examined using the delay cost functions. To reduce the impact of process delays, various delay-controlled strategies are proposed, such as setting scheduled times for completion of a process, increasing the number of service counters, and priority service for emergent flights. Taoyuan International Airport in Taiwan is used as a case study when facing special events. Results showed that the model can effectively and efficiently estimate delay propagation and its costs. In addition, processes that are not consecutive allow more buffer time between different operations, which helps ease propagation of delays caused by previous services.     

Optimal assignment for check-in counters based on passenger arrival behaviour at an airport

Establishing how to utilize check-in counters at airport passenger terminals efficiently is a major concern facing airport operators and airlines. Inadequate terminal capacity and the inefficient utilization of facilities such as check-in counters are major factors causing congestion and delays at airport passenger terminals. However, such delays and congestion can be reduced by increasing the efficiency of check-in counter operations, based on an understanding of passengers' airport access behaviour. This paper presents an assignment model for check-in counter operations, based on passengers' airport arrival patterns. In setting up the model, passenger surveys are used to determine when passengers arrive at the airport terminals relative to their flight departure times. The model then uses passenger arrival distribution patterns to calculate the most appropriate number of check-in counters and the duration of time that each counter should be operated. This assignment model has been applied at the Seoul Gimpo International Airport in Korea. The model provides not only a practical system for the efficient operations of time-to-time check-in counter assignments, but also a valuable means of developing effective longer-term solutions to the problem of passenger terminal congestion and delays. It also offers airlines a means of operating check-in counters with greater cost effectiveness, thus leading to enhanced customer service.     

The punctuality performance of aircraft rotations in a network of airports

The aim of this paper is to investigate the influence of aircraft turnaround performance at airports on the schedule punctuality of aircraft rotations in a network of airports. A mathematical model is applied, composed of two sub-models, namely the aircraft turnaround model (turnaround simulations) and the enroute model (enroute flight time simulations). A Markovian type model is featured in the aircraft turnaround model to simulate the operation of aircraft turnarounds at an airport by considering operational uncertainties and schedule punctuality variance. In addition, stochastic Monte Carlo simulations are employed to carry out stochastic sampling and simulations in both the aircraft turnaround model and the enroute model. Results of simulations show the robustness of the aircraft rotation model in capturing uncertainties from aircraft rotations. The propagation of knock-on delays in aircraft rotations is found to be significant when the short-connection-time policy is used by an airline at its hub airport. It is also found that the proper inclusion of schedule buffer time in the aircraft rotation schedule helps control the propagation of knock-on delays and, therefore, stabilize the punctuality performance of aircraft rotations.     

The airline perturbation problem: considering disrupted passengers

Abstract

When airlines are faced with some unforeseen short-term events, they have to reconstruct their flight schedules. Although aircraft recovery decisions affect passengers, these disrupted passengers and recovering them have not been explicitly considered in most previous aircraft recovery models. This paper presents an assignment model for airline schedule recovery which recovers both aircraft and disrupted passengers simultaneously, using a rolling horizon time framework. Our model examines possible flight retiming, aircraft swapping, over-flying, ferrying, utilization of reserve aircraft, cancellation and passenger reassignment to generate an efficient schedule recovery plan. The model ensures that the schedule returns to normal within a certain time and the objective is to minimize operational recovery aircraft cost, cancellation and delay cost as well as disrupted passenger cost. The model is tested using a data-set with two disruption scenarios. The computational results show that it is capable of handling the integrated aircraft and passenger recovery problem successfully.     

Airline emission charges: Effects on airfares,service quality,and aircraft design

This paper explores the effect of airline emissions charges on airfares, airline service quality, aircraft design features, and network structure, using a detailed and realistic theoretical model of competing duopoly airlines. These impacts are derived by analyzing the effects of an increase in the effective price of fuel, which is the path by which emissions charges will alter airline choices. The results show that emission charges will raise fares, reduce flight frequency, increase load factors, and raise aircraft fuel efficiency, while having no effect on aircraft size. Given that these adjustments occur in response to the treatment of an emissions externality that is currently unaddressed, they represent efficient changes that move society closer to a social optimum.     

Monitoring Aircraft Turnaround Operations – Framework Development,Application and Implications for Airline Operations

Abstract

A real-time operation monitoring system – Aircraft Turnaround Monitoring System – is developed based on a system framework to monitor aircraft turnaround operations at an airport. Mobile computing devices (PDAs) and wireless network technology General Packet Radio Service (GPRS) are used to implement the real-time monitoring system for an airline. System implementation and test results indicate that real-time operation monitoring can potentially reduce delays occurring from airline operations. Proactive measures can be taken immediately by ground handling staff to reduce delays, once the risk of delays and potential delay propagation is identified. The availability of detailed operating data can help airlines identify the root delay causes from complex connections among aircraft, flight/cabin crew and passengers. In addition, these operating data also shed some light on the future development of aircraft routing algorithms in order to consider explicitly stochastic disruptions and delay propagation in airline schedule planning.     

A heuristic model for frequency planning and aircraft routing in small size airlines

The flight schedule of an airline is the primary factor in finding the most effective and efficient deployment of the airline's resources. The flight schedule process aims at finding a set of routes with associated aircraft type, frequency of service and times of departures and arrivals in order to satisfy a specific objective such as profit maximization. In this paper, we develop a two‐phase heuristic model for airline frequency planning and aircraft routing for small size airlines. The first phase develops a frequency plan using an economic equilibrium model between passenger demand for flying a particular route and aircraft operating characteristics. The second phase uses a time‐of‐day model to develop an assignment algorithm for aircraft routing.