June 11, 2010
What's Next for U.S./EU Aeropolitical Relations?
Real Time Brussels, a web-log of the Wall Street Journal, has an excellent posting by Daniel Michaels on the future of U.S./EU aeropolitical relations. See U.S.-EU 'Open Skies' Near Arrival, Real Time Brussels, June 11, 2010 (available here). The post discusses the pending approval of the U.S./EU "second stage" Protocol and the potential impact chief U.S. negotiator John Byerly's retirement will have on future negotiations between the world's largest air transport markets.
Legends of Flight
Blog readers may be interested in a detailed story on the new IMAX film, Legends of Flight, which was part of NPR's daily show, Talk of the Nation. See Legends of Flight: Aviation Hits and Misses, Talk of the Nation (NPR), June 10, 2010 (available in transcript and streaming audio here). The movie itself charts the hundred-year-plus history of aviation, culminating in the recent development of the Airbus 380 and Boeing 787 Dreamliner aircraft. More information on the film, including interactive features, is available here.
June 9, 2010
Clarifying Antitrust Immunity
Last week Friday, a number of national papers picked up a story analyzing the potential for a US Airways/American Airlines merger. See US Air/American Link Could Bolster Global Routes, Reuters, June 4, 2010 (available here). The article speculated that the two U.S.-based air carriers could forge an alliance relationship before seeking a full-on merger. According to the story: "In that scenario, US Airways and American would seek an exemption from U.S. antitrust law to share scheduling and pricing details."
This is not entirely accurate. The 1979 International Air Transportation Competition Act allows for intercarrier agreements which affect foreign transport to be filed before the Department of Transportation for approval and antitrust immunity. See 49 U.S.C. §§ 41308-09. In other words, US Airways and American would still be subject to U.S. antitrust statutes with respect to their domestic operations even if they received immunization to cooperate with their foreign partners.
Rulers of the New Silk Road
This week's edition of the Economist has an excellent briefing on aviation industry developments in the Gulf region. See Rulers of the New Silk Road, Economist, June 3, 2010 (available here). A shorter piece, "Super-Duper-Connectors From the Gulf," is also available here.
June 8, 2010
Airline Web Pricing During a Price War
Blog readers fluent in Portugese may be interested in Fabiana Todesco et al.'s Airline Web Pricing During a Price War: Where Are the Deep Discounts?, 2 Rev. Transp. Lit. 21 (available from SSRN here). From the abstract:
This paper uses a reduced form econometric model to identify elements correlated with discounts in air fares three Brazilian airlines charge in a set of six domestic destinations flown out of the city of São Paulo. Our dataset was built with information extrated directly from the websites of the airlines especially with the intention of empirically modelling the statistics associated with the practice of the web pricing of the airlines, namely means and variations. Obtained results show that traveling with GOL, TAM, or late in the night represent the options for lower fares. Higher fares are associated with evening departures, and connecting flights.
Price War in the Brazilian Airline Industry
Blog readers may be interested in Jose Maria Silveira & Alessandro V.M. Oliveira's An Empircal Game-Theoretical Approach to Model a Price War in the Brazilian Airline Industry, 2 Rev. Transp. Lit. 7 (2008) (available from SSRN here). From the abstract:
This paper develops a model of post-liberalization price competition between airlines on the route Rio de Janeiro - São Paulo. The intense price competition episode culminated in the rupture of a thirty-nine year-old cooperative structure - the air shuttle service cartel. By modeling and estimating parameters of a two-stage Stackelberg game with incomplete information, we aim at contributing to the understanding of price war rationality in the airline industry.