Airline network competition: Full-service airlines, low-cost airlines and long-haul markets

The paper discusses airline network competition. Low-cost airlines and conventional airlines have distinctly different strategies and network types. This determines their ability to compete with other airlines in specific markets. The paper discusses the lack of competition between conventional airlines in local markets, and sees why low-cost airlines are the primary source of competition in such markets. Conventional airlines are relatively strong on long-haul markets, using their networks to keep costs per seat relatively low. Charter airlines show that a long-haul low-cost strategy is feasible For scheduled low-cost airlines, this may be more difficult, but this does not automatically mean that low-cost airlines cannot enter thick long-haul markets.     

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.     

Low-cost carriers in Asia: Deregulation, regional liberalization and secondary airports

While the demand for low-cost air transportation is potentially huge in Asia, development of low-cost carriers (LCCs) lags behind the region's overall aviation development, and certainly lags behind the LCC development in North America and Europe. It has been noted that market conditions and the regulatory environment of Asia are different from those of North America and Europe. What are the main differences here; and how do these differences impact market entry and success of Asian LCCs? This paper describes salient features of Asian LCCs and their developments. It examines the impact of Asia's domestic and international airline regulations and airport infrastructure on the performance of its LCCs. We find that the “Southwest effect” may also exist in Asia and that the development of low-cost terminals may compensate, at least partly, the scarcity of secondary airports in the region. The experiences of Thailand and China are investigated as case studies.     

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.     

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.     

On the beaten track: a view of US West-Coast container port competition

More than a century ago far-sighted railroad builders and steamship operators were seeking the shortest intermodal itineraries between the eastern United States and the Orient. A combination of locational fact and the factual outcomes of 19th century railroad building left Chicago roughly equidistant in railway mileage from what became the four great US West-Coast port complexes in the Los Angeles, San Francisco, Portland and Seattle regions. Their nearly equivalent rail access to Chicago and points east has renewed significance in the container era.

This paper concerns the efforts of US Pacific seaboard ports to stay 'on the beaten track' with respect to container shipments between Asia and the eastern United States. The West-Coast ports are transit points dividing the transcontinental and transoceanic segments of long intercontinental journeys. From origins to destinations there are, in fact, many possibly feasible itineraries, including all-water routes.

The West-Coast ports have considerable control over their own site improvements. On the other hand, with respect to transiting container traffic, the ports may influence, but are unlikely to control, their own situations. Since the major container port facilities are very often on long-term lease to large intermodal carriers, the latter are making the important shipping and routeing decisions. The carriers tend in fact to set the tone and level of port competition.

What is the nature of the competition between container ports? Is it a figment of the publicist's imagination and perpetuated by irrelevant statistical boasting? Is it perhaps something forced on the ports by carriers eager to play one port off against another in a 'lowest bid' game? At what geographical scale might port competition be most useful or, maybe, least wasteful?     

Editorial: Young maritime researchers—a note of respect

Globalization, liberalization, competition and spatial interaction are significant factors affecting the transformation of manufacturing industries worldwide. In the transportation and logistics industry, however, cooperation is becoming even more critical than competition in determining firms' efficiency. Cooperation has always characterized the liner sector in which strategic alliances, mergers and acquisitions have generated twin effects: notable increases in ship size and falls in freight rates. Meanwhile, the stevedoring industry is undergoing privatization-driven consolidation and the emergence of global pure terminal operators. This article focuses on vertical integration between global carriers and terminal operators. We address the following key current issues: 1. dedicated terminals as a strategy for cutting costs and controlling integrated transport chains;

2. the struggle for supply chain control, involving global carriers versus global terminal operators, driven by financial power and technical and managerial capability.

We close analysing one of the core problems of the market, namely the evolving role of the dedicated terminals. For the pure stevedores they represent an opportunity to secure a cargo, while in the hands of the liners they enable cost stability and the possibility to put pressure on pure terminal operators.     

Maritime liner shipping and the stevedoring industry: market structure and competition strategies

Globalization, liberalization, competition and spatial interaction are significant factors affecting the transformation of manufacturing industries worldwide. In the transportation and logistics industry, however, cooperation is becoming even more critical than competition in determining firms' efficiency. Cooperation has always characterized the liner sector in which strategic alliances, mergers and acquisitions have generated twin effects: notable increases in ship size and falls in freight rates. Meanwhile, the stevedoring industry is undergoing privatization-driven consolidation and the emergence of global pure terminal operators. This article focuses on vertical integration between global carriers and terminal operators. We address the following key current issues:

• dedicated terminals as a strategy for cutting costs and controlling integrated transport chains;
• the struggle for supply chain control, involving global carriers versus global terminal operators, driven by financial power and technical and managerial capability.

We close analysing one of the core problems of the market, namely the evolving role of the dedicated terminals. For the pure stevedores they represent an opportunity to secure a cargo, while in the hands of the liners they enable cost stability and the possibility to put pressure on pure terminal operators.     

Price formation of dry bulk carriers in the Chinese shipbuilding industry

In this paper, we present, for the first time, the price formation of Chinese dry bulk carriers based on the historical shipbuilding contract prices. Price determinants include generic market factors as well as Chinese elements. Principal component regression analysis is employed as the solution for the multicollinearity problem among explanatory variables. The result indicates that the time charter rate has the most significant positive impact on shipbuilding price; increases in three other factors, namely the cost of shipbuilding, the price-cost margin and the shipbuilding capacity utilisation, have positive influences in the descending order. Unlike the traditional perception of newbuilding price that shipbuilding cost has the most significant effect, we assert that the most important role the time charter rate plays is attributed mainly to the ‘China Factor’ in the bulk carrier sector. In addition, simulations are performed to investigate what would happen to the Chinese dry bulk carrier prices under changes in the time charter rate and shipbuilding cost. The findings are useful for Chinese shipyards, shipowners and emerging shipbuilders.     

Daily Maersk’s impacts on shipper’s supply chain inventories and implications for the liner shipping industry

The liner shipping industry has long been characterized by a weekly sailing frequency and schedule unreliability. This research is motivated by the launch of the revolutionary “Daily Maersk” service in late 2011, which introduced daily departures and “absolute reliability” in the Asia–North Europe trade lane. This article analyzes Daily Maersk’s impacts on a shipper’s supply chain inventories and profound implications for the liner shipping industry as a game changer. The quantitative analyses show that the impact of more frequent sailings is most significant on a shipper’s cycle stock, while improving schedule reliability substantially reduces safety stock and pipeline stock. Daily Maersk is most valuable for products that have high value density, high inventory holding cost ratio, low demand variability, and high service level (SL) requirement. These findings imply that the trend of liner alliance/merger/acquisition is likely to continue or even accelerate as shipping lines consolidate fleet capacity to offer more frequent sailings. Rival carriers may step up their involvement in terminal operations to improve schedule reliability. They also need to rethink about their SL targets and clearly define their preferred customer segments.     

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.     

Impact of scale increase of container ships on the generalised chain cost

In recent years, an increase in the size of the container ships could be observed. The question is how these larger ships will influence the total generalised costs from a port of loading to a destination in the European hinterland. The second question is whether a scale increase of the container ships on other loops, such as a loop from the United States to Europe, has the same impact on the generalised chain costs as on the loop from Asia to Europe. A derived question is which element of the total chain has the highest importance, and whether this balance varies as the ship size changes. In this article, a model is developed that allows answering the above research questions. The model is designed to simulate the cost of a complete loop of a container ship and of a chain that uses that same loop. For the chain cost simulation, the maritime part is determined by the loop. From the ports of loading and unloading, the port container handling and the hinterland transportation costs are also integrated. The model also allows calculating the total chain cost from a point of origin (either a hinterland region or a port) to a destination point (also a port or a hinterland region). An actual container loop of a container shipping company can be introduced in the model. An application is made to two existing container loops, namely from Asia respectively the United States to Europe. It turns out that changing ship does indeed lead to economies of scale, but also that the impact is larger on the Asia–Europe connection than on the US–Europe connection. Furthermore, the maritime component has the biggest share in the total chain cost, but as ship size increases, the shares start getting closer to each other. This research contributes to the existing literature in two ways. First of all, it quantifies the impact of the scale increase of container ships throughout the total chain. Second, this is done from a bottom-up engineering modelling approach.     

The implications of increased competition among ports for port policy and management

The increased competition faced by ports is more focused than previously on the performance of logistics systems of which the individual terminals in ports are critical hubs. The changes in competitive conditions raise issues about appropriate public port policies and strategies of port managements. This paper argucs that the port industry should (and is) moving in the direction of more harmonized policies based on economic principles. Port policies based on cost recovery from users of port facilities and services need to be adopted as the international standard. The competitive environment favours considerable local autonomy. Port management, in addition to possible direct responsibility for terminal management, needs to focus on activities with economies of scale or scope. Such activities, which span the requirements of terminals and may even warrant inter-port cooperation, enhance the services available for many port users.     

Analysis of thirty years evolution of urban growth,transport demand and supply,energy consumption,greenhouse and pollutants emissions in Greater Cairo

The objective of the paper is to analyze evolution of urbanization, transport demand and supply in Greater Cairo (GC) over the last three decades of the 20th century. This is in addition to investigating the impact of city growth on energy consumption and emissions from transport. It utilizes results of 1971, 1978, 1987, 1998 and 2001 travel demand surveys, undertaken during the corresponding GC transport studies; each was published a year or two later. No further transport studies have been carried out in GC over the past decade and in view of the current political situation, it is not envisaged that similar studies will be undertaken in the near future. The analysis includes the evolution of daily trips, trip purpose share, modal share and number of cars. More recent trends for 2006/2007 vehicle registration by type and size are given. The evolution of transport supply covers projects until early 2012. In parallel estimates of the evolution of energy consumption and cost, emissions of greenhouse gases (CO₂) and pollutants (CO, HC and NO_x) are given for 1971/2001. The adopted estimation methodology is summarized. Comparative analysis of relevant evolution indexes and trends of growth between 1971 and 2001, taking the former as base year, is given. Land use and transport policies and projects that in some cases helped, directly or indirectly, to reduce traffic congestion, or at least prevented an increase, are addressed, commenting on their outcomes. Thus, transferable experience are useful to sister cities benefiting from successes and avoiding drawbacks. The evolution of the impact of GC metro on energy consumption and cost, and GHG emissions is given for 1987/2001, assuming the scenario “metro did not exist”. More recent impact analysis is given for 2007/2008, as the data allowed estimating traffic volumes that would have been added to the congested metro corridors under the above scenario; and the related fuel consumption and cost and GHGs. The paper ends with conclusions on GC evolution, learned lessons and suggests repeating similar work in other mega cities of the developing countries. Further research is emphasized, e.g., modeling the relationship between land use, transport, energy and emissions; modeling emission factors by vehicle type; and studying fuel-subsidy-reduction scenarios and their socio-economic effects.     

Strategic fleet size planning for maritime refrigerated containers

In the present economic climate, it is often the case that profits can only be improved, or for that matter maintained, by improving efficiency and cutting costs. This is particularly notorious in the shipping business, where it has been seen that the competition is getting tougher among carriers, thus alliances and partnerships are resulting for cost effective services in recent years. In this scenario, effective planning methods are important not only for strategic but also operating tasks, covering their entire transportation systems. Container fleet size planning is an important part of the strategy of any shipping line. This paper addresses the problem of fleet size planning for refrigerated containers, to achieve cost-effective services in a competitive maritime shipping market. An analytical model is first discussed to determine the optimal size of an own dry container fleet. Then, this is extended for an own refrigerated container fleet, which is the case when an extremely unbalanced trade represents one of the major investment decisions to be taken by liner operators. Next, a simulation model is developed for fleet sizing in a more practical situation and, by using this, various scenarios are analysed to determine the most convenient composition of refrigerated fleet between own and leased containers for the transpacific cargo trade.     

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.     

Impact of proposed federal limits on US bagged food aid shipments: reduction in MSF carrier profits—a risk assessment 1

This paper is a stochastic risk simulation of the impact of proposed federal tonnage limits on US Maritime Security Fleet (MSF) bagged food aid shipments. Only MSF (i.e. federally subsidized carriers/vessels for war, or emergencies) and non-MSF US carriers (therefore, at competitive disadvantage) can compete for such shipments—representing an indirect subsidy to both groups. To compensate, US Congress proposed a financial penalty (loss of voyage subsidy) on MSF carriers for food aid above a certain limit. Accordingly, certain carriers will be policy 'winners' (non-MSF—larger food aid shipments), and others 'losers' (MSF). By simulating loss-minimizing economic behaviour by MSF carriers—using five stochastic factors—I obtain losses substantially below those claimed by the MSF owners.

Simulated annual-average MSF profits reduction is $3.5 million—within a large confidence interval; if no carriers surrender their subsidies (as claimed by MSF owners), a reduction of $6.0 million. Only 16% of annual MSF voyages are affected by a 2,500-ton limit (3%; 5,000-ton limit). Minimizing losses, 25 (of 41 affected) annual MSF voyages replace 38,000 tons of food aid with 23,000 tons of other cargo—forgoing $2.1 million in yearly direct subsidies. Two assumptions explain most of this simulated loss reduction.     

靠船件安装方法的设计和计算

新建导管架海上安装通常需要动用大型浮吊船舶,成本高昂,靠船件原有的安装方法就位困难,甚至可能延误工期,浪费施工资源。对此,结合工程实例,介绍了一种新的靠船件安装方法,阐述了其使用的导向型钢的结构形式和安装位置,并使用ANSYS软件进行了强度校核,最后对其在实际工程应用中提出了几项建议。     

金属风暴武器技术发展综述

金属风暴武器技术是采用弹丸叠装技术和电子点火技术的新型发射技术,具有射速高、火力强大、极高的火力质量比等特点。本文较为全面地论述了金属风暴武器技术的原理、各个方面的发展及改装情况,包括发射药密封、多发射药、点火与不点火排除、现场装弹、大口径武器发射及普通榴弹与可叠装弹丸改装等专利技术。采用这些技术可以解决发射药的有效密封与低成本密封、弹丸初速度的提高与改变、可靠点火与低成本点火、现场再装弹、大口径武器发射及低成本改装等问题。     

Rail access charges in France: Beyond the opposition between competition and financing

Access charges to the railway infrastructures, and in particular of the high speed lines, poses many theoretical and practical questions. Besides the need to decide whether it is better to apply a principle of marginal cost or a full cost approach, a difficulty arises with regard to the possibilities of competition between various operators. France is especially affected by this problem since access charges are particularly high while at the same time competition is non-existent. Is this absence of competition explained by the high level of access charges? After describing the principles which underlie the pricing scheme for high speed trains in France, this paper attempts to find out if these tolls constitute a barrier to entry. After building a model that summarizes the components of supply and demand on the Paris–Lyon journey, this paper shows that the considerations relating to demand (peak hour or off-peak hour) are more fundamental than access charges, which do not in themselves constitute a barrier to entry. Barriers exist, but they involve access charges in relation to the allocation of slots which would make it possible to guarantee certain profitability to a new entrant. Break-even points are proposed which show that SNCF's potential competitors have margins for manoeuvre.