BESTUFS policy and research recommendations IV: environmental zones in European cities, accommodating the needs of passenger and freight transport in cities, and BESTUFS Project recommendations

Recommendations report produced as part of the EC-funded BESTUFS project on urban freight transport.

Can the European low-cost airline boom continue? Implications for regional airports

At a time when the traditional major airlines have struggled to remain viable, the low-cost carriers have become the major success story of the European airline industry. This paper looks behind the headlines to show that although low-cost airlines have achieved much, they too have potential weaknesses and face a number of challenges in the years ahead. The secondary and regional airports that have benefited from low-cost carrier expansion are shown to be vulnerable to future changes in airline economics, government policy and patterns of air service. An analysis of routes from London demonstrates that the low-cost airlines have been more successful in some markets than others. To attractive and historically under-served leisure destinations in Southern Europe they have stimulated dramatic growth and achieved a dominant position. To major hub cities however they typically remain marginal players and to secondary points in Northern Europe their traffic has been largely diverted from existing operators. There is also evidence that the UK market is becoming saturated and new low-cost services are poaching traffic from other low-cost routes. Passenger compensation legislation and possible environmental taxes will hit the low-cost airline industry disproportionately hard. The high elasticities of demand to price in certain markets that these airlines have exploited will operate in reverse. One of the major elements of the low-cost business model involves the use of smaller uncongested airports. These offer faster turn-arounds and lower airport charges. In many cases, local and regional government has been willing to subsidise expansion of air services to assist with economic development or tourism objectives. However, recent court cases against Ryanair now threaten these financial arrangements. The paper also examines the catchment areas for airports with low-cost service. It is shown that as well as stimulating local demand, much traffic is captured from larger markets nearby through the differential in fare levels. This has implications for surface transport, as access to these regional airports often involves long journeys by private car. Consideration is then given to the feasibility of low-cost airlines expanding into the long-haul market or to regional operations with small aircraft. Many of the cost advantages are more muted on intercontinental services.

Dynamic cost indexing

This paper describes the development of a generic tool for dynamic cost indexing (DCI), which encompasses the ability to manage flight delay costs on a dynamic basis, trading accelerated fuel burn against ‘cost of time’. Many airlines have significant barriers to identifying which costs should be included in ‘cost of time’ calculations and how to quantify them. The need is highlighted to integrate historical passenger delay and policy data with real-time passenger connections data. The absence of industry standards for defining and interfacing necessary tools is recognised. Delay recovery decision windows and ATC cooperation are key constraints. DCI tools could also be used in the pre-departure phase, and may offer environmental decision support functionality: which could be used as a differentiating technology required for access to designated, future ‘green’ airspace. Short-term opportunities for saving fuel and/or reducing emissions are also identified.

Review of UK urban freight studies

Report produced as part of the Green Logistics project (EPSRC and Department for Transport funded). This report is based on a review of UK studies in which data has been collected to obtain an understanding of road-based urban freight transport activities and patterns of operation. Urban freight remains relatively under researched by comparison with passenger transport both in the UK and worldwide. However, in the UK there have been a number of studies that have attempted to investigate road-based freight operations since the 1960s. But no attempt has been made to draw together the results of these various studies and compare them. This is what is presented in this report. The report has studied the results of 30 UK urban freight studies carried out in the last decade in order to attempt to provide insight into urban freight activities in our towns and cities. It presents this current knowledge about urban freight transport activities in the UK from these studies, and compares the similarities and differences between study findings.

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!

Considering the relationship between freight transport and urban form

There has been much discussion since the mid-1980s about the relationship between transport and urban form. However, all of this body of research has concerned itself with passenger transport (i.e. the movement of people). This report is intended as an initial investigation into the relationship between road freight transport and urban form. Important trends in road freight transport and logistics and the land use associated with these activities are discussed. Data about road freight transport activity by heavy goods vehicles (HGVs) in Britain that has been disaggregated from a UK government survey is analysed to investigate the nature of urban freight operations in sixteen selected urban areas. This includes analysis of the efficiency and transport intensity of these operations on journeys to, from and within each urban area. Scenarios concerning urban freight operations based on reductions in length of haul, and improvements in vehicle lading factors, vehicle carrying capacities and empty running are constructed in order to investigate the potential effect of such changes on the vehicle kilometres performed on journeys to, from and within the sixteen urban areas.

The challenge of managing airline delay costs

Estimates of airline delay costs as a function of delay magnitude are combined with fuel and (future) emissions charges to make cost-benefit trade-offs in the pre-departure and airborne phases. Hypothetical scenarios for the distribution of flow management slots are explored in terms of their cost and target-setting implications. The general superiority of passenger-centric metrics is of significance for delay measurement, although flight delays are still the only commonly-reported type of metric in both the US and Europe. There is a particular need for further research into reactionary (network) effects, especially with regard to passenger metrics and flow management delay.

Modelling the airline costs of delay propagation

Reactionary delays constitute nearly half of all delay minutes in Europe. A capped, multi-component model is presented for estimating reactionary delay costs, as a non-linear function of primary delay duration. Maximum Take-Off Weights, historically established as a charging mechanism, may be used to model delay costs. Current industry reporting on delay is flight-centric. Passenger-centric metrics are needed to better understand delay propagation. In ATM, it is important to take account of contrasting flight- and passenger-centric effects, caused by cancellations, for example. Costs to airlines and passenger disutility will both continue to be driven by delay relative to the original schedule.

ADR in aviation: European and national perspectives

The air transport sector generates the largest share of cross-border consumer complaints, as a proportion of complaints received by the ECC-Net. Since the foundation of the ECC-Net in 2005, air passenger claims have made up around one fifth of the total caseload most years. A pan-European framework of bodies that handle consumer to business disputes will be implemented through the consumer ADR directive.4 Taking these developments into consideration, the aviation industry is an interesting sector to study. This paper looks at dispute resolution for air passengers in the United Kingdom (UK) and Germany, as well as at European level.

The paradox of competition for airline passengers with reduced mobility (PRM)

Airline competition with customer service as product differentiator has forced down costs, air fares and investor returns. Two passenger markets operate in aviation: (a) able-bodied passengers for whom airlines compete and (b) passengers with reduced mobility (PRMs) – disabled by age, obesity or medical problems – for whom airlines do not compete. Government interference in the market intended to protect a minority of narrowly-defined PRMs has had unintended consequences of enabling increasing numbers of more widely-defined PRMs to access complimentary airline provisions. With growing ageing and overweight populations and long-haul travelling medical tourists such regulation could lead to even lower investors’ returns. The International Air Transport Association (IATA) (2013) examined the air transport value chain for competitiveness using Porter’s (2008) five forces but did not distinguish between able-bodied passengers and PRMs. Findings during an investigation of these two markets concurred with IATA-Porter that the markets for the bargaining powers of PRM buyers and PRM suppliers were highly competitive. However, in contrast to the IATA conclusions, intensity of competition, and threats from new entrants and substitute products for PRM travel were low. The conclusion is that airlines are strategically PRM defensive by omission. Paradoxically, the airline which delivers the best PRM customer service could become the least profitable.

The paradox of competition for airline passengers with reduced mobility (PRM)

Airline competition with customer service as product differentiator has forced down costs, air fares and investor returns. Two passenger markets operate in aviation: (1) able-bodied passengers for whom airlines openly compete and (2) passengers with reduced mobility (PRMs) – disabled by age, obesity or medical problems – for whom airlines do not compete. Government interference in the market intended to protect a minority of narrowly-defined PRMs has had unintended consequences of enabling increasing numbers of more widely-defined PRMs to access complimentary airline provisions. With growing ageing and overweight populations and long-haul travelling medical tourists such regulation could lead to even lower investors’ returns. The International Air Transport Association (IATA) (2013) examined the air transport value chain for competitiveness using Porter’s (2008) five forces but did not distinguish between able-bodied passengers and PRMs. Findings during an investigation of these two markets concurred with IATA-Porter that the markets for the bargaining powers of PRM customers and PRM suppliers were ‘highly competitive’. However, in contrast to the IATA conclusions the threats posed by new entrants, substitute products and intensity of competition for PRM passengers were all ‘low’. The conclusion is that airlines are strategically PRM defensive by omission. Paradoxically, the airline which delivers the best PRM customer service could become the least profitable.

Performance and prospects of smaller UK regional airports

This paper investigates the traffic and financial performance of smaller UK regional airports between 2001 and 2014. Fourteen airports that typically serve less than 5 million passengers per annum were selected for the analysis. A period of strong growth in passenger demand was experienced from 2001 to 2007, driven largely by low cost carriers. The period from 2007 to 2014 was characterised by declining demand, resulting in significant losses for many of the airports. Airline strategies, such as the use of an increased unit fleet size and average sector length, may further limit future prospects for smaller UK regional airports in favour of larger ones with greater local demand. The relationship between traffic throughput and the generation of aeronautical revenues seems to vary at airports. There is generally a strong and significant relationship between traffic throughput and the generation of commercial revenues and total operating costs at airports serving 3–5 million passengers, but the situation for airports serving fewer than 3 million is less certain.

The Roles of ‘Conventional’ and Demand-Responsive Bus Services

Purpose - The roles of ‘conventional’ (fixed-route and fixed-timetable) bus services is examined and compared to demand-responsive services, taking rural areas in England as the basis for comparison. It adopts a ‘rural’ definition of settlements under a population of 10,000. Design/methodology/approach - Evidence from the National Travel Survey, technical press reports and academic work is brought together to examine the overall picture. Findings - Inter-urban services between towns can provide a cost-effective way of serving rural areas where smaller settlements are suitably located. The cost structures of both fixed-route and demand-responsive services indicate that staff time and cost associated with vehicle provision are the main elements. Demand-responsive services may enable larger areas to be covered, to meet planning objectives of ensuring a minimum of level of service, but experience often shows high unit cost and public expenditure per passenger trip. Economic evaluation indicates user benefits per passenger trip of similar magnitude to existing average public expenditure per trip on fixed-route services. Considerable scope exists for improvements to conventional services through better marketing and service reliability. Practical implications - The main issue in England is the level of funding for rural services in general, and the importance attached to serving those without access to cars in such areas. Social implications - The boundary between fixed-route and demand-responsive operation may lie at relatively low population densities. Originality/value - The chapter uses statistical data, academic research and operator experience of enhanced conventional bus services to provide a synthesis of outcomes in rural areas.

Delay Assignment Optimization Strategies at Pre- Tactical and Tactical Levels

This paper compares different optimization strategies for the minimization of flight and passenger delays at two levels: pre-tactical, with on-ground delay at origin, and tactical, with airborne delay close to the destination airport. The optimization model is based on the ground holding problem and uses various cost functions. The scenario considered takes place in a busy European airport and includes realistic values of traffic. Uncertainty is introduced in the model for the passenger allocation, minimum time required for turnaround and tactical uncertainty. Performance of the various optimization processes is presented and compared to ratio by schedule results.

Identification of enterprise carbon assets based on a business perspective

From a new perspective, this paper clarifies the internal and external factors affecting the carbon assets on the basis of induction of the connotation. It takes the enterprise business as the source of carbon assets, and makes an automotive group as an example, and establishes a network of its passenger car business activities based on the topological structure. This paper provides a method for identifying carbon assets from the relationship of business activities, and explains the formation mechanism of different assets from which it refines its network, and puts forward a reference to re-identify enterprise carbon assets from the perspective of development.