Old conflicts, new rivals? Airline competition in the European market

Christoph Franz of Lufthansa recently identified Ryanair, easyJet, Air Berlin and Emirates as the company’s main competitors – gone are the days when it could benchmark itself against BA or Air France-KLM! This paper probes behind the headlines to assess the extent to which different airlines are in competition, using evidence from the UK and mainland European markets. The issue of route versus network competition is addressed. Many regulators have put an emphasis on the former whereas the latter, although less obvious, can be more relevant. For example, BA and American will cease to compete between London and Dallas Fort Worth if their alliance obtains anti-trust immunity but 80% of the passengers on this route are connecting at one or both ends and hence arguably belong to different markets (e.g. London-San Francisco, Zurich-Dallas, Edinburgh-New Orleans) which may be highly contested. The remaining 20% of local traffic is actually insufficient to support a single point to point service in its own right. Estimates are made of the seat capacity major airlines are offering to the local market as distinct from feeding other routes. On a sector such as Manchester–Amsterdam, 60% of KLM’s passengers are transferring at Schiphol as against only 1% of bmibaby’s. Thus although KLM operates 5 flights and 630 seats per day against bmibaby’s 2 flights and 298 seats, in the point to point market bmibaby offers more seats than KLM. The growth of the Low Cost Carriers (LCCs) means that competition increasingly needs to be viewed on city pair markets (e.g. London-Rome) rather than airport pair markets (e.g. Heathrow-Fiumicino). As the stronger LCCs drive out weaker rivals and mainline carriers retrench to their major hubs, some markets now have fewer direct options than existed prior to the low cost boom. Timings and frequencies are considered, in particular the extent to which services are a true alternative especially for business travellers. LCCs typically offer lower frequencies and more unsociable timings (e.g. late evening arrivals at remote airports) as they are more focused on providing the cheapest service rather than the most convenient schedule. Interesting findings on ‘monopoly’ services are presented (including alliances) - certain airlines have many more of these than others. Lufthansa has a significant number of sectors to itself whereas at the other extreme British Airways has direct competition on almost every route in its network. Ryanair and flybe have a higher proportion of monopoly routes than easyJet or Air Berlin. In the domestic US market it has become apparent since deregulation that better financial returns can come from dominating a large number of smaller markets rather than being heavily exposed in the major markets - which are hotly fought over. Regional niches that appear too thin for Ryanair to serve (with its all 189 seat 737-800 fleet) are identified. Fare comparisons in contrasting markets provide some insights to marketing and pricing strategies. Data sources used include OAG (schedules and capacity), AEA (traditional European airlines traffic by region), the UK CAA (airport, airline and route traffic plus survey information of passenger types) and ICAO (international route traffic and capacity by carrier). It is concluded that airlines often have different competitors depending on the context but in surprisingly many cases there are actually few or no direct substitutes. The competitive process set in train by deregulation of European air services in the 1990s is leading back to one of natural monopolies and oblique alternatives. It is the names of the main participants that have changed however!

A monovalent chimpanzee adenovirus Ebola vaccine boosted with MVA

BACKGROUND The West African outbreak of Ebola virus disease that peaked in 2014 has caused more than 11,000 deaths. The development of an effective Ebola vaccine is a priority for control of a future outbreak. METHODS In this phase 1 study, we administered a single dose of the chimpanzee adenovirus 3 (ChAd3) vaccine encoding the surface glycoprotein of Zaire ebolavirus (ZEBOV) to 60 healthy adult volunteers in Oxford, United Kingdom. The vaccine was administered in three dose levels — 1×1010 viral particles, 2.5×1010 viral particles, and 5×1010 viral particles — with 20 participants in each group. We then assessed the effect of adding a booster dose of a modified vaccinia Ankara (MVA) strain, encoding the same Ebola virus glyco- protein, in 30 of the 60 participants and evaluated a reduced prime–boost interval in another 16 participants. We also compared antibody responses to inactivated whole Ebola virus virions and neutralizing antibody activity with those observed in phase 1 studies of a recombinant vesicular stomatitis virus–based vaccine expressing a ZEBOV glycoprotein (rVSV-ZEBOV) to determine relative potency and assess durability. RESULTS No safety concerns were identified at any of the dose levels studied. Four weeks after immunization with the ChAd3 vaccine, ZEBOV-specific antibody responses were similar to those induced by rVSV-ZEBOV vaccination, with a geometric mean titer of 752 and 921, respectively. ZEBOV neutralization activity was also similar with the two vaccines (geo- metric mean titer, 14.9 and 22.2, respectively). Boosting with the MVA vector increased virus-specific antibodies by a factor of 12 (geometric mean titer, 9007) and increased glycoprotein-specific CD8+ T cells by a factor of 5. Significant increases in neutralizing antibodies were seen after boosting in all 30 participants (geometric mean titer, 139; P<0.001). Virus-specific antibody responses in participants primed with ChAd3 remained positive 6 months after vaccination (geometric mean titer, 758) but were significantly higher in those who had received the MVA booster (geometric mean titer, 1750; P<0.001). CONCLUSIONS The ChAd3 vaccine boosted with MVA elicited B-cell and T-cell immune responses to ZEBOV that were superior to those induced by the ChAd3 vaccine alone. (Funded by the Wellcome Trust and others; ClinicalTrials.gov number, NCT02240875.)