Books on Airline Economics (Open Skies Policy)

[kuzukuzu]

Howsit,

I'm writing my master's thesis on the economic implications of an open skies policy on the role of flag carriers. At the current time, I'm searching for theoretical sources based around airline economics and globalisation in general. I understand there are quite a number of books pertaining to airline economics, but was hoping for any specific recommendations you may have.

I've already waiting for Flying Off Course (Rigas Doganis), but was hoping for some suggestions on other sources, in particular concentrating on open skies policy.

Cheers

[The SSK]

Are you talking EU-US Open Skies?

Not a book, but a bit of a read nonetheless:
http://ec.europa.eu/transport/air/international_aviation/country_index/doc/final_report_us_bah.pdf

Or this:
http://www.internationaltransportforum.org/2009/workshops/pdf/Oum.pdf

[jabird]

the role of flag carriers

Whether due to Open Skies or more likely a simple case of rationalisation, there is little role for flag carriers who believe they have an inherent right to exist just because they always have done. Yet some smaller players have carved out useful niches - see Brussels to Africa or Helsinki to east Asia.

I'd suggest reading the Malev thread for a bit more background on this - obviously this forum isn't scientific but you get some good insider views which an academic looking in from the outside can't give.

Anyone fancy starting PPFN? (Professional Pilots' Fact Network). Awaits the stamp of the mods' feet :=

[The SSK]

views which an academic looking in from the outside can't give

But 'policy' is very often based on consultant reports such as those I quoted, and it is 'policy' which drives the industry. Accumulated expertise then finds itself in damage-limitation mode.

Some academics are better than others; Doganis has hands-on experience, a profound insight into the industry and access to super-quality research. But in my experience the young researchers in the better consultancies are very quick learners - at least I hope so, since they usually are earning more than me and my [mumble-mumble] years experience.

Our friend who asked the original question will make a far better living in consultancy, influencing aviation policy from the outside, than trying to counteract questionable policy from the inside. But hey, it's not all about money.

[EI-BUD]

kuzukuzu

I have a book with some references to Open Skies, it is called 'Airline Marketing and Management', by Stephen Shaw.

I expect the challenge will be spelling out the examples and between which countries that have open skies agreements with which other countries. There are many examples.

Within a European context there are few examples of Flag/Legacy carriers taking advantage of Open Skies or Deregulated market.


Lufthansa going into Italy with Lufthansa Italia (at Malpensa). This has failed.
BA setting up 'Open Skies' by BA at Paris with 757s to fly to the states. Rumours that it has been given a last chance to succeed.
Plenty of examples of flag carriers taking over/ merging with other carriers in other countries in EU though. BA/Iberia, Lufthansa/Bmi/Austrian/Brussels Airlines, KLM/Air France. More of that likely to happen. Though very little of examples outside of them that I can think of.
I think there is a case to be made re pre EU deregulation some carriers had 5 Freedom routes between 2 countries foreign to their home territory, Aer Lingus and TAP as two examples I know of. Possibly Greece too.
Possibly good to mention items such as limitations on ownership of say EU companies or US companies by outside parties, something like 49% restriction.
In the main fair to say in EU flag carriers havent had an appetite for and where they have they have not been successful.
May a case to make that the brands are not connected to the countries involved, contentious comment I know but eg Easyjet and Ryanair are truly pan European and are consulted for travel across Europe and most people outside of the industry would not readily identify them as say British, Irish, Spanish or French or whatever!!
Say a brand like Air France, people consulting the internet for travelling from say Madrid to Zurich would probably instinctively not consider air france, again this could be challenged but happens to be my view. Same with AirBerlin, although big base at Palma, who checks AirBerlin for say Palma to a non german destination. Perhaps the key to solving the case is making the flag carrier brand and reputation less related to its home country. Eg a generic brand that is marketed heavily across Europe but gives no clue to its precise country of origin.
Sorry Im probably well of topic and wandering. Possibly all remedial to you.

Re Book....
References on page 54 & 110;

Page 54;Reference is made to deregulation, it explains that it know of approx 73 international agreements and goes on to describe these as open skies agreements. It goes on to say that the barriers as an aside are ownership and control.


Page 110;
The text is about KLM and Northwest and an Open Skies agreement between US and Netherlands. It then looks at Lufthansa and United that
was the making of The Star Alliance.

I hope this is of some help and good luck with your script.

[jabird]

a case to make that the brands are not connected to the countries involved, contentious comment I know but eg Easyjet and Ryanair are truly pan European and are consulted for travel across Europe and most people outside of the industry would not readily identify them as say British, Irish, Spanish or French or whatever!!

If we are looking at brand values, I think Ryanair certainly play on their Irish roots (and routes ;). They are heavily character led (love him or hate him), and the harp on the tailfin is a symbol of Ireland. That their financials are much more lead through London is less relevant to the punter. Easyjet are a much more pan European brand - I perceive them as British as they started at LTN, but Stelios himself is a Greek Cypriot living in Monaco. No suggestion of any nationality based branding, just heavy dependence on the word and the particular shade of orange.

[The SSK]

Anyone fancy starting PPFN? (Professional Pilots' Fact Network). Awaits the stamp of the mods' feet

No, we just need another forum, called 'beancounters'. Only those with a genuine interest in how the industry works would dare to venture in ...

[OverRun]

Doganis is an excellent book, and an invaluable source. He knows the issues around legacy flag carriers.

There is another book which is more on the airline economics/financial side to give you the background in that area, but it doesn't touch on open skies; still is an excellent coverage of airline financial planning:
Buying the Big Jets: Fleet Planning for Airlines, 2nd edition Paul Clark. And Stephen Holloway: Straight and level - practical airline economics.

And then, one which I rather like because it is a good read as well: Geoffrey Thomas co-authored a book called Flightpaths, which covers a lot of the airline economics material at a more practical level. Not necessarily at academic level, but if you are coming from outside an airline economics background, it helps you understand what is going on, and then you can find a suitable academic reference covering the same point which you can put in your thesis.
This book is available at: http://www.silverskypublishing.com/Flightintro.shtml

Open skies is a topic that has been studied a bit at the academic level. I would get into your university library's electronic/online databases and do some searching on previous theses on the topic - might be some good stuff there. When I was doing my PhD on airline economics, I found some good stuff already written. Don't get tempted by plagiarism - the software is getting better at detecting it these days :=

By the way, you used a phrase which I thought had disappeared from use in modern times I've already waiting for Flying Off Course What happened to Amazon? I thought all books appeared in 3-7 days . . . . . . . . . . . . .

Good luck. If I can access my Endnote, I'll see what I have got on open skies. Absolutely hit "Journal of Air Transport Management" as a resource and troll through that.

[OverRun]

A quick check at my University on "open skies" gave 16,508 Results

* Peer-reviewed journals(1,115)
* Full text online(8,612)
* Available in the Library(1)
* Physical resources(2)
* Cited Articles(56)

Here is the thesis I was thinking of:
Some legal aspects of an "open skies" aviation policy for Australia
Geoffrey Clive Baldock University of Western Australia. Law School. 2003

and my Endnote database gave this:
Oum, T. H. and Y. H. Lee (2002). "The Northeast Asian air transport network: is there a possibility of creating Open Skies in the region?" Journal of Air Transport Management 8(5): 325-337.

Good old Oum - prolific and expert and the foundation of modern academic enterprise in the field. Sorry the reference is a bit old - it shows when I was doing my research :)

[kuzukuzu]

This is excellent, thanks all for the comprehensive links and suggestions!

[globaljaco]

Hi kuzukuzu

Do you have any literature you can suggest after you've done your thesis? I am doing a masters this year and want to do my thesis in the line of aviation economics. Maybe something like the impact of aviation liberlization on developing economies, especially Africa.

i was reading through all the comments and wonder if you can suggest any related books worth investigating?

[OverRun]

There is a 2008 Uni. Pretoria PhD thesis by Bridget Ssamula "Strategies to design a cost-effective hub network for sparse air travel demand in Africa" which may relate to African airline economics.

Abstract

The aviation industry worldwide is changing dynamically in reaction to trends such as globalisation and with the need to increase market share to remain competitive. The African aviation industry still faces many problems in the institutional, technical and operational areas. Despite its potential for enhancing economic development, air travel to and from Africa remains a small percentage of world air travel. The African air route network is characterised by sparse demand, with long sector distances, low frequencies and high fares. This study investigates cost-effective hub-and-spoke (H&S) network design strategies for the African route network. An H&S network would minimise the cost of air transport and improve accessibility and connectivity. The study challenges the typical characteristics of H&S networks which are usually found in denser route networks. The design methodology used was the one most appropriate for the African region, using the datasets and tools available. As a first-cut analysis for Africa, the results of the research contribute to understanding the effectiveness of H&S networks in markets with sparse demand.

A cost model previously developed by the author to calculate operating costs on a route was used. It eliminated the need to assume discount coefficients on links, as passenger demand increases, in a field with limited data. The cost indicators derived from the model were used as criteria for choosing the most efficient hubs within a cluster. These were compared with the hub location criteria in the literature which use distances and passengers. It was found that using the cost indicators gives a reasonably consistent method that lowers passenger travel time.

The optimum number of clusters and hubs was found to be four. The geo-political network design method yielded the lowest network costs. The hubs are centrally located within the clusters: Morocco in the north, South Africa in the south, Kenya in the east and Nigeria in the west. They are characterised by high passenger demand and short node-hub sectors. There are significant benefits to be gained from using this hub network design, resulting from the economies of scale with higher passenger densities on routes. Furthermore, the benefits of higher service frequencies and better connectivity outweigh the extra travel time when routing through hubs.

The study found that for sparse networks, the cheapest hub-location options have high passenger demand. The sector distance is crucial in lowering operating costs as smaller, more efficient short range aircraft can be operated. It is therefore more efficient to assign nodes to the closest hub to lower node-hub costs. The optimum number of hubs/clusters is thus determined by the distance threshold for the efficient aircraft. The effect of changing the cluster boundaries on network costs also depends on the change in node-hub distances between the clusters. As sparsity reduces, the economies-of-scale benefits outweigh the increasing operating costs of longer distances, allowing efficient operation of larger-capacity aircraft. This means that the location of the hubs and the number of clusters becomes more flexible, implying that node-hub links can become longer, reducing both the clusters and the number of hubs.

Title page for ETD etd-07242008-093606 (http://upetd.up.ac.za/thesis/available/etd-07242008-093606/)

[PAXboy]

EI-BUDPerhaps the key to solving the case is making the flag carrier brand and reputation less related to its home country. Eg a generic brand that is marketed heavily across Europe but gives no clue to its precise country of origin.Yes and they already exist:


OneWorld
Star Alliance
Sky Team
etcetera

I predict that they will come to dominate.

OverRun
There is a 2008 Uni. Pretoria PhD thesis by Bridget Ssamula ...She'll never get a job at an African airline, she has researched her subject, is writing cogently and sounds as if she knows what she's talking about. :rolleyes: