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Global airline industry

Global airline industry

Belobaba, Peter; Barnhart, Cynthia; Odoni, Amadeo

Extensively revised and updated edition of the bestselling textbook, provides an overview of recent global airline industry evolution and future challenges Examines the perspectives of the many stakeholders in the global airline industry, including airlines, airports, air traffic services, governments, labor unions, in addition to passengers Describes  how these different players have contributed to the evolution of competition in the global airline industry, and the implications for its future evolution Includes many facets of the airline industry not covered elsewhere in any single book, for example, safety and security, labor relations and environmental impacts of aviation Highlights recent developments such as changing airline business models, growth of emerging airlines, plans for modernizing air traffic management, and opportunities offered by new information technologies for ticket distribution Provides detailed data on airline performance and economics updated through 2013

eBook, Electronic resource, Book. English.
Second edition.
Published Chichester, West Sus: Wiley Blackwell, 2015
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Details

Statement of responsibility: Peter Belobaba, Amedeo Odoni, Cynthia Barnhart
ISBN: 1118881141, 1118881176, 9781118881149, 9781118881170

Contents

  1. Notes on Contributors xiii
  2. List of Contributors xix
  3. Series Preface xxi
  4. Acknowledgments xxiii
  5. 1 Introduction and Overview 1Peter P. Belobaba
  6. 1.1 Introduction: The Global Airline Industry
  7. 1.1.1 Deregulation and Liberalization Worldwide
  8. 1.1.2 Industry Evolution Since 2000
  9. 1.2 Overview of Chapters
  10. References
  11. 2 The International Institutional and Regulatory Environment 19Amedeo R. Odoni
  12. 2.1 Introduction
  13. 2.2 Background on the International Regulatory Environment
  14. 2.2.1 The Chicago Convention
  15. 2.2.2 Freedoms of the Air
  16. 2.3 Airline Privatization and International Economic Regulation
  17. 2.3.1 Airline Privatization
  18. 2.3.2 Types and Critical Aspects of Air Service Agreements
  19. 2.3.3 Typical Content of Bilateral and Multilateral ASAs
  20. 2.3.4 The Unified EU Market and Other Major Developments
  21. 2.3.5 The Role of Airline Alliances
  22. 2.4 Airports
  23. 2.4.1 Restrictions on Airport Access
  24. 2.4.2 Airport Ownership and Management
  25. 2.5 Air Traffic Management
  26. 2.6 Key Organizations and Their Roles
  27. 2.6.1 International Organizations
  28. 2.6.2 Organizations in the United States
  29. 2.7 Summary and Conclusions
  30. References
  31. 3 Overview of Airline Economics, Markets and Demand 47Peter P. Belobaba
  32. 3.1 Airline Terminology and Definitions
  33. 3.1.1 Basic Airline Profit Equation
  34. 3.2 Air Transportation Markets
  35. 3.2.1 Typical Air Passenger Trip
  36. 3.2.2 Spatial Definitions of Airline Markets
  37. 3.3 Origin–Destination Market Demand
  38. 3.3.1 Dichotomy of Airline Demand and Supply
  39. 3.3.2 Factors Affecting Volume of O–D Demand
  40. 3.3.3 Quality of Service Factors
  41. 3.3.4 Total Trip Time and Frequency
  42. 3.4 Air Travel Demand Models
  43. 3.4.1 Elasticity of Air Travel Demand
  44. 3.4.2 Air Travel Demand Segments
  45. 3.4.3 O–D Market Demand Functions
  46. 3.5 Airline Competition and Market Share
  47. 3.5.1 Market Share/Frequency Share Model
  48. 3.5.2 “S-Curve” Model Formulation
  49. 3.5.3 Quality of Service Index (QSI) Models
  50. 3.6 Summary
  51. References
  52. 4 Airline Pricing Theory and Practice 75Peter P. Belobaba
  53. 4.1 Airline Prices and O-D Markets
  54. 4.1.1 Regulated versus Liberalized Pricing
  55. 4.1.2 Theoretical Pricing Strategies
  56. 4.1.3 Price Discrimination versus Product Differentiation
  57. 4.2 Differential Pricing
  58. 4.2.1 Market Segmentation
  59. 4.2.2 Fare Product Restrictions
  60. 4.2.3 Airline Fare Structures
  61. 4.3 Recent Trends in Airline Pricing
  62. 4.3.1 Branded Fare Families
  63. 4.3.2 Unbundling and Ancillary Revenues
  64. 4.4 Airline Pricing Strategies
  65. 4.4.1 Factors Affecting Fare Structure in an O-D Market
  66. 4.4.2 Competitive Fare Matching
  67. References
  68. 5 Airline Revenue Management 99Peter P. Belobaba
  69. 5.1 Computerized Revenue Management Systems
  70. 5.2 Flight Overbooking
  71. 5.3 EMSR Model for Flight Leg Revenue Optimization
  72. 5.4 Network Revenue Management
  73. 5.4.1 O-D Control Mechanisms
  74. 5.4.2 Network RM Optimization Models
  75. 5.4.3 Revenue Benefits of O-D Control
  76. 5.5 Revenue Management for Less Restricted Fare Structures
  77. 5.5.1 Demand Forecasting by Willingness to Pay
  78. 5.5.2 Marginal Revenue Optimization: Fare Adjustment Theory
  79. References
  80. 6 Airline Operating Costs and Measures of Productivity 127Peter P. Belobaba
  81. 6.1 Airline Cost Categorization
  82. 6.1.1 Administrative versus Functional Cost Categories
  83. 6.1.2 Cost Drivers by Functional Category
  84. 6.2 Operating Expense Comparisons
  85. 6.2.1 Percentage Breakdown of Operating Expenses
  86. 6.2.2 Aircraft Operating Cost Comparisons
  87. 6.2.3 Low-Cost Carriers
  88. 6.3 Comparisons of Airline Unit Costs
  89. 6.3.1 Total Operating Costs versus Unit Costs
  90. 6.3.2 Legacy versus Low-Cost Carrier Unit Costs
  91. 6.4 Measures of Airline Productivity
  92. 6.4.1 Aircraft Productivity
  93. 6.4.2 Labor Productivity
  94. References
  95. 7 The Airline Planning Process 159Peter P. Belobaba
  96. 7.1 Fleet Planning
  97. 7.1.1 Airline Fleet Decisions
  98. 7.1.2 Fleet Planning Methods
  99. 7.2 Route Planning
  100. 7.2.1 Hub Economics and Network Structure
  101. 7.2.2 Route Planning and Evaluation
  102. 7.3 Airline Schedule Development
  103. 7.3.1 Frequency Planning
  104. 7.3.2 Timetable Development
  105. 7.3.3 Fleet Assignment and Aircraft Rotations
  106. 7.4 The Future: Integrated Airline Planning
  107. References
  108. 8 Airline Schedule Optimization 189Cynthia Barnhart and Vikrant Vaze
  109. 8.1 Schedule Optimization Problems
  110. 8.2 Fleet Assignment
  111. 8.2.1 The Fleet Assignment Model
  112. 8.2.2 Fleet Assignment Solutions/Impacts
  113. 8.2.3 Extending Basic Fleet Assignment Models
  114. 8.3 Schedule Design Optimization
  115. 8.3.1 Modeling the Optimization of Flight Retiming and Fleet Assignment Problems
  116. 8.3.2 Importance of Modeling Competition in Schedule Design
  117. 8.4 Crew Scheduling
  118. 8.4.1 The Crew Pairing Problem
  119. 8.4.2 Crew Scheduling Problem Solutions and Impacts
  120. 8.5 Aircraft Maintenance Routing and Crew Pairing Optimization
  121. 8.5.1 Modeling and Solving the Extended Crew Pairing Problem
  122. 8.5.2 Modeling and Solving the Restricted Aircraft Maintenance Routing
  123. Problem Based on the Solution to the Extended Crew Pairing
  124. Problem
  125. 8.6 Future Directions for Schedule Optimization
  126. References
  127. 9 Airline Flight Operations 223Alan H. Midkiff, R. John Hansman, Jr., and Tom G. Reynolds
  128. 9.1 Introduction
  129. 9.2 Regulation and Scheduling
  130. 9.2.1 General Regulatory Requirements
  131. 9.2.2 Flight Crew Regulation and Training
  132. 9.2.3 Flight Crew Scheduling
  133. 9.3 Flight Crew Activities during a Typical Flight
  134. 9.3.1 Flight Crew Sign-In
  135. 9.3.2 Operations/Planning
  136. 9.3.3 Preflight
  137. 9.3.4 Predeparture
  138. 9.3.5 Gate Departure
  139. 9.3.6 Taxi-Out
  140. 9.3.7 Takeoff
  141. 9.3.8 Terminal Area Departure
  142. 9.3.9 Climb
  143. 9.3.10 Cruise
  144. 9.3.11 Descent
  145. 9.3.12 Terminal Area Arrival
  146. 9.3.13 Final Approach
  147. 9.3.14 Landing and Rollout
  148. 9.3.15 Taxi-In
  149. 9.3.16 Parking
  150. 9.3.17 Postflight
  151. 9.4 Summary
  152. List of Abbreviations
  153. References
  154. 10 Irregular Operations: Schedule Recovery and Robustness 263Cynthia Barnhart and Vikrant Vaze
  155. 10.1 Introduction
  156. 10.2 Irregular Operations
  157. 10.2.1 Managing Irregular Operations: Airline Operations Control Centers
  158. 10.2.2 Options for Schedule Recovery from Irregular Operations
  159. 10.2.3 Schedule Recovery from Irregular Operations: Objectives and Process
  160. 10.2.4 Evaluating the Costs of Recovery Options: The Challenges Imparted by Uncertainty and Downstream Effects
  161. 10.3 Robust Airline Scheduling
  162. 10.3.1 Robust Schedule Design
  163. 10.3.2 Robust Fleet Assignment
  164. 10.3.3 Robust Aircraft Routing
  165. 10.3.4 Robust Crew Scheduling
  166. 10.4 Directions for Ongoing and Future Work on Schedule Recovery from Irregular Operations
  167. References
  168. 11 Labor Relations and Human Resource Management in the Airline Industry 287Jody Hoffer Gittell, Andrew von Nordenflycht, Thomas A. Kochan, Greg J. Bamber, and Robert B. McKersie
  169. 11.1 Alternative Strategies for the Employment Relationship
  170. 11.2 Labor Relations in the US Airline Industry
  171. 11.2.1 Regulatory Framework for US Labor Relations
  172. 11.2.2 US Airline Responses to Cost Pressures Postderegulation
  173. 11.2.3 US Labor Relations Post-September 11, 2001
  174. 11.3 Labor Relations in the Airline Industry in Other Countries
  175. 11.3.1 The International Regulatory Framework for Labor Relations
  176. 11.3.2 Summary of Airline Labor Relations Strategies: What Works?
  177. 11.4 Human Resource Management at Airlines
  178. 11.4.1 Hiring and Training for Relational Competence
  179. 11.4.2 Flexible Boundaries between Jobs
  180. 11.4.3 Supervisory Coaching and Feedback
  181. 11.4.4 Performance Measurement at the Process Level
  182. 11.4.5 Conflict Resolution
  183. 11.4.6 Boundary Spanning Roles
  184. 11.4.7 Partnering with Other Key Players
  185. 11.4.8 Leadership
  186. 11.5 Conclusions
  187. References
  188. 12 Aviation Safety and Security 327Arnold I. Barnett
  189. 12.1 Safety
  190. 12.1.1 Safety Is No Accident
  191. 12.1.2 Measuring Air Safety: Some Hazards
  192. 12.1.3 The Q-Statistic
  193. 12.1.4 Some Calculated Q-Values
  194. 12.1.5 Other Approaches to Safety Measurement
  195. 12.1.6 Are Some Airlines Safer Than Others?
  196. 12.1.7 The Last Century
  197. 12.1.8 A Collision Risk Assessment
  198. 12.1.9 Midair Collision Risk
  199. 12.2 Security
  200. 12.2.1 September 11 in Context
  201. 12.2.2 Some Costs of Aviation Security
  202. 12.2.3 Some Security Procedures
  203. 12.2.4 Is It Worth It?
  204. 12.2.5 Two Economic Paradigms
  205. 12.2.6 A European Dilemma
  206. 12.2.7 More Security Dilemmas
  207. 12.2.8 Final Remarks
  208. References
  209. 13 Airports 361Amedeo R. Odoni
  210. 13.1 Introduction
  211. 13.2 General Background
  212. 13.3 Physical Characteristics
  213. 13.3.1 Airside Design Standards
  214. 13.3.2 Geometric Configuration on Airside
  215. 13.3.3 Typology of Passenger Buildings
  216. 13.3.4 Assessing Passenger Building Concepts
  217. 13.3.5 Ground Access
  218. 13.4 Capacity, Delays, and Demand Management
  219. 13.4.1 Airside Capacity
  220. 13.4.2 Airside Delays and Their Mitigation
  221. 13.4.3 Landside Capacity and Level of Service
  222. 13.5 Institutional, Organizational, and Economic Characteristics
  223. 13.5.1 Airport Ownership and Management
  224. 13.5.2 Airport User Charges
  225. 13.5.3 Economic Regulation
  226. 13.5.4 Financing Capital Projects
  227. References
  228. 14 Air Traffic Control 395R. John Hansman, Jr. and Amedeo Odoni
  229. 14.1 Introduction
  230. 14.2 The Generic Elements of an ATC System
  231. 14.2.1 Communications Systems
  232. 14.2.2 Navigation Systems
  233. 14.2.3 Surveillance Systems
  234. 14.2.4 Flight and Weather Information Systems
  235. 14.3 Airspace and ATC Structure
  236. 14.4 ATC Operations
  237. 14.5 Standard Operating Procedures
  238. 14.6 Capacity Constraints
  239. 14.7 Congestion and Air Traffic Flow Management
  240. 14.8 Future ATC Systems
  241. References
  242. 15 Air Transport and the Environment 423Karen Marais, Philip J. Wolfe, and Ian A. Waitz
  243. 15.1 Introduction
  244. 15.2 Limiting Aviation’s Environmental Impact: The Role of Regulatory Bodies
  245. 15.3 Airport Water Quality Control
  246. 15.3.1 Effects of Deicing Fluids
  247. 15.3.2 Managing Airport Water Quality
  248. 15.4 Noise
  249. 15.4.1 Effects
  250. 15.4.2 Noise Measurement
  251. 15.4.3 Noise Trends
  252. 15.4.4 Noise Controls
  253. 15.4.5 Emerging Issues
  254. 15.5 Air Quality
  255. 15.5.1 Effects
  256. 15.5.2 Emissions Measurement
  257. 15.5.3 Emissions Trends
  258. 15.5.4 Emissions Control
  259. 15.5.5 Emerging Issues
  260. 15.6 Impact of Aviation on Climate
  261. 15.6.1 Effects
  262. 15.6.2 Measurement
  263. 15.6.3 Greenhouse Emissions Control
  264. 15.7 Alternative Fuels
  265. 15.8 Summary and Looking Forward
  266. References
  267. 16 Information Technology in Airline Operations, Distribution and Passenger Processing 461Peter P. Belobaba, Cynthia Barnhart, and William S. Swelbar
  268. 16.1 Information Technology in Airline Planning and Operations
  269. 16.2 Airline Distribution Systems
  270. 16.2.1 Evolution of Computer Reservations Systems
  271. 16.2.2 Alternative Airline Distribution Channels
  272. 16.3 Distribution Costs and e-Commerce Developments
  273. 16.3.1 Internet Distribution Channels
  274. 16.3.2 Electronic Ticketing
  275. 16.3.3 Implications for Airlines and Consumers
  276. 16.4 Innovations in Passenger Processing
  277. References
  278. 17 Critical Issues and Prospects for the Global Airline Industry 487Peter P. Belobaba, William S. Swelbar, and Amedeo R. Odoni
  279. 17.1 Evolution of US and Global Airline Markets
  280. 17.1.1 Evolution of US Airline Markets
  281. 17.1.2 Recent Developments in Global Airline Markets
  282. 17.2 Looking Ahead: Critical Challenges for the Global Airline Industry
  283. 17.2.1 Strategies for Sustained Profitability
  284. 17.2.2 Infrastructure and the Environment
  285. References
  286. Index

Author note

Editors Peter Belobaba, Amedeo Odoni and Cynthia Barnhart
Massachusetts Institute of Technology (MIT), USA

Back cover copy

The Global Airline Industry, Second Edition provides a comprehensive introduction to the global airline industry. The perspective is international, drawing on the authors’ extensive experience with airline and air transport issues around the world. It features detailed coverage of airline economics, competition, pricing, planning, scheduling, operations, and ticket distribution, as well as survey chapters on airline labor relations, aviation safety and security, airports, air traffic control, environmental impacts, and the international regulatory environment in which the industry operates.

The contributors include faculty and research staff currently or formerly affiliated with the Massachusetts Institute of Technology (MIT), recognized for their expertise on the multiple facets of the air transport sector. In this second edition, many updates have been included to reflect new developments in the airline industry through 2014, including detailed discussion of the low-cost carrier (LCC) and emerging global airline sectors of the industry.

Key features:

Examines the perspectives of the many stakeholders in the global airline industry, including airlines, airports, air traffic services, governments, labor unions, in addition to passengers

Describes how these different players have contributed to the evolution of competition in the global airline industry, and the implications for its future evolution

Includes many facets of the airline industry not covered elsewhere in any single book, for example, safety and security, labor relations and environmental impacts of aviation

Highlights recent developments such as changing airline business models, growth of emerging airlines, plans for modernizing air traffic management, and opportunities offered by new information technologies for ticket distribution

Provides detailed data on airline performance and economics updated through 2013

The Global Airline Industry, Second Edition is a must-have textbook for students in transportation programs and is a comprehensive reference for air transportation professionals worldwide.