Edgar Ramiro Jimenez Perez / Airport strategic planning in the context of low-cost carriers ascendency: insights from the European experience

Title: Airport strategic planning in the context of low-cost carriers ascendency: insights from the European experience
Name of PhD candidate: Edgar Ramiro Jimenez Perez
Organization: MIT Portugal Program - University of Porto (FEUP) and Massachusetts Institute of Technology (MIT)
Supervisor: Prof. J. Pinho de Sousa (FEUP), Prof. J. Claro (FEUP) and Prof. R. de Neufville (MIT)
Email address: erj@mit.edu
(Expected) date of completion: February 2015

Abstract of thesis: During the last decades the airport industry has undergone structural changes. Previously, airport planning followed wide political goals and extensive governmental regulation. Airports were mere providers of infrastructure that favoured monumental facilities, often representing some kind of national or regional pride. This form of airport planning and design became a paradigm that still applies for many major airports. Yet nowadays a number of airports look very different from those of previous times. Some turned into huge shopping malls or small cities. Others appear strangely unsophisticated, compact and inexpensive.

Arguably, liberalisation of the air transport market, with different forms around the world, played the most important role in reshaping the entire aviation industry. A liberalised market provides an ideal ground for low-cost carriers (LCC) to proliferate. LCCs disrupted the industry by offering a different value proposition and operative model that impacted traditional airlines and airports alike. The growth of LCCs provided a good opportunity for underused airports and former military bases, particularly in the USA and Europe, to attract the segment of low cost airlines and travellers.

This dissertation analyses the airports that LCCs use in Europe to propose a general framework for airport strategic planning. It argues that a new paradigm in airport strategic development should incorporate in the same process the planning and design of infrastructure and the definition of a matching business strategy. It must take into account the existence of different airline business models that entail differences in airport facilities and operation or that may challenge airport strategies. Furthermore, airline business models will inevitably continue to evolve and their requirements may differ slightly in the near future and substantially in the long-term, thus a new paradigm must as well embrace the inherent uncertainty of the aviation industry.

Daniel Kraffczyk / Airport Hubs: A Typology in Change

Title: Airport Hubs: A Typology in Change
Name PhD candidate: Daniel Kraffczyk
Organization: University of Stuttgart, Germany
Supervisor: Prof. Dr. Johann Jessen, University of Stuttgart, Germany
Email address: dkraffczyk@web.de
Website: www.aeroSCAPE.org
Expected date of completion: November 2015

Abstract of thesis: Development of a theoretical model on a new mobility-driven kind of urbanity/urbanism that will then be examined at major international greenfield hub airports and their airport cities ( under the academic focus of architecture and urban design).

Please see full abstract here: wp.me/p1CY5B-4d

Erik Linden / Impact of digitalization on advisory boards: An analysis of capabilities and decision-making of advisory boards

Name: Erik Linden    
Organization: Center for Aviation Competence (CFAC-HSG), University of St. Gallen    
Supervisors: Dr. Andreas Wittmer, Prof. Dr. Roland Müller and Prof. Dr. Thomas Bieger    
Email address: erik.linden(at)unisg.ch
Expected date of completion: 2019/2020

Abstract of thesis:

Economies around the world are progressively becoming more volatile, uncertain, complex and ambiguous. Today’s business ecosystems are changing accordingly. Digitalization has become a gigatrend effecting every industry and every human being. This raises many challenges regarding the strategy of a firm and the decision-making of strategic managers. In the Aviation industry, researchers struggle to come up with new and more accurate terms for the creation and capturing of value. Especially with new and more digital tools, managers feel more and more lost in an ecosystem with too much, difficult and changing information and data. Managers have to change their decision-making schemas and adapt them to the changing ecosystems as well as changing basics for business model innovation. Thus, they require an understanding of what matters in the specific decision-making context, how certain aspects will potentially change going forward, and where to access the necessary intelligence in the form of data, information or knowledge. Therefore, this thesis will focus on managers as the actors and with human factors in a changing ecosystem. The thesis will align the literature streams of business ecosystems, behavioral strategy and decision-making of managers to better understand the decision-making schemata and rationalities of managers in a business ecosystem driven by digitalization.

Claudio Noto / Airport Capacity Allocation with Network Airlines. Regulation of Congestion Externalities under Imperfect Competition, with Vertical Product Differentiation based on Network Density Effects

Name: Claudio Noto
Organization: University of St. Gallen
Supervisor: Prof. Dr. Christian Laesser, Institute for Systemic Management and Public Governance (IMP-HSG), Research Center for Tourism and Transport, University of St. Gallen
Doctoral Committee:
Email address: claudio(at)noto.ch
Status: submitted for acceptance as a Dissertation

Abstract of thesis: This study provides a theoretical framework to inv estigate the efficiency of different airport capacity allocation schemes under congestion externalities and imperfect competition. Its innovation is to consider a dominant network carrier at a hub airport that endogenously differentiates its product based on passenger benefits from network density. The investigation is based on the analysis of a generic partial equilibrium model and a numeric simulation of a parametric version. The aim is to determine the ambiguities on allocation efficiency that arise from market power and congestion externalities. The results do not favor the recently proposed alternative allocation instruments. Therefore, this study suggests to investigate a transfer of regulation schemes known from other network industry sectors that are concerned with market dominance. Within the perspective on the airport capacity allocation problem from previous work this consideration has not received major attention yet.

Raoul Rothfeld / Modelling, Simulating, and Evaluating Transport Performances of Urban Air Mobility

Name: Raoul Rothfeld
Organization: Bauhaus Luftfahrt e. V.
Supervisor: Prof. Dr. Constantinos Antoniou
Email address: raoul.rothfeld@bauhaus-luftfahrt.net
Expected date of completion: 12/2020

Abstract of thesis:

While Personal Air Vehicles (PAV) and electric Vertical Take-off and Landing (eVTOL) projects receive much attention, little research is available on modelling their integration into urban transport systems. We present the Urban Air Mobility (UAM) extension for the multi-agent transport simulation, MATSim, which enables first analyses of system-wide urban transport performance considering the effects of variations in VTOL vehicle properties, dedicated infrastructure, and its infrastructure placement.

Hugo E. Silva / Airport pricing policies: airline conduct, price discrimination, dynamic congestion and network effects

Name: Hugo E. Silva
Organization: VU University Amsterdam
Supervisor: Prof. dr. Erik T. Verhoef, dr. Vincent A.C. van den Berg
Doctoral Committee: dr. Leonardo J. Basso, Prof. dr. Jan Brueckner, Prof. dr. José Luis Moraga, Prof. drs. Jaap de Wit and Prof. dr. Cees Withagen
Email address: hugosilvam(at)gmail.com
Date of completion: 08/04/2015

Abstract of thesis: Aviation is essential for the modern economy as firms, households, tourism and trade rely, to a substantial and growing extent, on air transportation. In spite of its benefits, the continuous growth of air transportation has turned air transport delays into an acute problem globally. Solutions to the airport congestion problem include capacity expansions, controlling the total flight volume through slot constraints and implementing optimal congestion pricing. The objective of this thesis is to offer new insights into the airport pricing policy debate. For different market structures and congestion technologies, the design and efficiency of congestion pricing is investigated, also investigating and accounting for the extent to which airlines internalize self-imposed congestion already. Further focus is put on network effects and on the role of banning airports from setting differentiated charges to airlines in the design of policies to achieve socially more desirable outcomes.


Anna Straubinger / Potential Impact of Urban Air Mobility – An Urban Economic Analysis Applying a Spatial Computable General Equilibrium Model

Name: Anna Straubinger
Organization: Bauhaus Luftfahrt e.V.
Email address: anna.straubinger(at)bauhaus-luftfahrt.net
Expected date of completion: 2022

Abstract of thesis:

This research seeks to answer the overarching questions governmental institutions and mobility providers face when discussing the introduction of new transport modes: Does this system add value to our city? Do the inhabitants gain welfare through the new transport service? The focus hereby will be on urban air mobility (UAM), a novel transport concept that uses next-generation vertical take-off and landing vehicles for on-demand mobility within cities.

Therefore an urban economic analysis will be performed, applying a spatial computable general equilibrium model. The model has a microeconomic basis and by that is able to account for changes in the inhabitants’ welfare and ecological impacts of transport systems changes while also accounting for changes in location choice and congestion. In order to achieve a welfare maximizing scenario different market regulating policies will be investigated.

Tolga Ülkü / Empirical analyses of airport efficiency and costs: Small regional airports and airport groups in Europe

Title: Empirical analyses of airport efficiency and costs: Small regional airports and airport groups in Europe
Name PhD candidate: Tolga Ülkü
Organization: Humboldt University of Berlin
Supervisor: Prof. Dr. Ulrich Kamecke (HU Berlin) and Prof. Dr. Hans-Martin Niemeier (UAS Bremen)
Email address: tolga.ulku@yahoo.com
Date of completion: January 2015

Abstract of thesis: Small and regional airports often have insufficient revenues to cover their costs due to limited traffic and given minimum fixed infrastructure requirements. The question is how such airports could be efficiently structured and managed and financially supported in order to survive. Some airports are operated individually and receive direct subsidies from the local and federal governments. Others, mainly those belonging to national public corporations such as AENA in Spain, Avinor in Norway and DHMI in Turkey, which operate the majority of airports in the country, survive through cross-subsidizations. Furthermore, subsidization of air services through Public Service Obligation (PSO) in order to assure the mobility of people to and from remote areas also includes a subsidy element for the airports in term of landing fees, which they otherwise would not receive.

This dissertation first deals with the efficiency of 85 small regional European airports for the years 2002-2009 by applying a bounded measure of data envelopment analysis. Estimates show the potential savings and revenue opportunities to be in the order of 50% and 25% respectively. It is also noted that belonging to an airport system reduces efficiency by about 5%. The average break-even passenger throughput over the last decade more than doubled to 464 thousand passengers. However airports behaving efficiently could have covered their annual operating budget with a mere 166 thousand passengers annually.

The second part of the dissertation addresses the comparison of airports belonging to two airport groups AENA and DHMI for the years between 2009 and 2011. The majority of airports operate under increasing returns to scale. After presenting the similarities and differences of two institutions, a Russell measure of data envelopment analysis is implemented. Our results indicate higher average efficiency levels at Spanish airports, but recent private involvement enhances efficiency at Turkish ones. Certain policy options including the application of airport-specific aeronautical charges, a greater decentralization of airport management and the restructuring of the airport network (by closing some inefficient airports) should be considered to increase the airport system’s efficiency in both countries.

In the final part of the dissertation, we have studied how the airport specific characteristics drive the unit costs. In order to capture the spatial interdependence of airport costs, a spatial regression methodology is applied. Two separate datasets of subsidized French and Norwegian airports are used to test various hypotheses. The results show a negative effect of subsidies on airport cost efficiency. Furthermore, the significance of scale economies is illustrated.

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