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!

Individual differences and personality correlates of navigational performance in the virtual route learning task

Research on the mechanisms and processes underlying navigation has traditionally been limited by the practical problems of setting up and controlling navigation in a real-world setting. Thanks to advances in technology, a growing number of researchers are making use of computer-based virtual environments to draw inferences about real-world navigation. However, little research has been done on factors affecting human–computer interactions in navigation tasks. In this study female students completed a virtual route learning task and filled out a battery of questionnaires, which determined levels of computer experience, wayfinding anxiety, neuroticism, extraversion, psychoticism and immersive tendencies as well as their preference for a route or survey strategy. Scores on personality traits and individual differences were then correlated with the time taken to complete the navigation task, the length of path travelled,the velocity of the virtual walk and the number of errors. Navigation performance was significantly influenced by wayfinding anxiety, psychoticism, involvement and overall immersive tendencies and was improved in those participants who adopted a survey strategy. In other words, navigation in virtual environments is effected not only by navigational strategy, but also an individual’s personality, and other factors such as their level of experience with computers. An understanding of these differences is crucial before performance in virtual environments can be generalised to real-world navigational performance.

Factors affecting airport route development activity and performance

Airports have become increasingly active in route development as a means of attracting, growing and retaining air services. However, little is known about the different levels of route development activity at airports, or the extent to which route development activity affects performance. Based on the findings of a survey of 124 airports worldwide, this study finds that larger airports are significantly more active than smaller airports. It also finds that private airports are more active than public airports, and that airports in Europe are more active than airports in other world regions, although differences according to ownership and location are not significant. Route development activity has a significant positive effect on performance. Factors associated with the airport business environment (market turbulence, competitive intensity, market growth and airport constraints) were not found to have a significant moderating effect on the relationship between route development activity and performance. However, two factors were found to have a significant direct effect on performance; market growth has a significant positive effect while airport constraints have a significant negative effect.

En Route Speed Reduction Concept for Absorbing Air Traffic Flow Management Delays

This paper proposes an en route speed reduction to complement current ground delay practices in air traffic flow management. Given a nominal cruise speed, there exists a bounded range of speeds that allows aircraft to fly slower with the same or lower fuel consumption than the nominal flight. Therefore, flight times are increased and delay can be partially performed in the air, at no extra fuel cost for the operator. This concept has been analyzed in an initial feasibility study, computing the maximum amount of delay that can be performed in the air in some representative flights. The impact on fuel consumption has been analyzed, and two scenarios are proposed: the flight fuel remains the same as in the nominal flight, and some extra fuel allowance is permitted in order to face uncertainties. Results show significant values of airborne delay that may be useful in many situations, with the exception of short hauls where airborne delay may be too short. If cruise altitude is changed, the amount of airborne delay increases, since changes in cruise speed modify the optimal flight altitudes. From the analyzed flights, a linear dependency is found relating the airborne delay with the amount of extra fuel allowance.

European route choice determinants

Different charging zones are found within European airspace. This allows airlines to select different routes between origin and destination that have different lengths and en-route charges. There is a trade- off between the shortest available route and other routes that might have different charges. This paper analyses the routes submitted by airlines to be operated on a given day and compares the associated costs of operating those routes with the shortest available at the time, in terms of en-route charges and fuel consumption. The flights are characterised by different variables with the idea of identifying a behaviour or pattern based on the airline or flight characteristics. Results show that in some areas of the European airspace there might be an incentive to select a longer route, leading to both a lower charge and a lower total cost. However, more variables need to be considered and other techniques used, such as factor analysis, to be able to identify the behaviour within an airline category.