Dr Frankie O'Connell

In the airline industry, where information asymmetry prevails, airlines employ various strategies to maximise profitability. Signalling theory offers a valuable framework for understanding how airlines communicate the quality of their offerings to consumers through pricing signals. This theory suggests that signallers (airlines) use pricing to indicate the quality of their products or services to receivers (consumers), who then use these signals to inform their purchasing decisions (Connelly et al., 2011). Airlines often differentiate themselves by signalling through market share, pricing, and brand perception, with pricing being a particularly potent indicator of quality (Jeng, 2016; Jiang et al., 2014). Elevated prices for premium products can effectively signal superior quality, providing consumers with confidence in their more expensive purchasing choices (Bagwell, 1992). Traditional economic theories suggest that a higher market share often acts as a quality signal, indicating to consumers that many others have favoured a company's products or services, thereby implying superior quality (Caminal & Vives, 1996). Bhattacharya et al. (2022) further empirically demonstrates that firms with higher market share can deliver more credible signals, enabling them to set higher prices and consequently enhance profitability. This study enriches signalling theory by incorporating relative price, which reflects the price differences between products of varying quality. This pricing framework segments consumers and signals quality differences between service tiers. Hernandez (2011) contributes to this expanded understanding by demonstrating that competition influences pricing strategies. Their findings indicate that the optimal price ratio between products of varying quality levels widens with increased competition intensity. This suggests that in competitive markets, a larger price differential is used effectively to signal superior quality, offering a competitive advantage. However, the effectiveness of price signals is contingent on market structure. While price differentiation can reinforce consumer perceptions of quality, Basdeo et al. (2006) argue that when multiple firms engage in similar signalling strategies, the clarity of any single price signal may be diminished. In such cases, firms must establish sufficiently pronounced price differentiation to ensure their signals remain distinct and effective in influencing consumer perceptions. This study bridges an empirical gap by employing the relative price to analyse how pricing strategies between business and economy classes serve as signals of quality and impact airline profitability. Relative price quantifies the deviation of business and economy class pricing of an airline from the average fare on specific routes, providing a nuanced measure of how airlines use price differentiation as a mechanism to convey service quality. At each airline level, relative price is a strategy characterised by setting higher business class fares to maximise revenue, while offering lower economy class fares to boost sales. As most routes offer two or three distinct quality tiers, such as business and economy class, this market structure is particularly well-suited for such an investigation. Furthermore, competitive routes represent high-demand market where multiple airlines with varying characteristics operate, while non-competitive routes tend to have lower demand. Consequently, the extent to which market share signals quality may vary across markets. It is more likely to reflect quality in competitive routes, while in less competitive markets, where consumer choice is limited, it may instead reflect a lack of alternatives rather than superior service. By analysing the impact of relative price signals on airline revenues across different market contexts using real-world airline data, this study contributes to signalling theory by exploring these dynamics in a practical, real-world setting.

The Association of Southeast Asian Nations (ASEAN) and the European Union (EU) signed the Comprehensive AirTransport Agreement (CATA) between their member states in October 2022.The ASEAN-EU CATA is the world’s first bloc-to-bloc air transport agreement and reflects the latest policythinking in air transport regulation. The agreement allows the carriers of the two blocs to operate passenger andcargo services between and beyond both regions, by exercising Fifth Freedom traffic rights and liberalisingcodeshare restrictions.Since 2014 and despite both sides showing a commitment to elevating their aviation relations to a new level,the two regions remain different regarding the level of domestic air travel market integration and liberalisation.These intrinsic variations contribute to creating disadvantages in the competitive position of ASEAN-basedcarriers when compared to their EU counterparts.This study aims to investigate the possible implications of the CATA on the competitive dynamics of airlines inboth markets, by applying the Competitive Dynamics Model to analyse the interactions in the strategies andresponses, and its implications on the performance of the relevant air carriers. Using secondary data, a series ofquantitative indicators are utilised to examine selected ASEAN and EU carriers’ awareness, motivation, andability to respond to the novel changes in the industry’s regulatory and competitive environment.While the findings indicate the strategic responses of both ASEAN and EU carriers is more focussed on interlineagreements and joint ventures, competitive rivalry is to remain intense for popular destinations such as those toand from Thailand and Singapore.The study analyses the advantages in the scheduled frequencies and fares of the big three Middle Easterncarriers and Turkish Airlines, over home airlines in major ASEAN and EU hubs. The CATA-induced partiallyliberalised market will drive more partnerships among ASEAN and EU carriers to align schedules in theirrespective hubs as a response to competition posed by Middle Eastern carriers. The findings suggest that thepossible actions and reactions of airlines to one another are precursors to driving changes in market structureover time within the new ASEAN-EU CATA framework.

While most businesses actively adopt a data-driven approach for revenue management decisions, understanding how air travellers perceive and behave differently to pricing strategies is essential for yielding optimal financial outcomes. This study analyses the loss aversion and diminishing sensitivity mechanisms of prospect theory in economy and business cabin classes. With rich longitudinal airfares, regression models and revenue data (15,868 observations from the top-10 aviation routes in the world) from 2014 to 2019, this study finds that lower-(higher-)than-expected airfares have a positive (negative) impact on revenue. When the effect of loss-coded and gain-coded tickets were compared, the extent to which passengers avoided losses (vs. welcomed gains) had a greater impact on revenue, supporting that loss aversion applies to the airline revenue, especially for business passengers. This study contributes to the further refinement of prospect theory by showing that the loss aversion and diminishing sensitivity mechanisms manifest differently in each cabin class.

Airline boardrooms have steered commercial departments to increasingly focus on diversifying revenue streams through ancillary revenue mechanisms. Ancillary revenues are any revenues which are additional to those generated from the sale of the different fare categories or branded fares. Ancillary revenues can be classified into four main groups: a la carte sales, frequent flyer programmes, commission-based products and advertising. Across the world’s airlines, baggage is also a big ancillary item with AirAsia for example producing 56 per cent of its total ancillaries in Q1, 2018 from baggage fees. Surveys have shown that passengers were willing to pay for specific ancillary products that were perceived as a ‘necessity’ such as seat assignment and baggage and together with food and drink, rather than ‘nice-to-have’ products. Punitive charges are another key revenue driver as consumers may be charged a penalty fee if they choose to alter their travel itineraries or for purchasing tickets with credit cards.

Political conflicts between countries can disrupt normal functioning of the airline industry, leading to uncertainty and affecting airline demand (Dwyer et al., 2013). Empirical evidence shows that political conflicts have a dampening effect on airline demand (Zhang & Zhang, 2017; Laufer, 2018), and can results in a significant decrease in passenger traffic (Fernandes & Pacheco, 2017). Airlines respond to political conflicts by implementing various coping strategies, such as route diversification, code-sharing agreements, and fleet renewal (Zuidberg & de Wit, 2020). For example, airlines may shift their focus to alternative destinations or establish partnerships with other carriers to expand their route options when facing reduced demand due to political instability (Button et al., 2016; Corbet et al., 2019). Understanding the impact of growing political conflicts on airline demand and management strategies is crucial as airlines serve as the primary transportation mode for domestic and international tourists. However, research has largely overlooked the differential impact on distinct airline business models, such as full-service carriers (FSCs) and low-cost carriers (LCCs). This research note aims to address this gap by examining the effects of the China-Korea political conflict, specifically the deployment of the Terminal High Altitude Area Defense (THAAD), on FSCs and LCCs operating in South Korea in terms of flight numbers and seat capacity.

Pilot retention has been a significant concern for airlines that find it difficult to recruit and maintain pilots who are classified as high skilled employees. The aim of this research is to determine the factors that influence pilot retention and investigate if these factors differ based on gender, age and level of commercial flying experience of pilots. A mixed methods approach was used. Quantitative information was collected via an online survey sent to 394 Ryanair pilots. Nine in-depth expert interviews were conducted. The pilots ranked, in order of importance, a number of retention-influencing factors spanning seven areas, identified with the help of interviewees and secondary research. The results of the survey indicate that the most important retention influencing factors are being based at home, working a fixed roster pattern for a financially stable airline, being paid a competitive salary and having job security. This research provides qualitative evidence that airlines can use to develop or update their financial and non-financial benefits packages and where necessary, amend work practices and maximise pilot motivation to stay. •Airlines generally face high rates of pilot turnover.•Seven category areas containing 30 subcategories influencing pilot retention are identified.•394 Ryanair pilots assessed their retention-influencing factors in the seven category areas.•The most important factors are: being home based, fixed roster, financially-stable carrier, competitive salary, job security.

Fatigue has been a long-standing concern in modern aviation. The duty hours of those who operate (cabin crew and pilots) have increased significantly. In order to combat the effects of fatigue, operators must adhere to Flight Time Limitations (FTLs) strictly set by regulatory bodies. With advances in the science of fatigue, the European Aviation Safety Agency (EASA) in February 2016 altered the duty limits and rest periods. A quantitative self-report survey design using descriptive statistics, chi-square tests of association and probit regressions with marginal effect calculations gathered the crew perceptions about the impact of the FTL regulation change to fatigue levels, reporting and safety/just culture. Participants (n = 794) were commercial cabin crew and pilots operating under European Aviation Safety Agency (EASA) regulations. 73.2% said they have not reported fatigue to their airline and 81.7% having operated fatigued. Scales on Fatigue Knowledge and Just/Safety Culture were constructed. Each point increase on the 6-item Just/Safety Culture scale shows that respondents are 8.6 percentage points less likely to operate fatigued. This study signifies that fatigue is under-reported and is a real risk to safety in the aviation industry. A substantial change to the existing safety culture should be encouraged and the fatigue’s safety implications should not be underestimated and safety be compromised for maximum aircraft and labour utilisation.

The aircraft maintenance sector has high complexity with many intermediaries, multiple actors sharing data and needs to ensure high data security. The implementation of Blockchain technology can significantly contribute to the aforementioned characteristics. This research explores the implementation of Blockchain technology in Maintenance, Repair and Overhaul (MRO). For this research, a mixed-method approach was followed to obtain a holistic view of the adoption of Blockchain technology in an aircraft maintenance facility. Semi-structured interviews and a case study were used. The interview findings related to the current status of maintenance records management. The findings also highlighted the value of data storage within MRO’s and the benefits of Blockchain. The paper also discusses the readiness/willingness of aircraft maintenance facilities to implement Blockchain and the barriers to implementation. Recommendations and areas for further research are identified.

Given the China’s fast-evolving aviation market, a reliable carbon dioxide (CO2) emissions forecast is essential to identify and mitigate the environmental impact of aviation market. Due to slot limits and airport capacity constraints in Shanghai, the rate of traffic growth has slowed down in recent years. However, the increasing number of regional and international flights tends to drive the fuel consumption and carbon emissions to an unexpectedly high level. This study uses a two-tiered bottom-up emissions prediction method for empirically estimating and forecasting air transport CO2 emissions on all the passenger flights to/from Shanghai. The Autoregressive Integrated Moving Average (ARIMA) linear model was applied for a 5-year prediction of air transport fuel consumption and en route CO2 emissions. The research established that 36.49 million tonnes of CO2 will be emitted into the atmosphere by the end of June 2021, representing a 6.41% increase compared to the same period a year earlier. Market-based recommendations are proposed including a nationwide carbon market and a carbon offset scheme, accordingly.

The spread of misinformation with regards to aviation disasters continues to be a point of concern for aviation companies. Much of this information usually surrounds speculation based on the cause and responsibility attributed to the incident, implicitly possessing the potential to generate significant financial market price volatility. In this paper, we investigate a number of stylised facts relating to the effects of airline disasters on aviation stocks, while considering contagion effects, information flows and the sources of price discovery within the broad sector. Results indicate a substantially elevated levels of share price volatility in the aftermath of aviation disasters, while cumulative abnormal returns present sharp under-performance of the analysed companies relative to international exchanges. When considering an EGARCH analysis, we observe that share price volatility appears to be significantly influenced by the scale of the disaster in terms of the fatalities generated. Significant contagion effects upon the broad aviation index along with substantial changes in traditional price discovery channels are also identified. The role that the spread of information on social media, whether it be correct or of malicious origins, cannot be eliminated as an explanatory factor of these changing dynamics over time and region.

In 2014, Malaysia Airlines experienced two tragedies in quick succession, damaging the company's reputation and finances, with negative implications for Malaysian tourism. This research assesses the impact of this. We find that the share price response was immediate and substantive. The carrier implemented sweeping adjustments, while passenger traffic rapidly declined particularly in Asian markets. Malaysian Airlines augmented fare reduction after each accident to stem the ongoing leakage of passengers. Traffic from China witnessed sharp declines, signalling the severity of the incumbents' prognosis. We further examine the investor response and the ultimate government decision to nationalise and restructure. •We investigate the financial effects of the Malaysia Airlines disasters.•Share price response to both tragedies was substantial compared to previous incidents.•The reverberating shocks changed long-standing correlations and information flows.•International passengers sought other options despite lower fares offerings.•The most prudent choice was Malaysian state intervention to protect tourism industry.

Some airlines, especially Low Cost Carriers (LCCs), have earned significant profits from revenues derived from ancillary revenues. However, to date few have been able to derive a meaningful portion of revenues from 3rd party ancillaries. The key to increasing these revenues comes from an understanding of passenger willingness to pay for 3rd party products/services, coupled with increasing customer awareness and consequently the all-important customer conversion. This study assesses the 3rd party ancillary services that passengers are more willing to purchase, along with the potential offers that might increase their willingness to purchase specific 3rd party services. A mixed methods approach was used consisting of a passenger survey and nine expert interviews. The main findings are that car hire, airport parking, and the sale of hotel rooms had the most significant associations with customer willingness to pay. It was also found that there was a significant association between specific offers and increased willingness to purchase. The 15% discount off a future flight, and to a lesser extent, hotel price guarantees were the most significant. Expert interviewees confirmed that the future sustainability of this revenue stream for airlines is centred on mobile digital devices, customer conversion, and exploiting potential market opportunities.

COVID-19 is an unprecedented situation and its impacts are expected to be significant, especially for the travel and tourism industry. This study contains a comprehensive and in-depth analysis of air transport capacity, traffic and revenue changes in domestic and international markets involving China with a focus on airlines, route networks and airports during the Covid-19 pandemic covering the period through to April 2020. Data from OAG and MIDT were used to analyse the Chinese domestic market, the traffic China to Europe and China to the rest of Asia. The analysis found that domestic markets, those served by well financed/funded air carriers, those less exposed to the highest rates of Covid-19 infection and those that are seeing the least restrictive lockdown and travel measures have been least impacted by the pandemic and are those that are most likely to rebound first. Less well financed/funded carriers whose networks are focussed on international markets, premium traffic and discretionary leisure travel have been found to be impacted most by the pandemic and are those that are likely to take the longest to recover. In terms of Chinese airports, performance has varied according to airlines served, characteristic of the airport/city, and the severity of the outbreak.

[This corrects the article DOI: 10.1016/j.annals.2021.103298.].

One of the key sub-sectors in the aviation industry includes that of engine manufacturers, who have long led technological advancement and the battle to reduce airline carbon emissions. However, these same companies have been susceptible to a number of issues that have been central to international airlines due to higher costs and competition pressures. When an aviation disaster occurs, there is widespread allocation of blame and responsibility, which has left engine manufacturers exposed until the true cause is identified. This can generate many issues with regards to reputational damage and ability to generate finance. We set out to analyse such interactions over time and region. Our results indicate that engine manufacturers have had to contend with substantial income and financial leverage issues in the aftermath of a major aviation disaster, irrespective of whether they have been identified as a causation factor in the incident itself. Further, we clearly identify that there exists an average one day loss of 1.64% in the immediate aftermath of aviation incidents. Substantial corporate instability is found to persist without the company being in any way responsible for the incident. Shortly thereafter, contagion effects increase as speculation diminishes and more factual evidence arrives. The role of social media is examined as a potential contributory factor. •We investigate the contagion effects of aviation disasters upon engine manufacturers.•Results indicate substantial income and leverage effects in the aftermath of disaster.•Significant abnormal returns are identified.•Such effects exist regardless of speculated causation factors.•The role of social media is examined as a potential contributory factor.

The economic development of many countries globally relies heavily on tourism arrivals and spending. Terrorist attacks, political unrest, and other external shocks create disruptions and imbalances that lead to tourism crises with devastating effects on a country's economy. The paper quantitatively examines the wider economic impacts and welfare effects of a continued decrease in tourism revenues caused by terrorism and political instability on the Kenyan economy. We use a dynamic Computable General Equilibrium model which we calibrate to a 2003 Social Accounting Matrix for Kanya. Our results reveal that a decrease in tourism spending causes a contraction of the economy in the short‐term and long‐term. Tourism contraction leads to decreased output, prices and wages in urban households, whereas the rural households notice an increase in welfare in the short and medium‐term and a decrease in the long‐term. Diversification of the tourism product, better branding, crisis management preparations and emphasis on domestic tourism that is less af‐ fected by disruption are ways to safeguard tourism in Kenya and beyond.

While one salient characteristic of hub airports lies in connecting passengers, the full-service airlines in North America concentrate their networks spatially over a number of hubs. Having witnessed the emerging multi-hub network, this paper investigated the flight scheduling problem under a multi-hub configuration, taking a well-defined bank structure and airport operational restrictions into account. An integrated non-convex Mixed-Integer Nonlinear Programming (MINLP) approach was proposed to enhance airline connectivity, considering different combinations of traffic flow direction and connecting times. To verify the scalability and effectiveness of the proposed model, a comprehensive case study has been undertaken with real-world scheduling data from Air China, which was solved by a novel problem-specific Selective Simulated Annealing (SSA) algorithm. Substantial improvements were achieved without sacrificing the scheduling efficiency. Precisely, the program adjusted the flights during a typical operational day in a timely manner. The post-optimisation outcomes have witnessed its effectiveness with a 17.97%, 17.06%, 22.41% and 53.86% increase in airline connectivity at its four major hub airports (Chengdu Shangliu, Beijing Capital, Shanghai Pudong and Hongqiao) in China, respectively. A clear pattern of the bank structure also confirms its positive impact on airline connectivity under the multi-hub network configuration. Lastly, a comparative analysis for the distribution of all feasible connections further highlights the critical challenge concerning the role of the hubs in a multi-hub network. More specifically, Air China’s multi-hub network systematically performs better on Domestic-International routes, due to flight schedule, frequencies, geographical placements and detours. Among the four hub airports, Beijing Capital International Airport stands out as a dominant one, which implies its potential to serve as a robust international hub airport. •Proposes a passenger-centred multi-hub scheduling model to maximise connectivity.•Considers operational restrictions, tail number and prior studies’ shortcomings.•Introduces a correction factor to adjust GCD and flight times for random factors.•Verifies with a large-scale multi-hub network with proven scalability and efficiency.•Highlights bank structure’s positive impacts on connectivity and challenges for hubs.

The world’s governments imposed a plethora of restrictions and quarantine rules to prevent the rapid spread of COVID-19. China was chosen for this study as it was the first market to be impacted. The overall aim of this paper was to analyse international air travel to and from China since the start of COVID-19 and to assess the impact of policy initiatives on seat capacity during this time. The key findings are that implementation of the so called Five one policy in March 2020 was associated with an almost immediate reduction in seat capacity on China to the rest of the world, partially suppressing the more typical impact of underlying GDP and air fares on capacity. It was further found that Chinese international gateways, as airports with substantial proportions of international and connecting traffic, remain the most distressed. Long haul international traffic and revenues from European and North American destinations all experienced unprecedented and sharp reductions. Traffic and revenues from other Asian markets was even more sporadic. Alarmingly, the study extracted that revenues from premium classes were deteriorating much faster than economy class, which is of imminent concern for long-haul carriers reliant on premium traffic coming into the pandemic.

In this study, the operating environment’s attributes and its influence on the performance of airlines in SoutheastAsia are assessed through a comprehensive literature review and performance analysis. As a first step, a ParetoAnalysis is performed to assess the capacity contribution of registered airlines in the Southeast Asia region,totalling 65 in 2019. Then, seven of the largest Southeast Asian airlines, representing 80% of total capacity in theregion, are taken forward into an in-depth benchmarking and Product and Organisational Architecture (POA)performance analysis. The research pinpoints key differences between Full-Service Carriers and Low-Cost Carriersin the region through a series of 13 metrics applied in the POA. It was found that the region’s FSCs scoredbetter at Product Architecture, which includes convenience, comfort and connectivity, whilst the LCCs strengthwas in the Organisational Structure component, namely fleet and labour productivity, sales and distribution, andairport attractiveness, especially in the case of AirAsia.

This paper estimates the influence of terrorist attacks on European tourism through the short-term post hoc response of the airline industry and passengers. We use a seasonally-adjusted ARMA-GARCH methodology on unique datasets that examine changes in tourism as measured by ASKs, seats filled and changes in both fares and revenues. Traffic flows are found to fall despite significant fare reductions; however, this response varies substantially based on the flight origin and ticket-type purchased. We found that business travel slows substantially due to duty of care legislation for corporate transport. While we found evidence indicating substantial airline fare reductions, in the majority of investigated cases this response was unable to mitigate substantial reductions in passenger demand and flows across varying ticket types.

This study aims to investigate air travellers' Willingness to Pay (WTP) for green premiums , specifically focusing on their contribution to reducing carbon emissions generated by air travel. The research integrates the Theory of Planned Behaviour (TPB) and the Contingent Valuation Method (CVM) to estimate the monetary value that air passengers would be willing to pay for environmental initiatives. The TPB provides a theoretical framework to understand the psychological factors influencing individuals' intentions and behaviours, while the CVM allows for the estimation of the economic value of environmental goods. Drawing on the TPB, this study examines the influence of attitudes, subjective norms, and perceived behavioural control on air travellers' WTP for green premiums, while considering the determinants and barriers related to ecological goods, and sustainable consumption. The study investigates the potential economic implications of air travellers' willingness to pay for green premiums, particularly in the context of sustainable aviation fuel options and carbon-related fees. The findings of the survey of a sample of 248 respondents suggest a general willingness among passengers to pay for environmental premiums, notably carbon taxes, with variations in WTP influenced by demographics, travel preferences, environmental values, and awareness. Notably, younger travellers exhibit the highest WTP which is negatively related to the air ticket price. Higher environmental consciousness correlates with greater WTP. The impact of price perception and perceived efficacy of environmental initiatives were also found significant. Financial constraints and scepticism about the credibility of such premiums, however, limit some passengers' willingness to contribute.

This paper examines China’s considerations in reaching the 2004 and 2007 Air Service Agreement Protocols with the United States (US) and the impacts of such policy on the China-US market from the perspective of China. Analysis shows that the 2004 and the 2007 Protocols have profound impacts on the China-US market. The two Protocols have been associated with phenomenal traffic growth and intensified competition. Passengers also benefit from much more choice in terms of both airlines and routing. Over time, Chinese carriers’ operating performance and financial performance have gradually improved after the liberalization expressed in the Protocols. However, the industry’s hub-building initiatives are still seriously challenged by competing hubs in Seoul and Tokyo which have diverted substantial number of passengers moving between the China and US markets. Such issues have to be addressed in order to create a win-win outcome for both countries.

This study aims to investigate the contribution of aviation related travel restrictions to control the spread of COVID-19 in Europe by using quasi-experiment approaches including the regression discontinuity design and a two-stage spatial Durbin model with an instrumental variable. The study provides concrete evidence that the severe curtailing of flights had a spontaneous impact in controlling the spread of COVID-19. The counterfactual analysis encapsulated the spillover effects deduced that a 1% decrease in flight frequency can decrease the number of confirmed cases by 0.908%. The study also reveals that during the lockdown, the aviation industry cancelled over 795,000 flights, which resulted in averting an additional six million people being from being infected and saving 101,309 lives.

This study uses the Kano model and importance-satisfaction analysis (ISA) to assess airline service quality by identifying the prioritised service quality attributes (SQA) for business travellers. The study aims to produce suggestions for airline executives on how to allocate resources in the most effective way to enhance the quality of service and increase customer satisfaction. A conceptual framework divides business travellers into four Clusters based on the behavioural variables of flight length and cabin class. For each Cluster, business traveller expectations for fourteen SQAs were assessed through using the Kano model while integrating the ISA. The empirical phase employs a 38-item questionnaire that was shared on various frequent flyer and business travel forums. Additionally, this study utilises an adapted qualitative questionnaire where four airline managers expressed their perceptions on how they think business travellers perceive the fourteen SQAs. The analysis reveals four categories, namely 'concentrate here', 'keep up the good work', 'low priority', and 'possible overkill', exhibiting the importance and satisfaction of the fourteen SQAs. Findings show that resource allocation was adequate on only five attributes out of fourteen. The analysis of the airline manager responses shows differences in their assessment when compared to business travellers for two tangible attributes.

This study examines the metronomic rise of Turkish Airlines into a global carrier in the period following domestic deregulation and part privatisation. Using a comparative assessment of the carrier's network and its competitive strategies during the 2003-2013/2014 period it was found that Turkish Airlines now benefits from considerable network, cost, service and brand advantages over competing European and to a lesser extent Middle-Eastern airlines. Its network operation based in Istanbul Ataturk airport enjoys strong geographic and demographic advantages, which enables it to optimise the use of its large and young short-haul fleet between a significant number of domestic and international points. This study has important implications for partially or fully state owned legacy carriers as to how to gain competitive advantages in an increasingly open and liberal airline industry.

Air Traffic demand in Latin America is expected to double over the next twenty years, yet airline profitability in the region remains highly problematic. The impediments challenging financial prosperity in the continent are numerous and have resulted in prolonged loss-making periods across most Latin American carriers. Breaking with this trend, Copa Airlines has been able to report double-digit net results for several years and recorded 56% of total profits earned by all Latin American carriers in 2016. This research has identified a number of Key Performance Indicators that have underpinned Copa Airlines' financial prosperity through a Product and Organisational Architecture (POA) framework analysis whose results were validated and elaborated upon by the CEO of Copa Airlines. Copa's sustained financial success was attributable to a number of factors. First, its geographical positioning has allowed it to engineer strong connectivity by coupling North and South America through its hub, which is reachable with narrowbodies to nearly all points in the Americas. Second, its low unit cost structure is akin to that of LCCs, operating a single aircraft type with high utilisation. Third, it has a uniquely low market concentration of competitors on its routes and capitalises on this by having a strong schedule with high frequencies together with outstanding punctuality. Fourth, it has a synergistic and fruitful cooperation with its hub airport at Tocumen. Finally it benefits from positive external factors such as a dollarized home economy with high GDP growth, exceptionally low unemployment and inflation rates ring-fenced with security. These pillars can be used as a reference for other Latin based airlines seeking to improve profitability. •Produces a literature overview and analysis of the Latin American airline landscape.•Identifies the drivers of profitability of Latin American Carriers.•Pinpoints which key elements of Copa Airlines' business model contributes to its profitability.•Copa outperforms other carriers in connectivity, hub airport, market structure, external factors & convenience.

Arabian Gulf carriers are changing the dynamics of international aviation. While travellers flying between East and West used to connect traditionally at European hubs, the rapid emergence and growth of Emirates, Etihad Airways and Qatar Airways have altered traffic flows, transforming their home bases into global air transport hubs. Thus, this study aims to assess the hub-and-spoke system efficiency of the three main Gulf carriers and compare it to major European hubbing airlines. The paper detects that the connectivity through European hubs is being increasingly challenged by the Gulf based hubs. The research findings have shown a high degree of connectivity and temporal coordination for Gulf carriers, clearly greater than European hubs. Qatar Airways and Etihad Airways provide about twice the level of intercontinental connectivity compared to their European counterparts.

This paper discusses the issues facing Philippine Airlines in its ever evolving and changing landscape in the domestic, regional and international markets. The Philippine aviation industry had its safety status downgraded to Category 2 for six years by the International Civil Aviation Organization and the US Federal Aviation Administration. This downgrading of the status severely limited Philippine Airlines from expanding internationally, but its reinstatement provides huge opportunities for the incumbent. However, in the domestic and regional markets it faces a threat from rapidly encroaching low-cost carriers. The Philippines has the highest domestic low-cost carrier penetration rate in the world, while the incumbent has rebranded its low-cost subsidiary, AirPhil, to a full-service carrier, PAL Express, which has impacted its ability to compete in short-haul markets. Philippine Airlines' new routes to the Middle East and Europe have the potential to be profitable, but their success is hampered by the lack of domestic connectivity and no feeder traffic from partner airlines.

Recent events have confirmed the concerns that many within the aviation industry have held about the viability of the low cost business model for long-haul operations. This paper begins by reviewing the operating cost differences between low cost carriers (LCC) and legacy airlines in different regions of the world. This is followed by a summary of the various cost advantages of low cost carriers operating in short-haul markets. The main focus of the work, however, is a cost simulation involving the use of a Boeing 767-300 by both a LCC and a legacy carrier under varying operating assumptions. The research demonstrates that in none of the cases cited is the LCC cost advantage greater than 10%.

This study sets out to investigate the revenue characteristics of long-haul low-cost carriers (LHLCCs) in the Southeast Asian market using a recently established metric that calculates revenue per equivalent flight capacity per block hour (REB). REB allows for the accurate comparison of airlines on different routes with varying cabin configurations, and stage lengths. The majority of the data was sourced from Sabre MIDT and OAG, while supplementary data were from other various sources. In addition to REB, the study investigates: How do LHLCCs yields compare to full-service network carriers (FSNCs)? Are LHLCCs positively impacted by smaller share of connecting passengers? Are LHLCCs positively impacted by ancillary revenues? Do LHLCCs benefit from higher load factors and seat densities? Results show that LHLCCs performed 26.6% less in overall REB compared to their FSNC counterpart despite LHLCCs generating 43.9% less yield. This is a result of less revenue diluting connecting passengers, higher average ancillary revenue per block hour, higher average load factors and higher average seat densities for LHLCCs. On a route-level, some LHLCC operations can equally perform or outperform competition's revenue performance. Furthermore, the findings are mostly consistent with earlier REB research conducted on the North Atlantic market by Soyk et al. (2018). Revenue and operating characteristic showed the same trends in both markets, although to varying degrees. This study exposes, with high detail, the revenue generating inner-workings of the elusive long-haul low-cost model in its second largest market, and compares it on equal grounds to their full-service network competition. We learn that airlines can drive the airfare down while minimising the loss of revenue per flight capacity of the aircraft by adjusting for the numerous variables that directly impact it, such as seat density, cabin configuration, ancillary revenues, load factors, and percentage of connecting passengers.

Charter airlines operating all-inclusive vacation packages on the short-haul European market are quickly being replaced by low-cost carriers. The business model of low-cost carriers is now evolving to capture the long-haul travel segment and consequentially could replace the all-inclusive package holidays provided by the Charter airlines in this market. The research deduces that this will not transpire. The study extrapolates the opinions from experts who resonate that three pivotal cornerstones the differentiate Charter airlines from low-cost long-haul carriers which comprise of its destination expertise, Air Travel Organiser Licence affiliation and its horizontally integrated multifaceted enterprise. A passenger survey directed exclusively at passengers travelling on Charter airlines to long-haul destinations in Latin America found that vacationers aged 56 years and older together with families would not opt to vacation on low-cost long-haul airlines.

The purpose of this study is to explore the impact of changes in EgyptAir's corporate strategy on its role and significance in relation to the Egyptian tourism sector. In-depth open interviews with top-level personnel were combined with a before–after time-series analysis of key market data in order to identify any early effects of EgyptAir's strategic changes on important international markets for inbound and outbound tourism. The study's major finding is that EgyptAir has taken some significant steps to target higher-yielding tourist passengers travelling from Egypt to Europe, Asia and North America and vice versa by fortifying its position at Cairo, improving its overall service offering and joining the world's largest strategic airline alliance (Star Alliance). Some early gains have been noted in these markets for EgyptAir, while at the same time an avoidance strategy has been noted in relation to lower-yield package holiday-makers who, despite forming a growing share of total demand, are already served by a highly competitive mix of foreign charter and scheduled airlines. Tourist numbers were found to increase after the strategic changes at EgyptAir. This increase was either facilitated directly by EgyptAir or indirectly as other carriers took advantage of the additional opportunities to serve markets that were dominated or neglected by EgyptAir prior to its air policy induced change of strategic direction. The general push towards liberalization in the wider Middle East region also partly led to these strategic changes.

Direct competition between full service airlines and no-frills carriers is intensifying across the world. US and European full service airlines have lost a significant proportion of their passengers to low cost carriers, the experience now being repeated in the domestic markets of Asia. This paper attempts to provide answers to a number of critical questions: What are the key drivers of each type of airline's business model? Is there a difference in passengers’ perceptions between low cost carriers and full service incumbents in a mature European market and in a rapidly developing Asian economy? What are the principle reasons why a passenger chooses a particular airline model? How could a legacy carrier encourage passengers to return and so regain their domestic market share? These questions are addressed using information obtained in passenger surveys that were recently conducted in Europe and Asia.

The African air transport market has been a laggard in development, remaining encircled by a plethora of problematic issues that has curtailed its expansion and prosperity for decades. Regulatory restrictions, protectionism, inadequate infrastructure and prolonged loss making periods are regularly correlated with the plights of African carriers. Ethiopian Airlines is disrupting this negative manifestation and is exponentially expanding its African and international network footprint, enshrined in continuous profitability. The research quantifies that it is Africa's most successful airline through a POA analysis by aggregating a series of pertinent airline indices to derive its prominence from among its peers. Three key pillars were deduced that specifically correlated with Ethiopian Airlines continued prosperity and can be used as a template, which included a large intra-African network, a strong hub with multiple wave permutations for onward connecting traffic and forging deep strategic partnerships with regional based African carriers.

This paper examines the performance of the two core classifications of airline ancillary revenues, which are unbundled products and commission based income. It also investigates the willingness of passengers to pay (WTP) for these services together with what type of ancillary items are acceptable at a particular price point. The study found that passengers value a narrow range of perceived ‘necessity’ products and services such as food and drink, checked baggage and seat assignment as opposed to perceived ‘optional’ unbundled or commission based products/services. It also found significant differences in WTP for specific ancillary services based on carrier type (FSC/LCC/Charter), length of flight (long and short haul) and journey purpose (business, leisure, VFR). •A narrow range of unbundled products are shown to be the most commonly purchased ancillaries for airlines.•There are statistically significant differences in willingness to pay for different ancillary products between long and short haul passengers, by journey purpose and length of haul.•Airlines can use the study’s disaggregated WTP results to determine which ancillary products to focus on.

The airline industry is a diverse sector, requiring the support of a varied range of ancillary businesses such as maintenance, catering and travel agencies to carry out its activities. Many of these supporting businesses demonstrate the potential to drive wider profit margins despite generating lower revenues than the airlines themselves, making them attractive investment opportunities in a sector prone to volatile and often lacklustre trading. This study investigates two of the largest diversified airline groups, Germany's Lufthansa Group and Dubai's Emirates Group, each adopting a distinct approach towards diversification that may serve as a model for airline groups worldwide. The areas investigated were Cargo, Maintenance, Catering and Travel Services. The research found that whilst diversification may not always present the most attractive option financially, strategic factors can often outweigh such concerns. Business units studied were found to have variable prospects; particularly in the case of Catering, a sector on the rise – versus in-house Maintenance, which for airlines, is likely to see decline. The pursuit of third party revenue streams to offset weak internal trading and growth in competencies were found to be the key drivers of success. Interplay between segments was also apparent, showing that a well-organised diversification strategy can achieve robust cross-functional benefits and deliver significant value to the parent organisation.

Developed and less developed countries follow different approaches during the formulation of aviation strategic plans. Additionally, there exists no pre-defined framework to guide developing countries in formulating civil aviation strategies matching their macro-environment and competitiveness levels while addressing their future vision for growth or sustainability. Instead, civil aviation planning over-look these priorities and is often dictated by local political pressures, and mostly influenced by uncoordinated foreign aid assistance. Hence, developing countries use dissimilar and un-structured approaches to reach what is known as “civil aviation master plan” or “draft civil aviation policy”. Recognizing that a problem exists in the mechanism for civil aviation planning in this part of the world, research is encouraged to highlight this substantial topic. This paper uses a scenario-based approach to study the roles played by the macro-environment and industry-level performance in realizing best-fit national civil aviation strategies. The goals are achieved through utilizing a two-stage performance benchmarking technique named Data Envelopment Analysis (DEA) on country level data on a sample of 52 countries in different stages of development, followed by truncated regression. Results of the best performing countries—in terms of output efficiency, indicate that the country's macro-environment and air transport sector's performance serve as guidelines to identify aviation policy elements that are considered to impact efficiency. The regression results indicate that a more liberal air services approach is said to be of positive influence on efficiency levels. Further, we show that private airports are more efficient, while public airports are even less efficient than those with mixed ownership/management model. Hence, policy makers are encouraged to adopt an efficient peer analysis approach based on influential policy elements to bridge performance gaps, achieve better operating capacity, direct and prioritize investments in the civil aviation sector.

The premium economy class is fast becoming an embedded and valued product that is being incorporated into the long haul fleets of the world's flag carriers. The premium economy unique proposition positions itself mid way between economy and business class with enhanced leg room as its primary attribute. It targets the price sensitive business traveller and the comfort seeking leisure passengers. This study contains an insight into the unit cost of production of economy, premium economy, business and first class seats and their potential to generate revenues on the lucrative London Heathrow to New York JFK route using a British Airways 747-400 aircraft. The main findings show that the rationale for implementing a premium economy seat is justified as it is only 1.6 times more expensive than an economy seat to produce, but it generates revenues that are 2.3 times higher than its cost of production - spawning the highest marginal returns from the four cabin hierarchy. The research reinforces the assumption that premium economy class cabins could very well become an embedded and sustainable product in the landscape of long haul travel in the near future.

Never before have network airlines been so exposed and vulnerable to low-cost carriers (LCCs). While LCCs had 26.3% of all world seats in 2013, Southeast Asia had 57.7% and South Asia 58.4% – and these figures will only increase. There are many consequences of LCCs on network airlines, including inadequately meeting the expectations of customers, so increasing dissatisfaction, and not offering sufficient value-for-money. Clearly, it is fundamentally important for Asian network airlines to respond appropriately to LCCs. This paper looks at the strategic capability of 22 of the top Asian network airlines in competing with LCCs, which is achieved by analysing questionnaire data from these airlines in terms of 37 competitive responses across six distinct response categories. It is crucial to note that this paper only concerns their capability in competing with LCCs, and it does not consider their overall strength. This paper also investigates how strategic capability varies by Asian sub-region and by airline performance, with performance examined in two respects: by perceived performance and actual performance. The results show that strategic capability varies widely, with Vietnam Airlines possessing the strongest strategic capability to compete with LCCs and SilkAir the weakest. Of others that compete heavily with LCCs, Malaysia Airlines and Garuda Indonesia have strong capabilities, while Philippine Airlines does not. However, all three need to more forcefully respond to LCCs. As a whole, network airlines within Southeast Asia have the greatest strategic capability, and Northeast Asia the weakest. There is a reasonably strong correlation between strategic capability and both actual and perceived performance, which suggests that those airlines with strong strategic capabilities should achieve strong overall performance.

Although there is a vast amount of literature on airline business models and their evolution in changing global landscapes, there is a general lack of research into the applicability of those models, traditionally defined in European and North American contexts, to the African scene. Implicit in this study is the hypothesis that the African environment is unique enough to warrant its own host of strategies, which may be distinctive enough to form part of a new strategic template, or business model. Initially, a review of existing literature is undertaken to profile the African aviation environment and evaluate existing airline business models and their evolution, both globally and in Africa. The methodology consists firstly of a cluster exercise, whereby 57 African airlines are analysed in terms of their network and size, to yield a number of heterogeneous groups which serve to identify the current business models of airlines on the continent. Following this, eight airlines (representative of the groups outlined in the cluster analysis) were subsequently selected for analysis in terms of the Product and Organisational Architecture framework. While it was evident that the traditional models are followed in Africa, in some instances variations were apparent. Full-service network carriers and regional carriers were concluded as being the most prominent and stable in the African market. The applicability of the low-cost carrier model in Africa was also examined at length, with mixed results. The analysis also raised network density and connectivity as essential components of business models for delivering profits in an African context.

India’s aviation industry promises huge growth potential due to a large and growing middle class population, favourable demographics, rapid economic growth, higher disposable incomes, and overall low air transport penetration levels of less than 3%. However, the Indian Aviation Industry has been going through a turbulent phase over the past several years, facing multiple and prolonged difficulties through which carriers are continuously underperforming financially. After conducting a set of expert interviews backed by a statistical analysis of secondary data, this paper concludes that restrictions on foreign ownership, outdated regulatory policies and overtaxed fuel, overlain by industry wide overcapacity issues are the major contributing factors.

The impacts of international migration have been heavily studied. Much of this analysis has been carried out within the framework of the economic and social effects of migrants, to both host and home countries. This paper looks at the impact of Lebanese emigrants’ homeland relations on air travel demand in a security volatile market. The emphasis is on two particular features: first, the principal impact of liberal air transport policies in facilitating emigrants’ home visits; and second, the sensitivity of passenger-GDP relation. The paper pulls together data and other cases on the Lebanese emigration evolution and explains its impacts on the economy as well as on the air transport market in Lebanon. The study findings suggest that in Lebanon and due to the presence of interrelated factors, the variation and the strength of the relationship between traffic levels and GDP are neither consistent nor static. The considerably huge expatriate communities, which are three times greater than the Lebanese residents, are said to defy the negative impact of security instability on the air passenger growth through frequently visiting expats. Moreover, the emigrants’ economic support to Lebanon through remittance inflows is observed to dampen the sensitivity of the relationship between passenger and GDP in times of war and peace. The results should be looked at as indicative of trends to encourage policy makers to consider how best to make use of these human and financial flows.

Middle Eastern airlines are changing the dynamics of international aviation as Emirates, Qatar Airways and Etihad Airways are quickly emerging as the new global challengers. The region’s airports are also undergoing a rapid transformation to remain in line with the exponential traffic growth that is forecast. This paper examines the relentless growth of Emirates, and investigates the various strategies that underpin its core competencies, which are responsible for its 20 years of consecutive profitability. The paper establishes that the underlying formula for Emirates’ success is largely attributed to its hub and spoke operation, competitive cost structure and the strong leverage of its brand.

The airline industry is characterised by sustained long-term growth in demand for air services. Yet the industry, consisting of around 1,400 airlines globally in 2015 with a combined fleet of over 23,151 aircraft. Airlines worldwide reacted by adding large amounts of capacity in order to capture the increasing passenger traffic. Global airline traffic has been doubling every 15 years since the early 1970s despite the fact that it is fully exposed to many external forces that cause its growth to widely fluctuate. New disruptive airlines continue to enter the global marketplace equipped with leaner cost structures, high productivity mandates and best practice efficiencies that trigger structural shifts within the industry that distinctly impact the legacy incumbent airlines. Airlines based in the Asia-Pacific region fly almost two-fifths of total international freight tonne kilometres which represents around 40 million in metric tonnes each year. Airlines must prepare well in advance for the impending cyclicality of downward macroeconomic forces that regularly hit the industry.

The development of new jet aircraft has become the focal point of competition within the commercial aviation industry, pushing product development and positioning strategies to the core of the competitive game. This paper explores the competitive forces of the single aisle aircraft manufacturing market and how the rivalry between competitors affects their respective strategies. A survey was distributed to industry executives, along with interviews with key senior managers, to uncover and critique strategies the respective airframe original equipment manufacturers (OEMs) adopted. It was found that movements in the engine OEM industry were a key determinant in the competitive positioning of airframe OEMs during the period of this study ranging from 2004-2013. The focus OEMs established different strategies, considering the competitive actions of their rivals, to succeed in the single-aisle segment. Bombardier followed a niche strategy, differentiating itself in that niche by developing a clean sheet design aircraft. Airbus and Boeing use their competencies to create a broad cost and differentiation strategy, respectively. Embraer competes with its counterparts by adopting a niche strategy coupled with cost leadership in that niche.

•This special issue focuses on business model innovation in air transport management.•The selected papers demonstrates a wide range of innovation in air transport business.•The special issue emphasizes the evolution and the importance of innovation in air transport management.

Asia Pacific is increasingly at the forefront of world aviation, and low-cost carriers (LCCs) there now have 26% of all seats. This amount rises to 57% in Southeast Asia and 56% in South Asia. Clearly, Asian network airlines are very exposed to LCCs, and there are many consequences, such as lower financial performance from inadequately meeting the expectations of customers, offering insufficient value for money, and customer dissatisfaction. It is crucial that Asian network airlines respond expeditiously and appropriately to LCCs. This paper looks at the strategic capability of 22 Asian network airlines in competing with LCCs on the basis of analyzing questionnaire data from these airlines with respect to the level of importance and difficulty of 37 competitive responses across six response categories. Fundamentally, this paper concerns only their capability in competing with LCCs and does not consider their overall strength. This paper also identifies the importance and difficulty of all 37 responses and how the response categories vary by airline, while linking strategic capability with profit margins. The results show that strategic capability varies widely, with Vietnam Airlines possessing the strongest strategic capability and SilkAir, the weakest. Of airlines that compete heavily with LCCs, Garuda Indonesia has strong capability, while Thai Airways and Philippine Airlines do not. For all 22 Asian network airlines, quickly introducing changes, leveraging brand strength, and increasing aircraft use are the most important responses, and there is a reasonably strong correlation between strategic capability and margin, suggesting that those airlines with strong capabilities should achieve higher margins.

The long civil war, which ended in May 2009, poor economic performance and weak travel demand for Sri Lanka all coalesced in hindering the tourism industry. Consequently its aviation industry, which is dominated by the national carrier SriLankan Airlines, faced growing and difficult challenges. However, since 2009 the country has witnessed a boom in tourism, while an unprofitable SriLankan Airlines changed its financial and strategic circumstances by becoming a member of the Oneworld alliance in mid-2014, driven by its regional geography and proximity to India which had strict bilateral traffic rights for international incumbents from the United Kingdom and the United Arab Emirates. This study analyses tourism, economic and passenger data combined with results from a passenger survey and expert interviews in order to identify the critical issues and future prospects of aviation and tourism in Sri Lanka. The authors conclude that its ageing long-haul fleet, together with an inferior economy-class product along with high fuel prices, capacity constraints and poor management practices are the major issues faced by SriLankan Airlines. On the tourism side, uncompetitive hotel rates, unnecessarily high government taxes, visa charges and the lack of international promotion were seen as the principle drawbacks. A survey at Colombo airport revealed that fare is the principle rhetoric for passengers taking SriLankan Airlines, but when they want a wider range of additional and superior attributes they choose foreign carriers.

The recent strong performance of long-haul low-cost carriers AirAsia X and JetStar have re-raised the question of the long-term feasibility of long-haul low-cost operations. For the first time, this study contains a detailed financial assessment of low-cost operations on the transatlantic market using best-in class aircraft technology, the Boeing 787. The study's main findings demonstrate how challenging the successful running of a European long-haul low-cost carrier can be. In particular, on-going operating profit appears to be very sensitive to variations in demand and fuel prices, despite the use of new, highly efficient B787s. The findings show any prospective long-haul low-cost carrier that pursuing a demand focussed network strategy can ensure financial viability. This involves the creation of higher seating densities, higher cargo revenues and additional ancillary revenues.

The air transport market in the Middle East is undergoing a rapid transformation as passenger traffic is beginning to surge through the area, primarily because of the rapid expansion of the Emirates, Etihad and Qatar Airways. Meanwhile, Dubai, Abu Dhabi and Doha airports have launched massive expansion projects to match the future traffic forecasts, and will have a combined capacity of 340 million passengers by 2020. The key aim of this paper is to assess if these airports will attain their objective of being able to match their projected airport capacity with passenger traffic. In order to achieve this, the paper studies the region's demographics and socioeconomics; the ongoing air transport developments; the hub and spoke mechanisms; and the growth of the region's low cost carriers. Traffic forecasts are then constructed for each airport to investigate if the future passenger growth is likely to meet the airports' expansion programs.

This paper examines the recent developments of China’s aviation polices focusing on airline consolidation, the opening up of the domestic aviation market, and the adoption of more liberal international aviation policy. It then goes onto assess the impacts of the above policies on the industry structure, the performance of major airlines, and the competitiveness of Chinese airlines in international markets. The study shows that the industry became more competitive following the opening up of the domestic aviation market. Although major airlines saw an increase in passenger volume and an improvement in load factors, the falling yield and rising costs make them difficult to grow profitably. Moreover, Chinese airlines largely failed to capitalise on building an international network and the majors were weak in international competition. Strategic use of aviation policy to build a strong and profitable airline industry is still a formidable task lying ahead for policymakers.

In terms of air transportation, the International Air Transport Association has forecast that seven of the ten fastest-growing passenger markets over the next 20 years will be Malawi, Rwanda, Sierra Leone, Central African Republic, Tanzania, Uganda, and Ethiopia. This study of airline business models indicates that Africa is set for strong expansion in air connectivity and that is expects passenger growth to average around 4.4 percent between now and 2034. In the context of African aviation, chief bodies of research centre on the impact of liberalisation on the continent, not least of which was a comprehensive piece published for the International Air Transport Association on the economic benefits of implementing the Yamoussoukro Decision. High air fares on the continent are a symptom of the general lack of competition from strong airlines on intra-African routes as well as the inequality of income across African populations.

Airlines are buffeted by fluctuating political and economic landscapes, ever-changing competition, technology developments, globalization, increasing deregulation and evolving customer requirements. As a consequence all sectors of the air transport industry are in a constant state of flux. The principle aim of this book is to review current trends in the airline industry and its related suppliers, thereby providing an insight into the forces that are changing its dynamics. The factors that are reshaping the structure of the industry are examined with a view to identifying the key issues whose impact will be critical in the future. The book features two very distinct sections. The first contains short contributions from industry executives at CEO/VP level from airlines, aircraft/engine manufacturers, safety and navigational provider organisations, who have set out their take of where the airline industry is heading. This commercial input sets the scene for the book and provides the bridge to the second section, which is composed of 18 chapters written by distinguished academic authors. Each chapter presents a valuable insight into a specific area of the air transport industry, including: airlines, airports, cargo, deregulation, the environment, navigation, strategy, information technology, security and tourism. The shared objective of the authors is to describe and explain the core competencies that are determining the current shape of the industry and to examine the forces that will change its direction going forward. The book is written in a management style and will appeal to all levels of personnel who work for airlines across the world. It is also written for airport authorities, aerospace manufacturers, regulatory and government transportation agencies, researchers and students of aviation management, transport studies, tourism and the wider air transport industry.

In management, it is important to know what the likely feedback effects of employee-employer relationship outcomes might be on levels of ongoing employee trust. This paper looks to apply this important question to a case application of the air transport sector by testing the impact of recent changes in a case sample of air transport companies using a modified aggregate trust model. The findings of this study suggest that occupational group (flight crew/non-flight crew), airline type (Full Service Airline - FSA, Low Cost Carrier - LCC, Charter), and level of seniority (management/non-management level) all have an important bearing on levels of trust in the employee-employer relationship. Pre-existing labour agreements and legacy arrangements with senior and certain occupational groups were found to have a more damaging effect on the trust relationship than anything else. An underlying level of resentment and defensiveness has developed due to historical labour agreements being changed and have been observed most notably among FSAs, flight-crew and middle-management staff. The mediating role of the unions in the employee-employer trust relationship was found to be insignificant among the sampled air transport organisations mainly due to the perceived weakness among the sampled employees of unions to make any meaningful interventions.

The importance of safety within an organization is determined by the implementation of a Safety Management System (SMS), organizational culture, management commitment and behaviour, the activity of staff themselves, and to what degree safety reporting is upheld (Cohen, Wiegmann and Shappell, 2015). Canada was the first country globally to implement regulation mandating a Safety Management System (SMS) program. Many Canadian air carriers (CAC) proudly announce safety as a top priority, which is achieved through their SMS program. Amidst aviation’s verbal safety saturation, safety is often communicated as the top priority within the industry; however, are the public declarations consistent with CAC practices? This paper investigates whether safety behaviour within CAC is aligned to the objectives of the SMS. In-depth interviews with seven senior safety experts were conducted to identify areas of improvement and a survey with 164 respondents. This research found that there are many areas of improvement of the safety performance of CAC. Factors, which affect safety reporting behaviour and the priority of safety, include management’s support of a safety culture, job function, and the number of air carriers an individual has worked for. This research also suggests that a job function that was created to instil public confidence is more likely to deviate from safety procedures and less likely to report. A template for safety success, which influences organizational culture resulting in economic viability output, is proposed and recommendations for safety culture enforcement by the regulators.

The Frequent Flyer Program (FFP) is fast changing the scope of ancillary revenues. The sale of miles to third-party partners has epitomised the revenue generating capability of FFPs, which has yielded co-branded credit cards as a prominent instrument in substantially boosting earning streams. This study triangulates the tripartite composition of airlines, banks and payment networks that formulate the sale of miles and the resulting value that accrues. A survey was conducted at a prominent commercial conference devoted to the subject area, along with secondary data to ascertain the financial impact of today's FFPs and to investigate the underpinning factors as to how they are producing such stellar incremental revenue streams. The findings indicate that there are a low number of active FFP members, while one-third of new members signup for a co-branded credit card. The hierarchical tier structure supporting the compositional framework of FFPs has a significant impact on membership levels and loyalty engagement. A large proportion of ancillaries now evolve from airline co-branded credit cards which have significantly contributed in propping up the overall value of FFPs. Banks are distributing record numbers of airline co-branded credit cards where the top tier segment spend heavily, while a substantial proportion of such rewards cards now propagate through the payment networks. The symbiotic commercial partnership that is being forged between airlines and banks is prodigious and the industry has engineered a tool that harnesses noticeable returns which can significantly assist in sustaining the financial future in an ever changing landscape. •Produce a literature overview of the revenue generating capability of FFPs.•Examine the revenue linkage between airlines, banks and payment networks.•The hierarchical tier framework of FFPs has an impact on membership level & loyalty.•Airline co-branded credit cards have significantly propped up the value of FFPs.•A substantial proportion of airline reward credit cards go through payment networks.

The charter airline industry is showing rapid decline in the short-haul markets, whilst in the long-haul markets it remains far more resilient. Passengers now have the ability to self-assemble their own tailor-made package of travel products such as flights, accommodation, car rental, insurance, airport parking, ground transportation and tourism amenities from an airline’s own e-commerce platform through mechanism known as dynamic packaging, which are bundled items that charter airlines offered as a holiday package. A passenger survey was conducted at the international airport in Malta, which is a key sun-and-sand tourism destination earmarked by tour operators for holiday packages for decades, which sought to analyse and measure the willingness of passengers to purchase various travel-related products from an airlines’ website. It was found that over one-third of the sampled passengers were willing to purchase additional travel-related products beyond the flight, which has damaging consequences for charter airlines.

Aer Lingus has been an unique airline as it transitioned from a full-service airline to a low-cost carrier and is currently positioned as a value hybrid airline. It has coexisted with Ryanair for decades and it encountered three imminent periods where bankruptcy prevailed from 1993 to 2009. The research aims to uncover the various strategies that were applied to structurally re-engineer the carrier in order to adapt to its evolving competitive landscape. The key pillars underpinning Aer Lingus’ turnaround as a value hybrid were as follows: strict adherence to capacity discipline; relentless cost control and value-adding, consumer-driven product differentiation; innovative partnerships including contract flying to alleviate its problematic seasonality issues inherent in Aer Lingus markets; and by re-engineering its Dublin-based hub airport. A visionary master plan for the hub was fabricated to capitalize on Ireland’s geographical positioning which targeted the traffic flows between UK/European and North American destinations through its synchronized connection network at Dublin.

Air transport is considered a cyclical industry sensitive to the macro-environment in which it operates. As aviation policy makers and regulators strategically plan for their future, they need to consider the systematic and synergistic effects of common factors which comprise the operating environment of the industry׳s organisations. Thus, during the process of aviation systems planning governments should perceive the generic conditions which exist in the economy as a whole as equally important to air transport exclusive conditions. This paper highlights the significant impact of the national macro-environment factors on a country׳s air transport sector and it suggests including these elements within the context of civil aviation strategic planning. Country level data is collected on seventeen input variables versus four output variables on a sample of 52 countries. Structural Equation Modelling (SEM) is used to identify the descriptors with significant impact on air transport output, namely: passenger traffic, aviation total contribution to GDP, aviation total contribution to employment and air connectivity levels. The identified significant drivers are found to create an enabling environment that determines the capacity of an economy and society to benefit from the air transport system׳s productivity. The results call upon aviation policy makers and regulators to assess the national macro-environment forces during the situation analysis part of the strategic planning process. The identified operating environment conditions act as a framework for providing clear policy orientations and for facilitating the identification of areas where policy intervention could improve air transport sector׳s performance. A well-defined aviation strategy allows aviation policy makers to identify and address nation wide strategic issues and provides aviation industry׳s stake holders with guidelines to help maintain and enhance their competitive position in both domestic and global markets.

This study determines traveler preferences and acceptability levels for a range of airline ancillary products and services by employing an on-line passenger survey to examine booking preferences as well as attitudes toward a selection of air and non-air travel components sold by the airlines. The survey results are combined with expert opinions collated from a recent international conference, along with secondary data, to generate an acceptance ranking which can be used by a range of airlines to formulate their ancillary revenue strategies. It is found that airport car parking and checked baggage charges proved to be the most accepted commission based and unbundled products for airlines to sell respectively. Despite the recent focus and successes in ancillary revenues, however, it can also observed that none of the ancillary products and services examined in this study achieved a high take up rating suggesting that airlines can do much more to convince travelers of the benefit and value in airlines selling non-core products and services to them.

It is generally agreed that government ownership and participation in national carriers and regulated air service agreements can lead to inefficiencies and abuses of market power. This can result in poor carrier performance and service levels, impeding further growth in tourism markets. This paper contrasts this theory with recent case evidence from the Caribbean and the Middle-East. The former represents the mature exotic type beach holiday while the latter is a fast developing religious, cultural and multi-product form of tourism. In both cases multi-step relationships exist between the development of air transport policy and the number of incoming visitors. The strength and significance of these interrelationships are tested using two separate best-fit Structural Equation Models (SEMs) based on a panel data set of a selection of endogenous and exogenous variables for the period 2000–2007. It is found that, despite both regions’ continued government participation in national carriers, only in the Caribbean has this appeared to have resulted in the expected dampening effect on tourism output, whereas a reverse effect was found for the sample of Middle-Eastern states. Focussing on their formidable hub-and-spoke networks, state owned and vertically integrated Middle-Eastern carriers are still encouraged to offer competitive fare and service levels to capture 6th freedom traffic with the growing number of long-stay visitors being one of the main beneficiaries of this.

The air transport market in the Middle East is undergoing a rapid transformation as passenger traffic is beginning to surge through the area. This paper examines the impact that deregulation is having on the region, including the growth of low cost carriers. It establishes that the region is working towards a pan-regional agreement on liberalisation under the leadership of the Arab Civil Aviation Commission.

India, home to one-sixth of the world's population, is becoming one of the world's economic engines. Its bureaucratic and outdated regulatory policies have been reformed resulting in a three-fold increase in the number of scheduled airlines and a five-fold increase in the number of aircraft operated. This paper reviews how the new regulatory roadmap has transformed the supply of domestic air services. A large passenger survey conducted in Mumbai investigated the sensitivity of passengers to a change in fare and which flight products would encourage them to select either a full service airline or a low cost carrier. The study finds that there is a homogenous set of flight products required by leisure passengers, travelling on both full service and low cost airlines, however there is a considerable dissimilarity overall between the requirements of passengers using a full service airline and a low cost carrier.

Airline boardrooms have steered commercial departments to increasingly focus on diversifying revenue streams through ancillary revenue mechanisms. Ancillary revenues are any revenues which are additional to those generated from the sale of the different fare categories or branded fares. Ancillary revenues can be classified into four main groups: a la carte sales, frequent flyer programmes, commission-based products and advertising. Across the world’s airlines, baggage is also a big ancillary item with AirAsia for example producing 56 per cent of its total ancillaries in Q1, 2018 from baggage fees. Surveys have shown that passengers were willing to pay for specific ancillary products that were perceived as a ‘necessity’ such as seat assignment and baggage and together with food and drink, rather than ‘nice-to-have’ products. Punitive charges are another key revenue driver as consumers may be charged a penalty fee if they choose to alter their travel itineraries or for purchasing tickets with credit cards.