scholarly journals Tracing the Woes: An Empirical Analysis of the Airline Industry

2010 ◽  
Vol 2 (3) ◽  
pp. 1-43 ◽  
Author(s):  
Steven Berry ◽  
Panle Jia
Keyword(s):  
Airline Industry ◽  
Structural Model ◽  
Travel Demand ◽  
Low Cost ◽  
Air Travel ◽  
Demand And Supply ◽  
The Us ◽  
Low Cost Carriers ◽  
Air Travel Demand ◽  
The Impact

The US airline industry went through tremendous turmoil in the early 2000s, with four major bankruptcies, two major mergers, and various changes in network structure. This paper presents a structural model of the industry, and estimates the impact of demand and supply changes on profitability. Compared with 1999, we find that, in 2006, air-travel demand was 8 percent more price sensitive, passengers displayed a stronger preference for nonstop flights, and changes in marginal cost significantly favored nonstop flights. Together with the expansion of low-cost carriers, they explain more than 80 percent of legacy carriers' variable profit reduction. (JEL L13, L25, L93)

Determinants of air travel demand: The role of low-cost carriers, ethnic links and aviation-dependent employment

2018 ◽  
Vol 112 ◽  
pp. 18-28 ◽  
Author(s):  
Thijs Boonekamp ◽  
Joost Zuidberg ◽  
Guillaume Burghouwt
Keyword(s):  
Travel Demand ◽  
Low Cost ◽  
Air Travel ◽  
Low Cost Carriers ◽  
Air Travel Demand ◽  
Dependent Employment

The impact of emigrants’ homeland relations on air travel demand in a security volatile market: a case study on Lebanon

2013 ◽  
Vol 30 ◽  
pp. 170-179 ◽  
Author(s):  
Nadine Itani ◽  
John F. O’Connell ◽  
Keith Mason
Keyword(s):  
Travel Demand ◽  
Air Travel ◽  
Air Travel Demand ◽  
The Impact

Ailing Kenyan carrier will face more competition

2016 ◽  
Keyword(s):  
Airline Industry ◽  
Low Cost ◽  
Air Travel ◽  
Recovery Strategy ◽  
East African ◽  
Content Type ◽  
Profit Margins ◽  
Low Cost Carriers ◽  
Fuel Costs ◽  
Air Carriers

Significance Despite low fuel costs and the global airline industry running profitable operations, Kenya Airways has recorded multiple years of losses, leading the company to consider a recovery strategy that includes selling aircraft and shedding jobs. Impacts East African air carriers could benefit from industry rationalisation, but domestic political concerns could obstruct regional reforms. Low-cost carriers have emerged in Africa but struggle to make headway against publicly owned airlines. Once Kenya Airways exits fuel-hedging commitments, lower prices should improve profit margins. Without airline liberalisation and local carrier rationalisation, foreign airlines will benefit most from growing African air travel. Government protectionism, high taxes and regulation will restrict competition, especially from low-cost carriers.

Business Turnaround Plan: The Experience of Malaysia Airlines

2012 ◽  
Vol 1 (2) ◽  
pp. 211-221 ◽  
Author(s):  
Herwina Rosnan ◽  
Razmah Mahmod
Keyword(s):  
Financial Crisis ◽  
Airline Industry ◽  
Travel Demand ◽  
Business Environment ◽  
Air Travel ◽  
Air Carrier ◽  
Award Winning ◽  
Winning Strategies ◽  
Air Travel Demand ◽  
International Airline

Malaysia Airlines (MAS) is the Malaysian national air carrier. It was incorporated during the early days of air travel in 1937. From a humble beginning, MAS has developed into a renowned international airline with award-winning products and services. It managed to achieve cost efficiency and operates slightly below industry average. MAS has gone through several changes in its management over the years and still survives. However, being a national air carrier and government owned, MAS has several constraints in its operation where it has to balance between political and social obligations, and at the same time consider its commercial interest. Thus, some of the decisions on air service destinations, pricing structure and other business factors cannot be made purely based on commercial ground. This had affected the profitability of the airline. Furthermore, the global airline industry was facing turmoil since 11 September 2001 as a result of significant decline in air travel demand as well as the increase in fuel cost. Without exception, MAS was also badly hit and had recorded a substantial RM 1.3 billion loss in 2005. The bad market environment at that time continues to hit MAS hard. Hence, it was inevitable for the airline to make drastic changes in order to respond to the volatile business environment. Therefore, a real and radical business turnaround plan was imperative for MAS. Introduced in 2006, the Business Turnaround Plan (BTP) managed to bring MAS out of its financial crisis within two years of its implementation. This case highlights the winning strategies and action plans implemented by MAS in the BTP that had successfully turnaround this national air carrier from a deep financial crisis. As a result, from a substantial loss of RM 1.3 billion in 2005, MAS achieved a record-breaking profit of RM 610 million in 2007.

Effects of Mergers and Divestitures on Airline Fares

2017 ◽  
Vol 2603 (1) ◽  
pp. 98-104 ◽  
Author(s):  
Zhou Zhang ◽  
Federico Ciliberto ◽  
Jonathan Williams
Keyword(s):  
Market Power ◽  
Airline Industry ◽  
Low Cost ◽  
Unique Data ◽  
Low Cost Carriers ◽  
The Impact

U.S. antitrust authorities have increasingly forced merging companies to divest assets as a condition for merger approval, with the goal of creating a more competitive postmerger environment. This study examined the effectiveness of this government strategy in the context of the airline industry, in which forced divestitures have occurred in recent consolidations. The study used unique data on assets critical to airport facilities that were involved in the divestitures to document the reallocation of those assets to low-cost carriers. Estimates of the impact of the divestitures on airfares were then calculated. The results show that, at the affected airports, fares for merging carriers fell by 3% and fares for nonmerging carriers fell by 1% relative to airports at which no divestiture occurred. These results provide evidence that the divestiture strategy used by antitrust authorities is effective in this setting in mitigating market power.

AN EMPIRICAL ANALYSIS OF THE EFFECT OF MULTIMARKET CONTACTS ON US AIR CARRIERS' PRICING BEHAVIORS

2011 ◽  
Vol 56 (04) ◽  
pp. 593-600 ◽  
Author(s):  
HIDEKI MURAKAMI ◽  
RYOTA ASAHI
Keyword(s):  
Empirical Analysis ◽  
Airline Industry ◽  
Low Cost ◽  
Empirical Studies ◽  
The Us ◽  
Low Cost Carriers ◽  
Air Carriers

A number of empirical studies have shown that multimarket contacts facilitate collusive behaviors between full-service carriers (FSCs) in the US airline industry. This paper empirically investigates the effects of multimarket contacts on air carriers' pricing behaviors and highlights those of low-cost carriers (LCCs) and FSCs as well as those among LCCs. Simultaneous demand and price (pseudo-supply) equations are estimated to derive these impacts of multimarket contacts in the top 30 air markets in the US multimarket contacts among FSCs do lead to collusive setting of high airfares. However, the effect of multimarket contacts is lower among LCCs, and the degree depends on the number of LCCs in a market. The airfares of LCCs remain low, even though there are multimarket contacts among LCCs. These results suggest that the behaviors of LCCs are not affected by multimarket contacts.

scholarly journals The impact of COVID-19 on air travel demand and CO2 emissions in Brazil

2021 ◽  
Author(s):  
João Pedro Bazzo ◽  
Carlos Kauê Vieira Braga ◽  
Rafael H. M. Pereira
Keyword(s):  
Fuel Consumption ◽  
Co2 Emissions ◽  
Travel Demand ◽  
Air Travel ◽  
Economic Activities ◽  
Sharp Drop ◽  
Commercial Aviation ◽  
Travel Restrictions ◽  
Air Travel Demand ◽  
The Impact

The drastic reduction in economic activities caused by the COVID-19 pandemic creates a unique and timely opportunity to examine the environmental impacts of human activity. In several countries, the aviation sector was dramatically affected by the travel restrictions, resulting in a change of trip demand and in a drop of fuel consumption. Nonetheless, little attention has been paid to the impact of the pandemic on air travel demand, one of the fastest-growing sources of emissions globally. This paper estimates the impact of the COVID-19 on air travel demand and emissions in Brazil, the largest aviation market in Latin America. Combining detailed flight data with daily number of passengers and fuel consumption and data on combustion emission factors, we estimate CO2 emissions of domestic flights in Brazil. A Bayesian structural time-series model was used to estimate the impact of COVID-19 on daily trends of air travel demand and emissions. We find that the COVID-19 pandemic caused a reduction of 68% on national passengers and 62% in total CO2 emissions compared to what would have occurred if the pandemic had not happened. It avoided a total of approximately 4.6 megatons of CO2 between March and December 2020 in Brazil, the equivalent of one year of domestic flight emissions in France. Despite such a sharp drop in commercial aviation, passenger demand recovered to 64.2% of pre-pandemic levels by the end of 2020. CO2 emissions had a 52.6% reduction in 2020 and the emissions per capita increased after the COVID-19 outbreak. Although the precise impact of the COVID-19 on this figure is not yet fully understood, the fast recovery in domestic flights by December 2020 indicates that the emissions could soon return to pre-pandemic levels, demonstrating the challenges of reducing emissions in the aviation sector in the short term.

scholarly journals Analysis of Strategies Implemented by AirAsia to Cater to the Covid-19 Effects

2021 ◽  
Vol 4 (3) ◽  
pp. 49-67
Author(s):  
Rajesh Kumar Nair ◽  
Varsha Ganatra ◽  
Karishma Kaur ◽  
Daisy Mui Hung Kee ◽  
Wan Teng Khoo ◽  
...  
Keyword(s):  
Airline Industry ◽  
Food Industry ◽  
Travel Demand ◽  
Air Travel ◽  
Annual Loss ◽  
Global Pandemic ◽  
Travel Restrictions ◽  
Air Travel Demand ◽  
Border Controls

During the global pandemic, AirAsia reported an annual loss of RM5.9 billion ($1.4 billion) in 2020. The uncertainty of the COVID-19 outbreak, travel restrictions, and border controls had led to weaker air travel demand, which had impacted AirAsia’s operation badly. This paper depicts how Covid-19 impacted AirAsia and the strategies implemented by AirAsia during the pandemic in the marketing aspects. This paper also focuses on how AirAsia can anticipate a strong recovery in the airline industry while expanding to other industries. In extreme and under pressure circumstances, AirAsia implemented many strategies to cater to the effects of Covid-19. However, other strategies, such as focusing on their business in the food industry, should be expanded throughout Malaysia.

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