- Email: [email protected]
Competition and Collaboration in Air Transportation
Available online at www.sciencedirect.com
Transportation Research Part E 44 (2008) 577–579 www.elsevier.com/locate/tre
Editorial
Competition and Collaboration in Air Transportation
Special issue of selected papers from the 10th ATRS Conference, Nagoya, Japan, 2006 The Air Transport Research Society (ATRS) Conference was held in May, 2006 in Nagoya, Japan. In this 10th anniversary year it attracted 345 participants from 27 countries and more than 160 paper presentations. As this was our 10th Anniversary Conference it is appropriate to cover briefly the history and objectives of the ATRS. The Air Transport Research Society (ATRS) was launched as a special interest group of the WCTR Society at the seventh Triennial WCTR Conference in Sydney under the leadership of Prof. Tae Hoon Oum, University of British Columbia. The first ATRS conference was held in Vancouver in 1997, followed by: Dublin, Hong Kong, Amsterdam, Jeju Island, Seattle, Toulouse, Istanbul, Rio de Janeiro and Nagoya. The ATRS has through the years gone beyond organizing conferences and taken more active part in industry development by publishing its Annual Global Airport Performance Benchmarking Reports that provide airports with important performance measures from year to year. The ATRS has also emphasized dissemination of scholarship in air transport research through publication of special issues of peer reviewed academic journals. The ATRS has been fortunate to have had strong supporters in academia and industry that have contributed both formally and informally to its development over the years. In order to keep conference registration costs manageable companies have played a large role in sponsoring the ATRS conferences and over 120 companies have honored the Society in this way and we extend our deep gratitude to those sponsors. The objectives of the ATRS are as follows: (1) To help organize and expand the air transport related sessions at the WCTR Conferences; to attract more people from airlines, airports, governments, research institutes, and academia to the WCTR Society and its activities; (2) To exchange research ideas and results via more frequent symposia, conferences or regional meetings than the WCTR Conference can provide via its main conferences every three years; (3) To enhance research capability for truly multi-national and multi-disciplinary issues on air transportation. For example, a good research on the globalization of airline industry requires expertise in various disciplines (economics, engineering, law, management, operations, planning and others) as well as good knowledge of the international, regional, and national institutions and regulations related to air transportation; (4) To interact with various international and national institutions which deal with policy and/or infrastructure issues concerning international aviation. Examples include the International Air Transport Association, the International Civil Aviation Organization, the World Trade Organization, the European Commission, the Organization of Economic Cooperation and Development (OECD), the Pacific Economic Cooperation Council, etc.; (5) To eventually provide forums to facilitate the exchange of ideas for forming multi-national and/or multi-disciplinary research teams to investigate topics of world-wide or continental interest; and 6. Other research on educational matters related to air transportation. The editors have the difficult task of selecting a handful of papers to enter a refereeing process for eventual publication in a special issue of the Transportation Research Journal Part E. We have chosen six papers, all of which have gone through a blind peer review process. The first three papers cover various aspects of service quality and the remaining three papers deal with oligopoly and stock market linkages, airline alliances, entry deterrence, and the impact of Open Sky bilaterals on international trade. 1366-5545/$ - see front matter Ó 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.tre.2007.05.005
578
Editorial / Transportation Research Part E 44 (2008) 577–579
Jou, Lam, Hensher, Chen and Kuo lead us into the impact of service quality on price in international air transport. In their paper they demonstrate how safety quality, service quality and pricing interact with forecasted profits in a specific market. The paper is particularly interesting in its attempt to measure the profit impact of airlines’ safety image relative to competitors as one element of service quality. Poor safety image of one player appears to constitute a substantial demand benefit to competitors with better image, underlining the importance of markets in correcting ineffectiveness that persists over longer periods. The impact of safety on profitability has been researched into before but still needs more work to reinforce our knowledge through more precise models showing the diminished returns and the detriment of poor performance over various lengths of time, e.g. single events to multiple events over long time. Espino, Martı´n and Roma´n conducted a stated preference (SP) choice experiment that considered several service attributes to assess willingness to pay attributes. They discover that preference heterogeneity assumptions are an important consideration for benefit measures at the individual level. The key contribution of this research for SP modelling is to demonstrate that if taste heterogeneity is neglected willingness to pay can be severely overestimated. Correia, Wirasinghe and Barros develop a global index for level of service in airports by using regression to establish relationship between global level of service and individual service components. This research is important as it attempts to establish global measures opposed to the more common individual components of service in airports. Gong, Firth and Cullinane model the relationship between earning announcements and abnormal stock returns under oligopolistic rivalry across borders. At the outset, the authors question if airlines behave as can be expected in an integrated world capital market given the common national regulatory restrictions on ownership and the predominant bilateral regime of air transportation. The researchers confirm that transnational information transfer on earnings announcements does support the stock market linkages hypotheses for close competitors. The authors do, consequently, find some support for the migration of the airline industry from ‘‘international’’ to ‘‘global’’ enterprises, given the regulatory constraints mentioned. Lin investigates the role of code-sharing alliances as entry deterrence. He demonstrates, through his theoretical model, that when the network size of a carrier is not large entry on one domestic spoke reduces total profits. Conversely if the incumbent forms an alliance with a foreign carrier it increases the allied carriers’ joint profit while reducing the unallied carrier’s profit on the domestic spoke. In his paper Yamaguchi looks into the question of costs versus distance in international trade. The premise in his research was that Open Sky air transportation policies would affect market prices and consequently international trade. Evidence is presented which demonstrates a positive relationship between international trade and pricing, rather than distance per se. The author goes further by showing the significance of the Open Sky bilaterals on international trade by specifying elasticity of export with respect to airfares. We extend our gratitude to all the people who contributed to the impressive success of the ATRS Nagoya Conference: the organization team, and participants through their presentations and enlightening discussions. We hope the readers, whether from industry or academia, find the articles valuable and an encouraging stepping stone for further inquiry into the respective topics. Sveinn Vidar Gudmundsson Department Strategy, Toulouse Business School 31068 Toulouse, France E-mail address: [email protected] Eizo Hideshima Department of Civil Engineering and Management Science Nagoya Institute of Technology 466-8555 Nagoya, Japan E-mail address: [email protected]
Editorial / Transportation Research Part E 44 (2008) 577–579
579
Tae Hoon Oum Sauder School of Business University of British Columbia 2053 Main Mall, Vancouver BC V6T 1Z2, Canada E-mail address: [email protected]
Transportation Research Part E 44 (2008) 577–579 www.elsevier.com/locate/tre
Editorial
Competition and Collaboration in Air Transportation
Special issue of selected papers from the 10th ATRS Conference, Nagoya, Japan, 2006 The Air Transport Research Society (ATRS) Conference was held in May, 2006 in Nagoya, Japan. In this 10th anniversary year it attracted 345 participants from 27 countries and more than 160 paper presentations. As this was our 10th Anniversary Conference it is appropriate to cover briefly the history and objectives of the ATRS. The Air Transport Research Society (ATRS) was launched as a special interest group of the WCTR Society at the seventh Triennial WCTR Conference in Sydney under the leadership of Prof. Tae Hoon Oum, University of British Columbia. The first ATRS conference was held in Vancouver in 1997, followed by: Dublin, Hong Kong, Amsterdam, Jeju Island, Seattle, Toulouse, Istanbul, Rio de Janeiro and Nagoya. The ATRS has through the years gone beyond organizing conferences and taken more active part in industry development by publishing its Annual Global Airport Performance Benchmarking Reports that provide airports with important performance measures from year to year. The ATRS has also emphasized dissemination of scholarship in air transport research through publication of special issues of peer reviewed academic journals. The ATRS has been fortunate to have had strong supporters in academia and industry that have contributed both formally and informally to its development over the years. In order to keep conference registration costs manageable companies have played a large role in sponsoring the ATRS conferences and over 120 companies have honored the Society in this way and we extend our deep gratitude to those sponsors. The objectives of the ATRS are as follows: (1) To help organize and expand the air transport related sessions at the WCTR Conferences; to attract more people from airlines, airports, governments, research institutes, and academia to the WCTR Society and its activities; (2) To exchange research ideas and results via more frequent symposia, conferences or regional meetings than the WCTR Conference can provide via its main conferences every three years; (3) To enhance research capability for truly multi-national and multi-disciplinary issues on air transportation. For example, a good research on the globalization of airline industry requires expertise in various disciplines (economics, engineering, law, management, operations, planning and others) as well as good knowledge of the international, regional, and national institutions and regulations related to air transportation; (4) To interact with various international and national institutions which deal with policy and/or infrastructure issues concerning international aviation. Examples include the International Air Transport Association, the International Civil Aviation Organization, the World Trade Organization, the European Commission, the Organization of Economic Cooperation and Development (OECD), the Pacific Economic Cooperation Council, etc.; (5) To eventually provide forums to facilitate the exchange of ideas for forming multi-national and/or multi-disciplinary research teams to investigate topics of world-wide or continental interest; and 6. Other research on educational matters related to air transportation. The editors have the difficult task of selecting a handful of papers to enter a refereeing process for eventual publication in a special issue of the Transportation Research Journal Part E. We have chosen six papers, all of which have gone through a blind peer review process. The first three papers cover various aspects of service quality and the remaining three papers deal with oligopoly and stock market linkages, airline alliances, entry deterrence, and the impact of Open Sky bilaterals on international trade. 1366-5545/$ - see front matter Ó 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.tre.2007.05.005
578
Editorial / Transportation Research Part E 44 (2008) 577–579
Jou, Lam, Hensher, Chen and Kuo lead us into the impact of service quality on price in international air transport. In their paper they demonstrate how safety quality, service quality and pricing interact with forecasted profits in a specific market. The paper is particularly interesting in its attempt to measure the profit impact of airlines’ safety image relative to competitors as one element of service quality. Poor safety image of one player appears to constitute a substantial demand benefit to competitors with better image, underlining the importance of markets in correcting ineffectiveness that persists over longer periods. The impact of safety on profitability has been researched into before but still needs more work to reinforce our knowledge through more precise models showing the diminished returns and the detriment of poor performance over various lengths of time, e.g. single events to multiple events over long time. Espino, Martı´n and Roma´n conducted a stated preference (SP) choice experiment that considered several service attributes to assess willingness to pay attributes. They discover that preference heterogeneity assumptions are an important consideration for benefit measures at the individual level. The key contribution of this research for SP modelling is to demonstrate that if taste heterogeneity is neglected willingness to pay can be severely overestimated. Correia, Wirasinghe and Barros develop a global index for level of service in airports by using regression to establish relationship between global level of service and individual service components. This research is important as it attempts to establish global measures opposed to the more common individual components of service in airports. Gong, Firth and Cullinane model the relationship between earning announcements and abnormal stock returns under oligopolistic rivalry across borders. At the outset, the authors question if airlines behave as can be expected in an integrated world capital market given the common national regulatory restrictions on ownership and the predominant bilateral regime of air transportation. The researchers confirm that transnational information transfer on earnings announcements does support the stock market linkages hypotheses for close competitors. The authors do, consequently, find some support for the migration of the airline industry from ‘‘international’’ to ‘‘global’’ enterprises, given the regulatory constraints mentioned. Lin investigates the role of code-sharing alliances as entry deterrence. He demonstrates, through his theoretical model, that when the network size of a carrier is not large entry on one domestic spoke reduces total profits. Conversely if the incumbent forms an alliance with a foreign carrier it increases the allied carriers’ joint profit while reducing the unallied carrier’s profit on the domestic spoke. In his paper Yamaguchi looks into the question of costs versus distance in international trade. The premise in his research was that Open Sky air transportation policies would affect market prices and consequently international trade. Evidence is presented which demonstrates a positive relationship between international trade and pricing, rather than distance per se. The author goes further by showing the significance of the Open Sky bilaterals on international trade by specifying elasticity of export with respect to airfares. We extend our gratitude to all the people who contributed to the impressive success of the ATRS Nagoya Conference: the organization team, and participants through their presentations and enlightening discussions. We hope the readers, whether from industry or academia, find the articles valuable and an encouraging stepping stone for further inquiry into the respective topics. Sveinn Vidar Gudmundsson Department Strategy, Toulouse Business School 31068 Toulouse, France E-mail address: [email protected] Eizo Hideshima Department of Civil Engineering and Management Science Nagoya Institute of Technology 466-8555 Nagoya, Japan E-mail address: [email protected]
Editorial / Transportation Research Part E 44 (2008) 577–579
579
Tae Hoon Oum Sauder School of Business University of British Columbia 2053 Main Mall, Vancouver BC V6T 1Z2, Canada E-mail address: [email protected]