NASA Scientific and Technical Aerospace Reports

In the absence, for regulatory reasons, of cross-border mergers these are the principal means by which the industry can
consolidate internationally. The failure of airlines such as Sabena and Swissair has also enforced restructuring at some of
Europe’s busier airports. This paper analyses the developments which have been taking place and attempts to identify the
implications for airline network structures and the function of different hub airports. Airlines have rationalised their networks
by withdrawing services that feed the hubs of rival alliances. New links have however been created that are made feasible by
the alliance support. The range of services available to passengers in long-haul markets to/from Europe is evaluated before
and after recent industry reorganization. Hubs are crucial to interlink the route networks of partners in an alliance. However,
duplication between nearby hub airports that find themselves within the same airline alliance can lead to loss of service at the
weaker locations. The extent to which the alliance hubs in Europe duplicate or complement each other in terms of network
coverage is assessed and this methodology also enables the optimal partnerships for ‘unattached’ airlines to be identified. The
future role of the various European hubs is considered under different scenarios of global alliance development. The paper
concludes by considering possible longer-term developments. In an environment where the low-cost carriers will provide a
major element of customer choice, it is suggested that the traditional airlines will retrench around their hubs, surrendering
many secondary cities to the low-cost sector. Further reduction in the number of alliances could threaten more of the European
hubs. For both regulatory and commercial reasons, the end result may be just one airline alliance - so recreating in the
deregulated market the historic role of LATA.
Author
Air Transportation; Airline Operations; Consolidation; Failure; Market Research; Network Analysis
20040111203 Embry-Riddle Aeronautical Univ., Daytona Beach, FL, USA
Application of Core Theory to the U.S. Airline Industry
Raghavan, Sunder; The Conference Proceedings of the 2003 Air Transport Research Society (ATRS) World Conference; July
2003; Volume 5; 14 pp.; In English; See also 20040111201; Copyright; Avail: CASI; A03, Hardcopy
Competition in the airline industry has been fierce since the industry was deregulated in 1978. The proponents of
deregulation believed that more competition would improve efficiency and reduce prices and bring overall benefits to the
consumer. In this paper, a case is made based on core theory that under certain demand and cost conditions more competition
can actually lead to harmful consequences for industries like the airline industry or cause an empty core problem. Practices
like monopolies, cartels, price discrimination, which is considered inefficient allocation of resources in many other industries,
can actually be beneficial in the case of the airline industry in bringing about an efficient equilibrium. Keywords: empty core,
demand, cost, equilibrium, unrestricted contracting, competition, airline industry.
Author
Airline Operations; Competition; Costs
20040111211 Toulouse Univ., France
Regulation in the Air: Price and Frequency Caps
deVillemeur, Etienne Billette; The Conference Proceedings of the 2003 Air Transport Research Society (ATRS) World
Conference; July 2003; Volume 5; 19 pp.; In English; See also 20040111201; Copyright; Avail: CASI; A03, Hardcopy
Despite deregulation on the air-transportation markets, man), connections are still operated by a single operator.
Regulation is thus a central issue in this industry. There is however a great concern for the (possibly negative) consequences
of price regulation on the quality of services. We argue that both aspects should be consider jointly and propose a mechanism
that allow to decentralize the optimal structure of ser_ices in this industry. The regulatory procedure is robust to the
introduction of heterogeneity in the travellers’ valuation of the connections’ frequency.
Author
Cost Analysis; Market Research; Air Transportation
20040111213 Wilfrid Laurier Univ., Waterloo, Ontario, Canada
Regulation, Competition and Network Evolution in Aviation
Gillen, David; Morrison, William; The Conference Proceedings of the 2003 Air Transport Research Society (ATRS) World
Conference; July 2003; Volume 5; 31 pp.; In English; See also 20040111201; Copyright; Avail: CASI; A03, Hardcopy
Our focus is the evolution of business strategies and network structure decisions in the commercial passenger aviation
industry. The paper reviews the growth of hub-and-spoke networks as the dominant business model following deregulation
in the latter part of the 20th century, followed by the emergence of value-based airlines as a global phenomenon at the end
of the century. The paper highlights the link between airline business strategies and networkstructures,and examines the
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