African Airline Research Articles

Optimizing the prices for airline flight passes

Abstract Flight pass is a new concept in which airline passengers pre-purchase a number of flights for a flat fee. This flat flee can be customized by the passenger and has an expiring date. Being an innovative concept, the industry is still lacking analytical support to define the prices for these passes. This research is aimed to fill this research gap. We propose a data-driven modeling framework that determines the value of each option per flight and that, consequently, estimates the recommended flight pass price. This is the first time in the literature that flight passes are discussed. The framework is divided in two models. First, a random forest regression is used to predict the ticket price of individual flights. Second, the flight pass prices are predicted using a Monte-Carlo simulation. The simulation is used to estimate the potential behavior of a passenger when using the flight pass. Since no reliable flight pass data was available, we make use of historical booking data from revenue management available from a major African airline to design, calibrate, and validate our models. With an average fit of 57 percent, the random forest regression algorithm can adequately predict the flight price, improving the current trial-and-error or linear regression approaches followed by most airlines. Moreover, the Monte-Carlo simulation is fast enough to support an online implementation of the proposed modeling framework to estimate flight passes prices.

The Influence of Perceived Justice on Recovery Satisfaction in the Airline Industry

ABSTRACTThis study examines the influence of perceived justice on customer satisfaction with service recovery and on the future behavioral intentions of customers in the airline industry. The study uses an exploratory research design that is quantitative in nature. Questionnaires were used to collect data, and structural equation modeling was used for hypothesis testing. The study revealed that the three dimensions of perceived justice, namely interactional, distributive and procedural justice, influence satisfaction with service recovery in the South African airline industry. However, only interactional and distributive justice had a positive influence on future behavioral intention.

Emerging Information Technologies and Delivering of Service Quality to Air Passengers: Case of South African Own-Registered Airlines

Increasingly services to airline passengers have evolved into the digital and technological realms. This study examined the extent to which South African own-registered airlines (SAORA) utilize emerging information technologies in delivering service quality to air passengers. The acronym “SAORA” refers to Six South African own-registered airlines which was focus of this study. The research methodology adopted for this study was a descriptive approach focused on cross-sectional analysis. Using a quantitative research method and non-probability convenient sampling technique, primary data was collected from 684 passengers at O.R. Tambo International Airport in Johannesburg and King Shaka International Airport in Durban. The study revealed that by utilizing emerging technologies, SAORA stand to offer superior service quality to air passengers, thereby gaining competitive advantage, continuous patronage, loyalty and increased profitability.

Emerging Information Technologies and Delivering of Service Quality to Air Passengers: Case of South African Own-Registered Airlines

Increasingly services to airline passengers have evolved into the digital and technological realms. This study examined the extent to which South African own-registered airlines (SAORA) utilize emerging information technologies in delivering service quality to air passengers. The acronym “SAORA” refers to Six South African own-registered airlines which was focus of this study. The research methodology adopted for this study was a descriptive approach focused on cross-sectional analysis. Using a quantitative research method and non-probability convenient sampling technique, primary data was collected from 684 passengers at O.R. Tambo International Airport in Johannesburg and King Shaka International Airport in Durban. The study revealed that by utilizing emerging technologies, SAORA stand to offer superior service quality to air passengers, thereby gaining competitive advantage, continuous patronage, loyalty and increased profitability.

African airlines wait for open skies

Since relocating to the Democratic Republic of the Congo (DRC) two years ago, Firmin Agossou has had a variety of options when traveling home to Benin. Employed in the eastern city of Goma, he often returns to Cotonou to spend time with his family.

Barriers to Entry for Low Cost Carriers in the South African Airline Industry: Competitive Dynamics and the Entry, Expansion and Exit of 1time Airline

This paper examines the barriers to entry and expansion of competitor airlines in South Africa. The exit of 1Time from the market as well as the experience of FlySafair, a recent entrant, are used to draw lessons about competitive conditions and constraints that new airlines face in the market. The assessment shows that while the exogenous barriers to entry are not prohibitively high in South Africa (partly evidenced by the number of entrants), a history of repeated anti-competitive conduct by the national carrier, South Africa Airways, has contributed to these challenges. The analysis of price data covering 2014 and 2015 and information drawn from detailed firm-level interviews demonstrates the positive effects of entry in the South African market, including through reducing prices and increasing frequencies to smaller routes which has benefits for local economies. There is preliminary evidence that the entry of LCCs has also contributed to increased passenger volumes, although there are limitations in the data which is available to assess this further.

Interplay between air passengers’ service quality, satisfaction, loyalty and loyalty programmes in South African owned airlines

Orientation: Delivering service quality is crucial for the continuous operation and sustainability of South African owned airlines. The term ‘South African owned airlines’ refers to six South African owned registered airlines, and is used for purpose of anonymity and confidentiality.Research purpose: The main aim of this study was to examine the interplay between service quality delivery, satisfaction, loyalty programmes and passengers’ loyalty to South African owned airlines.Motivation for the study: Intended to provide insight into quality to society of airline services, the global airline industry in general and the airline industry in South Africa in particular.Research approach, design and method: A quantitative research approach was adopted, using a cross-sectional (sample survey) method. Empirical data was directly collected by the researchers from 684 passengers at O.R. Tambo International Airport in Johannesburg and King Shaka International Airport in Durban using a non-probability random sampling technique.Main findings: The study’s main findings were that: (1) generally, passengers of South African owned airlines were satisfied with the airlines’ service quality and rated such satisfaction as moderate to high. (2) Only 22% of passengers were part of a loyalty programme. However, in the South African context, loyalty programme membership is not indicative of passengers’ loyalty to airlines: 86% of the respondents stated that they are consistently loyal to the airlines (3). There was no association between passengers’ loyalty and frequency of travel. (4) South African passengers have limited choice of airlines; therefore, loyalty and patronage does not lean towards a particular airline.Practical implications: By offering superior service quality to passengers, South African owned airlines could gain competitive advantage ongoing patronage and loyalty, thus increasing overall profitability.Contributions: This study provides cognitive information, which management could use to design new marketing strategies to enhance loyalty in the airlines in South Africa and globally.

Service Quality Failure and Recovery Imperatives: Implications for Airlines Owned by South Africa

This article reports on a study that examined service quality and recovery among South African airlines. Service quality is pivotal in the airline industry as service failures could negatively affect operations. The authors created the acronym “AOSA” which stands for “airlines owned by South Africa” for the purposes of anonymity and confidentiality in order to protect the airlines’ identity. A quantitative research approach was used with a cross-sectional analysis (sample survey) conducted with passengers of South African-owned airlines. The questionnaire was designed using a Likert scale tool, adapted to the SERVQUAL model. A non-probability convenient sampling method was used to collect primary data from 684 passengers at O.R.Tambo International Airport in Johannesburg and King Shaka International Airport in Durban. The key findings were that: (1) significant statistical gaps exist between passengers’ expectations and perceptions of AOSA’s service quality and that unsatisfactory service quality is antecedent to service failure. (2) Unsatisfactory service quality is tantamount to service failure in the provision of services by AOSA. (3) A significant positive correlation exists between service quality and the dimensional variables of tangibility, reliability, responsiveness, assurance, and empathy of AOSA. In conclusion, AOSA service quality is unsatisfactory, and management should take steps to empower and train staff in service recovery techniques in other to avoid service failures.

Africa’s single aviation market: The progress so far

To promote the development of air transport at the continental level, several policies were introduced, leading to the Yamoussoukro Decision (YD) in late 1999, which had the liberalisation of the intra-African aviation spaces as its main objective. Even though notable progress has been achieved towards more market-oriented aviation policies, at the pan-African level some markets are still restrictive and inconsistent with the YD, particularly with respect to the granting of 5th freedom rights. This paper aims to examine recent developments in the aviation sector in Africa, with a focus on the implementation of the YD. The obstacles to liberalisation are discussed and several measures for facilitating Africa’s move towards multilateral open skies are investigated. These include, among others, a greater collaboration and co-operation among African airlines, as well as between African airlines and foreign ones; redefinition of the role and responsibilities of different institutions which are instrumental in implementing the YD and some further issues such as ownership guidelines.

An analysis of African airlines efficiency with two-stage TOPSIS and neural networks

This paper presents an efficiency assessment of African airlines, using the TOPSIS – Technique for Order Preference by Similarity to the Ideal Solution. TOPSIS is a multi-criteria decision making technique, which similar to DEA (Data Envelopment Analysis), ranks a finite set of units based on the minimisation of distance from an ideal point, and the maximisation of distance from an anti-ideal point. In this research, TOPSIS is used first in a two-stage approach, in order to assess the relative efficiency of African airlines using the most frequent indicators adopted by the literature on airlines. During the second stage, neural networks are combined with TOPSIS results, as part of an attempt to produce a model for airline performance which has effective predictive ability. The results reveal that network size-related variables – economies of scope, are the most important variables for explaining levels of efficiency in the African airline industry, although the impact of fleet mix and public ownership cannot be neglected.

Aircraft Schedule Recovery Problem – A Dynamic Modeling Framework for Daily Operations

In this paper we present an innovative dynamic modeling framework to the aircraft schedule recovery problem (ASRP). The ASRP can be defined as the problem of modifying the flight and aircraft schedules to compensate the presence of irregular operations that result in the temporary or permanent unavailability of aircraft. Previous works on this topic often make use of static disruption test scenarios, simulating a set of disrupted events in a single time evaluation. The modeling framework here presented, named Disruption Set Solver (DSS), is innovative because it tackles aircraft schedule disruptions in a dynamic way (i.e., the recovery problem is solved as disruptions happen, involving the solutions of new disruption but also considering decision the incumbent solution) and because it is the first time that parallel time-space networks are used to track individual aircraft in the fleet. The framework relies on the combined usage of an efficient aircraft selection algorithm and a linear-programming model based on parallel aircraft specific time-space networks. The goal of the optimization model used to solve the ASRP is to minimize costs, including operational, passengers delay and cancellation costs. The decision variables involve the cancellation of flights, the delay of flights and the swap of aircraft between flights. The validation of the framework is done applying it to a set of real disruptive days in the operation of a major African airline. The results suggest two conclusions: (1) that the traditional static approach can lead to unreliable solutions, neglecting practical challenge and underestimating the disruption costs; and (2) that the proposed dynamic DSS framework can solve real aircraft schedule disruption problems within a time-window suitable for real-time operations.

Connecting African urban areas: airline networks and intra-Sub-Saharan trade

Despite efforts to enhance the efficiency of the African air transportation sector through such actions the Yamoussoukro Decision, African represents less than 2% of the world’s air passenger kilometers. This is despite the fact that air transportation can act as a means of transporting traded goods directly (including the individuals that are the “product” of tourism) and provide complementary services of labor mobility for those engaged in the production of more bulky goods that are shipped by land and maritime modes. We examine the network of intra-Sub-Saharan African airline connections to highlight the differential access enjoyed by the region’s largest cities. Second, we develop a quantitative framework linking the availability of air connections to the main international trade flows in sub-Sahara Africa. Our findings suggest that, although there is a positive link between air transportation and economic development in Africa, the multilateral efforts at reducing institutional impediments to more open aviation markets have not produced significant results.

Assessing the equity impact of the European Union Emission Trading Scheme on an African airline

The European Union Emission Trading Scheme (EU ETS) included aviation activity in 2012, with free emissions allowances being allocated to each airline. The EU ETS is a market-based measure, which the European Union has introduced for aiming at reducing emissions and meeting the targets specified under the Kyoto Protocol. One of the largest issues is equity. The first multinational emission trading scheme resulted in many regulatory issues and objections by a number of countries and airlines concerning its legality under the Chicago Convention. In addition, under the Kyoto Protocol, ratified countries have different responsibilities and roles based on whether they are Annex I or non-Annex I countries. Hence, this paper attempted to investigate the equity issues by measuring the impact of the EU ETS on an African airline compared to airlines in an Annex I country. The results of case study indicate that there are some differences in terms of equity between Annex I and non-Annex I carriers and their passengers. The instrument is proven to be cost-effective; however, the economic rationality arguments seem to be weak with respect to the volatility in individual behaviour and the vulnerability of non-Annex I carriers which is caused by competition with Annex-I carriers. A transparent distribution of revenue from the EU ETS could be one way of moderating the equity gap between carriers and passengers.

Air transport in Africa: toward sustainable business models for African airlines

Although there is a vast amount of literature on airline business models and their evolution in changing global landscapes, there is a general lack of research into the applicability of those models, traditionally defined in European and North American contexts, to the African scene. Implicit in this study is the hypothesis that the African environment is unique enough to warrant its own host of strategies, which may be distinctive enough to form part of a new strategic template, or business model. Initially, a review of existing literature is undertaken to profile the African aviation environment and evaluate existing airline business models and their evolution, both globally and in Africa. The methodology consists firstly of a cluster exercise, whereby 57 African airlines are analysed in terms of their network and size, to yield a number of heterogeneous groups which serve to identify the current business models of airlines on the continent. Following this, eight airlines (representative of the groups outlined in the cluster analysis) were subsequently selected for analysis in terms of the Product and Organisational Architecture framework. While it was evident that the traditional models are followed in Africa, in some instances variations were apparent. Full-service network carriers and regional carriers were concluded as being the most prominent and stable in the African market. The applicability of the low-cost carrier model in Africa was also examined at length, with mixed results. The analysis also raised network density and connectivity as essential components of business models for delivering profits in an African context.

Perceived justice in South African airline and hospital industries: measurement model

PurposeThe purpose of this paper is to describe and test a construct of perceived justice from an airline and hospital industry perspective. Furthermore, the similarities and differences of perceived justice in negative service encounters within the airline and hospital setting, and the validity of the constructs in the two different contexts is investigated.Design/methodology/approachThis paper reports on the results obtained from a South African survey on respondents who experienced a negative service incident in the last year in the airline and hospital industries. The two service settings being used purposely to reveal possible differences in the constructs in settings where life and health are at risk compared to a more hedonistic service. Comparative and confirmatory testing of perceived justice during service encounters in a hospital and airline setting was performed.FindingsThree dimensions of the perceived justice construct tested in the airline and hospital service encounters presented a satisfactory fit and were found to be valid and reliable. The three dimensions are distributive, interactional and procedural justice.Research limitations/implicationsThe main research limitations of this paper include that the construct has only been tested on a sample consisting of specific customer‐firm service encounters in airlines and hospitals in South Africa, which may indicate less applicability in other contexts. Yet, the empirical findings provide a basis for future research to refine and extend corporate endeavors in managing negative incidents in both the health care and tourism industries.Practical implicationsThe findings indicate that the notion of perceived justice is the same regardless of service industry. However, the average perception of justice is lower within hospital than in the airline industry. The similarities within these two industries imply that cross‐industry strategies can be developed to understand and manage the perceived justice in negative service encounters based on three justice dimensions.Originality/valueThe paper adds value by complementing and fortifying current theory and research on the justice construct from a service encounter and complaint handling perspective. By comparing the justice hospital and airline industries, this paper contributes to and complements the overall field of study by identifying similarities and the applicability of the justice concept across service industries.

The influence of passenger satisfaction on relationship formation in the South African domestic airline industry

Customers are increasingly becoming aware of alternative offerings in the market place, and are thus more demanding in terms of their expectations pertaining to service delivery. As airlines in particular are vulnerable to competitors’ offerings, they should offer passengers high levels of service and ensure that passengers are satisfied with their service offering in an effort to build long-term relationships. Building long-term relationships is important due to the financial and social benefits it holds to both the business and its customer. This study investigates whether passenger satisfaction influences whether or not passengers have formed a long-term relationship with the airline they fly with most often. Data was collected from South African domestic passengers departing from OR Tambo International Airport in Johannesburg by means of a convenience sample. Main findings from the study indicate that the majority of dissatisfied respondents have not formed a long-term relationship with the domestic airline, while satisfied respondents are more inclined to form a long-term relationship.

Precision Air Services Ltd – jostling for position in Tanzanian airspace

Subject area Finance, entrepreneurship, general management. Study level/applicability MBA/Postgraduate. Case overview This case is about Precision Air Services, a small profitable airline in Tanzania, which is in the middle of a changing airline industry. In less than ten years, Mr Michael Ngaleku Shirima, the founder and then holding two-thirds of the shares together with an option to buy the remaining one-third, had seen the airline grow to a major player in the domestic market. His plans to expand to regional routes were still on the drawing board when he received a US$2 million cash offer from Kenya Airways, a much larger airline, for a 49 percent equity stake. At the same time, South African Airways – another heavyweight in the African airline industry, was in the process of acquiring a controlling stake in the state-owned Air Tanzania Corporation. To Mr Shirima, giving up a significant stake in an airline he created from scratch was a dilemma. But if that was to be, he was also interested to see that he is getting the right price for his efforts. Expected learning outcomes This case can be used to teach elements of merger and acquisition, business valuation, negotiation, strategy (corporate, international, growth), strategic scoping and planning. Supplementary materials Teaching notes.

The evolution of alliances in the global airline industry: A review of the African experience

AbstractIn an increasingly globalized world, alliances have proliferated in one industry after another, and the competitive game has shifted from firm versus firm to group versus group, leaving many firms operating on the margins of these constellations. Using the case of the global airline industry, this article examines how the shift from bilateral to multilateral alliances has left many African airlines operating on the margins of the global airline alliances groupings. We conjecture that a number of internal organizational factors, such as size and lack of access to scarce resources, and external factors, such as a slow market‐reform process and insufficient reform of state‐owned airlines, have hindered their success in a highly competitive environment. The theoretical, managerial, and policy implications of these findings are discussed. © 2011 Wiley Periodicals, Inc.

African Airline Association

Africa Research Bulletin: Economic, Financial and Technical SeriesVolume 47, Issue 11 p. 18916A-18916A African Airline Association First published: 22 December 2010 https://doi.org/10.1111/j.1467-6346.2010.03621.xRead the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat No abstract is available for this article. Volume47, Issue11January 2011Pages 18916A-18916A RelatedInformation

Building customer relationships as retention strategy in the South African domestic passenger airline industry

Organisations are increasingly focusing on building long-term relationships with customers, thereby increasing their probability for success by offering customers higher levels of satisfaction, increasing customer loyalty, and ultimately retaining customers. Airlines in particular can benefit from retaining customers as the airline industry is characterised by fierce competition and many airlines are finding it difficult to survive against the backdrop of enormous challenges in the past decade, including the significant decline in demand for air travel together with rising costs and the worldwide economic downturn. This study investigates the effect which a strategy by airlines of building relationships with customers has on customer satisfaction, loyalty, and ultimately customer retention. The effect of service failures on customers' relationships with airlines are also considered as a negative experience could results in customers defecting to competitors. A questionnaire, comprising six sections, was specifically compiled to determine customer retention in the South African domestic passenger airline industry. Data were collected by trained fieldworkers from OR Tambo International Airport by means of a non-probability convenience sampling method from 324 passengers flying with the various domestic airlines. Findings indicate that most respondents were satisfied with the airlines' overall service; respondents who formed relationships with domestic airlines were more loyal toward the airlines; and the relationships of respondents who were satisfied with airlines' service recovery efforts were either strengthened or unchanged. The findings from this study support findings from international studies by providing a unique South African perspective on the effect of a strategy of building relationships with customers on their satisfaction, loyalty and ultimately retention. It can therefore be recommended that the organisations competing in the South African service sector, and specifically the domestic airline industry, make special efforts to build relationships with existing customers, rather than to continually try to acquire new customers. This strategy could result in a higher probability of success by increasing customer satisfaction, customer loyalty, and ultimately customer retention.