Name: Gerben de Jong        
Organization: Vrije Universiteit (VU) Amsterdam
Supervisors: Prof. dr. Erik T. Verhoef, Prof. dr. Hester van Herk, dr. Christiaan L. Behrens
Email address: g2.de.jong(at)vu.nl         
Expected date of completion: August 2018

Abstract of thesis:

The objective of this thesis is to improve our understanding of international airline competition in the increasingly liberalized global airline industry, with a specific focus on the home country advantage of national airlines. We first estimate the domestic market power of airlines, by analyzing their ability to charge a fare premium in markets that originate in their home country. We furthermore analyze the brand loyalty advantage of national airlines, using geocoded microdata on memberships and expenditures from a major international frequent flier program. A final study considers to what extent horizontal partnerships (e.g., codesharing) allow airlines to benefit from the home country advantages of their partner airlines. Insights from this thesis are of interest in understanding the market consequences of the ongoing air transport liberalization process, as well as to airline managers seeking for guidance in differentiating (marketing) strategies across borders.

Name: Chiara Morlotti    
Organization: University of Bergamo; University of Pavia    
Supervisor: Prof. Paolo Malighetti        
Email address: chiara.morlotti(at)unibg.it        
Expected date of completion: October 2018

Abstract of thesis:   

In industries characterized by fixed capacity and perishable items, understanding consumers behaviour is both challenging and crucial as firms, dealing with high fixed costs, have a limited amount of time to sell their products or services and to maximise their revenues. In this sense, air transport industry is an interesting market to study, as the available seats on an airplane have to be sold before the flight departs. This purpose leads airlines, especially low-cost carriers (LCCs), to a continuous revision of airfares, which are dynamically changed in order to meet all the different passengers’ willingness to pay. Air carriers’ pricing strategies have been greatly studied in the literature where scholars try to understand the determinants of airfares’ changes. Among all, demand is found to be one of the most crucial factor affecting prices. Therefore, the aim of this work is to explore how the interaction between passengers’ behaviour and LCCs’ price setting occurs and which are the main effects. After a deep understanding of the different determinants that influence both price variations in airlines’ strategy and demand, the effects of prices’ fluctuations on consumers’ purchases choices are studied. However, air transport passengers are not homogeneous and the impacts of price changes may vary according to different factors. Generally, consumers can be classified in two main types: myopic consumers, who simply make their purchase at full price, without wondering whether the price could decrease in future periods, and strategic consumers, who strategically time their purchase in order to pay as less as possible. This strategic behaviour has been nowadays enhanced by the availability of online sales channels and fare prediction tools, which improve the passengers’ awareness of pricing variations. In this context, by focusing on the European low-cost market, price elasticity of demand is estimated and all the different dimensions along which it may vary have been explored. Moreover, the effects of daily price volatility on consumers’ behaviour and the relative impacts on airlines’ revenue management are studied. All these analyses lead to an estimation of the presence of strategic consumers in the air transport industry.

Name: Annika Paul
Organization: Bauhaus Luftfahrt
Supervisor: Prof. Dr. Bernhard Wieland (Technical University Dresden), Prof. Dr. Hans-Martin Niemeier (University of Applied Sciences Bremen)
Doctoral Committee: n.a.
Email address: annika.paul@bauhaus-luftfahrt.net
Expected date of completion: August 2016

Abstract of thesis: My PhD thesis addresses the topic of hub airport competition in the European context and the extent of competition that these airports face by strongly growing hubs in the Middle East and in the Bosporus region. In particular, it aims to identify the parameters that determine the intensity of this type of competition. Current research in this area mainly focuses on airport competition on a regional level. The contribution of this work is to extend the existing research by hub airports. The works starts with a detailed overview of the historic development of the European airport market to show market entry and exit of hub airports. Furthermore, different methodologies in the field of competition analysis are evaluated to select appropriate ones for the hub airport context. These are applied in the methodological part of the theses with a particular focus on the transfer market for passengers. The thesis aims at generating added value for the analysis of the competitive situation between airports and their respective network carriers. In addition to that, the potential extent of substitution between hub airports delivers input for the design of economic regulation in this area.

Name: Adél (Németh) Schroepfer
Organization: Jacobs University
Supervisor: Gert Brunekreeft
Email address: adele.nemeth(at)gmail.com

Abstract of thesis:

According to microeconomics, mergers result in a more concentrated industry. This fact is hardly questionable, but the discussion about whether concentration is good or bad for society leads us to a lively debate, called the efficiency defense: do mergers increase market power or efficiency? How does merger policy take market power and efficiency into consideration?

My work investigates the circumstances and consequences of merger appraisal in passenger airline markets in Europe between 1995 and 2015. The analysis tries to identify the role of consolidation driven by market power, efficiency and bankruptcy. The thesis introduces economic principles, models and policy choices behind the efficiency defense, and explains why the European Commission did not consider efficiency as a core criterion for their decision to allow or prevent takeovers.

In summary, efficiencies could be considered in the merger process under the total welfare approach, which also contains efficiency gains from producer surplus increase. The author believes that efficiency is the ordinary aim of companies, but the reason behind mergers is to increase market presence, market share or with other words: market power. Competition policy should therefore improve a transparent and smart framework to regulate market power.

Name: Marcia Urban
Organization: Bauhaus Luftfahrt e.V.
Supervisor: Dr. Kay Olaf Plötner / Prof. Mirko Hornung (TU Munich)
Email address: marcia.urban(at)bauhaus-luftfahrt.net
Expected date of completion: March 2019

Abstract of thesis:

The global air transport system is a very complex and dynamic environment in which a lot of different stakeholders interact with each other. One of these stakeholders, the airlines, take a crucial role in this system since they provide the operation of aircraft and, thus, connect the different global regions and enable the transport of passengers and freight from almost every place in the world to every other place. Furthermore, they form the connection between aircraft manufacturers, which determine future aircraft technologies, and passengers, the demand side and revenue source of the airlines. Thus, airlines translate passenger requirements from an individual level to the aircraft level in order to define constraints for future aircraft technology demand as an input for the aircraft manufacturers.

Over the past years, the airline market has been changing as new operators entered and the demand for air transport began to grow disproportionately in emerging countries, inducing a shift towards Asia where double-digit growth rates are obtained. Furthermore, it can be observed that airline business models tend to gravitate towards each other, especially the full service network and the low-cost carriers implement certain business model aspects respectively. These developments inaugurate a scope of potential academic analysis of the future development of the airlines within the air transport system.

The thesis intends to evaluate operational airline models and to detect improvement potentials for the performance of air transport. Therefore, the impact of key drivers on the airline operational business will be investigated in order to better understand the constraints and requirements that future airline business approaches need to comply for a successful implementation into the future air transport system and the macro-economic environment. After gaining a thorough understanding of the effective principles of the airline industry and the external impact from other air transport chain stakeholders as well as from a macro-economic level, potential future business model concepts for commercial air transport providers and operators in other transport modes will be developed and analysed within a model environment. In addition, it is envisaged to derive ideas for future airline business approaches from examples from other industries with very similar product characteristics compared to the product flight from departure A to destination B. Enterprises from the telecommunication and internet industry feature such characteristics. The evolution of other transport modes complements the analysis of the current state of air transport, predominantly with respect to enhancements of intermodal transport solutions.

The scientific contribution of the work comprises the development of a comprehensive model for the air transport system using the methodology of system dynamics. The model will serve as an abstraction of the air transport system in changes in the market environment may affect airline business approaches. Previous research in this field focuses on specific aspects of the aircraft operation, e.g. the environmental performance. The system dynamics modelling approach allows to manage the complexity of the object of investigation and, thus, provides the resources required to model the air transport system. The simulation of potential future business approaches for airlines with the developed air transport model as well as the analysis of the simulation results constitute the last step of the thesis closing with recommendations for future research in the field.

Name: Shengrun Zhang
Organization: Department of Geography at Ghent University
Supervisor: Prof. Frank Witlox & Prof. Ben Derudder
Doctoral Committee: Prof. dr. Mario Cools; Prof. dr. Ben Derudder (Promoter); Prof. dr. Kurt Fuellhart; Prof. dr. Jan Nyssen (Chair); Dr. Tom Storme; Dr. Veronique Van Acker; Prof. dr. Frank Witlox (Promoter, Secretary)
Email address: zhangshengrun(at)gmail.com
Date of completion: 15/06/2015

Abstract of thesis: This dissertation investigates fare effects and dynamics of network structure in the air transport industry through case studies from the United States and Europe. Econometric models are established to examine factors influencing the pricing behavior of full-service carriers in hub-to-hub networks in the United States and Europe, taking into account route and market structure as potential explanatory factors. A stochastic actor-based modeling technique is applied to examine the main elements driving changes in the European air transport network between 2003 and 2009. Traffic changes at secondary airports in the European Union and United States are explored in the context of EU/US Open Skies agreement during 2005-2008.