Can long-haul low-cost airlines be successful?

A key question is whether the very successful, largely short-haul LCC business model can work over long-haul sectors? This paper compares the cost and other advantages of LCCs and evaluates how far they might be applied to long-haul sectors. It is estimated that cost advantages might be much lower than the 50-60% on short-hauls. Other factors such as the adoption by network airlines of some LCC features and their likely competitive response, the limited potential for market stimulation, the need for dense markets and feed traffic all combine to cast doubt on the widespread establishment of the business model for long-haul flights.     

Some insights into competition between low-cost airlines

The phenomenon of the wide world growth in low-cost airlines has resulted in a focus on their pricing strategies, on issues of cost recovery and on their impact on the traffic and market shares of legacy carriers or other low-cost carriers when they are in competition, either directly or at adjacent airports.This paper provides a brief overview of the characteristics of these low-cost carriers as well as their history and geography. It goes on to outline ways in which these carriers compete and manage demand, ranging from price competition to advertising; some of these methods directly reflect their special characteristics. Some empirical evidence is presented which indicates a correlation in fare setting behaviour between competitors and insights are offered on cost recovery.The impact of the start-up of low-cost carriers is also analysed, focusing on their impacts on other low-cost carriers. The case of Ryanair competing with easyJet on London-Venice is examined along with Southwest and Frontier on Denver-Las Vegas.     

Will China’s airline industry survive the entry of high-speed rail?

This study investigates the effects of high-speed rail (HSR) services on Chinese airlines. Our analysis suggests that the HSR service will be competitive in terms of network connectivity, total travel time and cost efficiency. On the other hand, growth of the Chinese airline industry has been unbalanced in terms of traffic distribution, airline network development, airport capacity and share of international traffic. While the long term prospects of Chinese airlines are bright, the carriers must develop effective hub-and-spoke networks and increase their competitiveness in international markets in order to achieve sustainable growth in the coming years. For the Chinese government, continued investment at hub airports and support to low-cost carriers are also necessary.     

Exchange rate changes and the cost competitiveness of international airlines: The Aviation Trade Weighted Index

Discussions of how changes in exchange rates impact on international airlines tend to be ambivalent. In this paper, it is shown that the relative cost competitiveness of an international airline will decline when there is an exchange rate appreciation in its home country - as will be the case for other tradable goods and services. The extent to which this happens depends on which countries the prices of the inputs are set in and also on which countries' airlines it is closely competing with. The impact is greater if there is an appreciation relative to those countries whose airlines the home airlines are closely competing with. In the trade literature, this is recognised in the Trade Weighted Index of exchange rates, which weights exchanges rates according to their importance in a country's trade flows. In this paper, an Airline Trade Weighted Index is developed - the weights for this index depend on airline traffic and revenues on routes to and from a country. The ATWI is calculated for Australian international airlines, and it indicates that there has been a significant loss of competitiveness in recent years, due to the appreciation of the Australian dollar relative to currencies of key airline competitor countries.     

Airlines within airlines: Assessing the vulnerabilities of mixing business models

In this paper we examine two questions; what is it that makes some cases of airlines within airlines apparently successful while in many other cases it is just the opposite? And second, why would a carrier attempt such a strategy, is there a common set of circumstances or is each case unique? In the US, Canada and Europe a number of legacy carriers have sought to respond to LCC entry by creating an LCC within the legacy carriers; most have failed but some have succeeded, most notably in Australia and Germany. We first examine the evolution of the LCC business model and illustrate the different forms it takes today. Following this we provide a discussion of the underlying sources of cost advantage of the LCC and assess which sources are sustainable in the longer term. Finally we examine the conditions under which these apparent successes have occurred and look for common threads. We find market dominance, judicious network planning and co-ordination are necessary conditions for success.     

Competition in transit markets

Despite regulatory reforms in a number of countries, competition in transit markets is still relatively rare. Moreover, where it does occur it tends to be small group in nature and the outcomes are difficult to predict. In this paper, simulation models of competition in inter-urban rail markets and urban bus markets are developed and applied in studies of Great Britain and Sweden. It is found that on busy routes head-on competition is commercially feasible (although for rail this assumes low access charges) but is not socially desirable. For routes with thin demand (or high access costs), competition may be limited to cream skimming. In most competed cases, there appears to be a tendency for the provision of too much service, at too high price and (at least for bus) at too low quality. Rather than classical Bertrand-Cournot oligopoly models, transit markets may be best described by models of oligopolistic competition based on horizontal product differentiation.     

Incumbent responses to low-cost airline entry and exit: A spatial autoregressive panel data analysis

While the US airline industry has been substantially transformed in recent years by the growth of low-cost airlines, the cost-saving benefits of lower airfares are difficult to gauge empirically. There are two important ways in which this paper contributes to the existing literature on the impact of the low-cost carriers (LCCs). First, the availability of route-level panel data allows us to examine the role of the LCCs in the long-run adjustment of airfares as well as the responses of the incumbent carriers to LCC entry and exit in a dynamic setting. Second, we capitalize on recent developments in spatial econometrics and explicitly model the spatial dependence among adjacent airline routes, an issue often ignored by previous studies. Although most of the pro-competitive effects of LCC entry take place after entry, we find evidence that the incumbent carriers also cut airfares in anticipation of entry by the LCCs. Moreover fares remain lower even after Southwest Airlines exits. Our empirical analysis confirms the spatial dependence among airfares in adjacent routes, provides estimates of the consumer benefits from lower airfares in routes affected by LCCs, and shows that there are substantial indirect benefits, i.e. lower fares in spatially-linked, nearby routes.     

Workshop 3B: Governance,ownership and competition issues in deregulated (free market) public transport: Lessons that can be learnt from developed and developing economies

The past emphasis in this conference series has been on the best ways to deregulate regulated public transport markets. This workshop reverses this process by examining the best ways to regulate deregulated public transport markets. A hierarchy of regulatory needs is identified and three hybrid models examined, based loosely on experience from Great Britain, New Zealand and Sweden. It is argued that deregulated public transport markets are a global phenomenon but regulatory measures should reflect local requirements. The resultant process of glocalisation might result in regulatory measures that focus on the rules of law and their enforcement in emerging public transport markets (such as urban transport in Sub Saharan Africa and for the soon to be competitive inter urban market in Germany) but that focus on guidance for network integration and incentivisation for welfare maximisation in more mature public transport markets (as in Great Britain, New Zealand and Sweden).     

A combined tramp ship routing,fleet deployment,and network design problem

In this paper, a tramp ship routing model of fleet deployment in a hub-and-spoke network is presented. This model simultaneously determines the selection of hubs, the assignment of spokes to hubs, the deployment of feeder-containerships as well as containership routing between spokes and spokes, hubs and spokes, and hubs and hubs. Even though some parts have been studied, this complex combination of shipping problems has never been addressed. Because the problem is NP-hard, a genetic algorithm (GA) with local search is proposed. In the algorithm, a cut-off procedure is applied to fleet deployment in a sub-route strategy. A number of randomly generated problem instances are solved by both a mathematical program and the GA with local search. A simple but realistic heuristic algorithm is also developed. Both the GA with local search and the heuristic algorithm are used to solve a number of real case instances. A comparison of the results shows the efficiency of the GA with local search. The developed model can be used as a route-decision support tool for shipping companies that provide long-haul shipping services in a hub-and-spoke network.     

The implications of the re-establishment of direct links across the Taiwan Strait on the aviation industries in Greater China

This paper investigates the economic implications of the liberalization of air transportation across the Taiwan Strait to the region's aviation industries. Our analysis suggests that (1) liberalization has brought substantial benefits to airports and airlines in Mainland China and Taiwan. Negative impacts to Hong Kong are largely compensated by traffic increase in routes linking Mainland China. (2) In general, Taiwanese airports and airlines have benefited more from liberalization compared to airports and airlines on the mainland and Hong Kong. Such asymmetric effect is due to the larger size of the Mainland Chinese aviation market, which allows Taiwanese airlines to exploit network-related benefits. (3) Our investigation suggests that foreign hub carriers and medium sized Chinese airports will benefit most from China's future liberalizations.     

船舶制造系统的复杂性及其控制

本文论述了船舶制造系统的特性及其复杂性。这些复杂性对船舶制造系统的最大的影响是难于控制制造系统的计划和成本。为此推出了降低和控制复杂性的方法，提出了生产模式创新，产品简化，制造过程简化的措施，结合信息化，网络化提出了以信息集成为基础的中心制造的造船模式。     

也谈雷雨天气下的签派放行

雷雨天气下运行航班,不但给航空安全带来隐患,而且极大地影响着航空空司的航班正点与经济效益。本文从签派放行的角度分析讨论了雷雨天气的形成机制、信息获取、信息加工、放行决策等方面,以期提高签派放行质量和运行效率。     

Competition in ship handling: a study of market turbulence in North European harbour towage

This paper addresses the issues of an increasingly competitive towage industry in Northern European ports. Enhanced competitiveness reflects the trends in the global mobility of capital, labour, enterprise and management within the context of deregulated port markets. Up until the early 1990s, the long term trend in major North European ports had been towards market concentration. Many small towage firms have been taken-over, bought out or merged. Alternatively, a pattern of consortia has emerged with co-operation and market sharing seen as preferable to ruinous competition. A contrasting trend has occurred in the 1990s, with new entrants into hitherto stable markets. In a number of ports—Antwerp, Rotterdam, Bremerhaven, Hamburg, Southampton, Thamesport, Bristol Channel—new fleets have brought competitive challenge to the incumbent towage fleets. The process of enhanced competitiveness raises questions of safety, reliability, investment and professionalism. The movement towards an openly competitive shipping industry has been in evidence from the 1960s onwards. The momentum of a dynamic shipping industry, with its competitiveness sharpened by the use of global supply factors, has intensified from that period. The movement in European tonnage towards flags of convenience and global labour supplies began in the tanker and bulk carrier markets; more recently this has spread to deep sea liner, short sea and even cabotage trade shipping. The towage industry is the last North European shipping sector to make this transition, following the trends towards port deregulation in the 1990s. From this perspective, this paper considers the impact on the towage market of global mobility and deregulation in North European towage markets—the impact of increased competition on the traditional operators and the likely effect on operational towage standards.     

基于NetLinx企业级计算机信息集成

网络技术推动了传统工业控制系统结构的变革。分析了NetLinx的体系结构，对其典型网络(以太网、控制网和设备网)的特性进行了介绍，详细论述了基于NetLinx的工业控制网络与ERP(企业资源规划)系统的集成应用。     

Competition in ship handling: a study of market turbulence in North European harbour towage

This paper addresses the issues of an increasingly competitive towage industry in Northern European ports. Enhanced competitiveness reflects the trends in the global mobility of capital, labour, enterprise and management within the context of deregulated port markets. Up until the early 1990s, the long term trend in major North European ports had been towards market concentration. Many small towage firms have been taken-over, bought out or merged. Alternatively, a pattern of consortia has emerged with co-operation and market sharing seen as preferable to ruinous competition. A contrasting trend has occurred in the 1990s, with new entrants into hitherto stable markets. In a number of ports Antwerp, Rotterdam, Bremerhaven, Hamburg, Southampton, Thamesport, Bristol Channel new fleets have brought competitive challenge to the incumbent towage fleets. The process of enhanced competitiveness raises questions of safety, reliability, investment and professionalism. The movement towards an openly competitive shipping industry has been in evidence from the 1960s onwards. The momentum of a dynamic shipping industry, with its competitiveness sharpened by the use of global supply factors, has intensified from that period. The movement in European tonnage towards flags of convenience and global labour supplies began in the tanker and bulk carrier markets; more recently this has spread to deep sea liner, short sea and even cabotage trade shipping. The towage industry is the last North European shipping sector to make this transition, following the trends towards port deregulation in the 1990s. From this perspective, this paper considers the impact on the towage market of global mobility and deregulation in North European towage markets the impact of increased competition on the traditional operators and the likely effect on operational towage standards.     

Shipping's fourth wave: ship management and Vernon's trade cycles

This paper considers the question whether the present recovery of shipping means a return to pre-crisis conditions with hegemony of OECD shipping or whether shipping has irrevocably changed. Shipping is losing its national character as ship management firms contribute towards the fragmenting of traditional ship-owning firms into separately managed activities, making shipping more footloose as an industry and facilitating relocation in least cost factor markets. Trade cycles may be at work in shipping like those observed in many industrial markets, beyond the scope of any single government's ability to control. The dispersion of shipping and shipping firms away from the historical concentration in a few traditional maritime powers towards low-cost countries must be seen as a manifestation of a secular trend, giving rise to a profound reorganization not only of shipping markets but of shipping itself.     

Long-term development of express coach services in Britain

Express coach services compete for longer distance market with car and rail, and largely cater for the leisure, tourism, and visiting friends and relatives. markets. Britain deregulated its express coach system in 1980, and it is now opportune to examine long-term impacts of that change. The initial impacts were reviewed by the authors in 1986 (Robbins & White, 1986) but such impacts do not necessarily match long-term outcomes. Monitoring of the British system has been conducted by examining service changes and data on ridership, together with financial performance of the main operator groups and technical press coverage. It can be shown that a dominant position has been retained by the major operator (National Express), with a continued decline in the role of smaller independent operators in the all-year-round daily network. However, new competition has emerged from other large groups (most notably Stagecoach ‘Megabus’ in 2003). The paper analyses the operating and marketing strategies of the new operator and contrasts these strategies with those adopted in the 1980s. Implications for the future development of the network in Britain are outlined.     

Measuring the effect of low-cost carriers on regional airports' commercial revenue

This paper measures the effect of low-cost carriers (LCCs) on British regional airports' commercial revenue using panel data analysis. The evidence shows that although LCCs have significant impact on airports' commercial revenue, their contribution is smaller compared to other carriers. The empirical results indicate that holding other variables constant, on average, each additional LCC passenger boosts airport commercial revenue by £2.87, while each additional other carrier passenger raises commercial revenue by £5.59. These results are relatively stable across different models. The findings have important policy implications for aviation strategy at the regional level and beyond.     

Structure, conduct and performance on the major liner shipping routes 1

Market concentration on the major container shipping routes has the potential to reduce contestability, impede effective competition and, as a consequence, inhibit the positive relationship between trade and economic growth. This development could also hamper the ability of economic regions to realize their respective competitive and comparative advantages. Within this context, the structure-conduct-performance (SCP) framework is used to analyse liner shipping dynamics in the transpacific, Europe-Far East and transatlantic trade routes. The analysis finds no conclusive evidence that either the increased concentration of slot capacity or the attempts by shipping lines to boost potential slot capacity (mainly through collaborative arrangements) lead to improved financial performance. The paper concludes that, despite high and increasing concentration among carriers on each of the trade routes analysed, these markets remain contestable.     

The impact of transitional changes of maritime passenger transport on Croatian tourism development

At the beginning of the nineties, Croatia witnessed the collapse of communism, arrival of democracy, a war of national survival and the launch of the transition. Extraordinarily under these circumstances, tourism has become one of the most propulsive economic activities in Croatia. To preserve this prosperous industry, one must consider the variables that affect Croatian tourism. Research shows that maritime passenger transport has a substantial influence upon seashore tourism improvement. This mode not only represents a sizable share of international tourism transport, but often provides the only access to island tourism destinations. This paper provides an analysis of the impact of the transitional changes of maritime passenger transport on Croatian tourism development. Following a brief examination of the functions of maritime transport within tourism, the paper focuses on: composition of Croatian fleets, potential opportunities in local and international markets, and structural reforms required to increase the quality of Croatian maritime passenger services. Commercialization programmes are significantly important as Croatia prepares to enter the EU, and open up its markets to free competition.