European Airlines Research Articles

Trends in the development of the air transportation market of Ukraine and influencing factors

Introduction. Given the current complex realities of conducting aviation business in a pandemic, the application of large-scale measures to combat its spread, as well as taking into account the development of liberalization of the air market, analysis of the effectiveness of Ukrainian airlines and identify current trends in Ukraine's air transportation market is an important task. The purpose of the paper is to investigate state of air transportation market in Ukraine in dynamics, to identify current trends and status of national airlines. Results. After the recession of 2014-2015, the volume of international passenger traffic by domestic airlines increased during the period 2016-2019. In 2020, it decreased by 76 %. At the same time, passenger traffic of Ukrainian airlines decreased by 65 % compared to 2019. Over the past five years, Ukraine’s air transportation market has evolved from highly concentrated to moderately concentrated. During this period, domestic airlines were more active in carrying out charter flights, while foreign airlines began to dominate in performing regular and scheduled flights with active participation of leading European low-cost airlines. Analysis of the market share of airlines with the largest volumes of passenger air traffic in air market of Ukraine showed that over past three years there has been a rapid decline in market shares of leading network airlines, both domestic and foreign. There was a rapid growth of market shares of foreign airlines – low-cost carriers. Conclusions. The changes identified in the air transportation market of Ukraine can be explained not only by the consequences of the pandemic, but also by the consequences of air transportation market liberalization. The signing of the Agreement on the Common Aviation Area in September 2021 between Ukraine and the EU will have a direct impact on the development of air transportation market of Ukraine, both in terms of supply and demand. Domestic airlines will be able to benefit from market liberalization only if they increase their competitiveness.

Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier.

Due to the COVID-induced global collapse in demand for air travel, the year 2020 was a catastrophic one for the aviation industry. A dramatic drop in operating revenues along with continuing fixed expenses drained the cash reserves of airlines, with consequent risks of financial distress and, potentially, even of bankruptcy. Flag-carriers are a special group in the airline business—they are considered to have privileges in terms of the support given by governments while, on the other hand, are often viewed as having low efficiency and performance. This study aims to estimate for European airlines the interaction effect of being a flag-carrier (flagship) with the relationship between leverage, liquidity, profitability, and the degree of financial distress. Findings obtained from analysing 99 European airlines over a period of ten years, indicate that the negative influence of leverage on financial stability is higher in the case of flag carriers (flagship). The impact of liquidity and profitability on financial health is more positive for flagship than for non-flagship carriers. These findings are not limited to contributing to the existing literature, but also have significant practical implications for executives, managers, and policy makers in the European air transport sector.

‘Extraterritoriality’ in European Law: Airfreight and Beyond

Air carriers operate, almost by definition, in an international environment. Under air services agreements (ASAs) concluded by European Union (EU) Member States with third countries, with or without the involvement of European institutions, many non-EU airlines offer flights to or from the Union. However, the correlative increase in competition has not only positive effects, e.g., a wider offer and more advantageous flight rates. The fact that the obligations imposed on – and, in general, the conditions applicable to – non-European carriers in their respective countries of origin are different from those that weigh on European airlines leads to situations in which EU and non-EU carriers do not compete on equivalent terms. Furthermore, anticompetitive behaviour on the part of the airlines cannot be ruled out. The question then is whether and to which extent European legislation is applicable to non-EU carriers, both in terms of competition law and sector-specific regulations. The present article aims at reviewing the current state of ‘extraterritorial’ application of European law, mainly from an antitrust perspective, and it does so on the basis of a thorough analysis of a case currently pending before the General Court (GC), where the jurisdiction of the Commission has been challenged precisely for sanctioning non-EU carriers for acts performed outside the Common Market. Carriage by Air, Competition law, Jurisdiction, Extraterritorial Application of European Law, Air Services Agreements

Assessing efficiency in public service obligations in European air transport using Data Envelopment Analysis

In recent years, the use of Public Service Obligations (PSOs) in air transport policy has substantially increased. In remote regions, where air transport services are not profitable, the application of this subsidy program is crucial for the economic and social development of these regions. However, there is a great diversity in the provision of PSO services among different regions in Europe. Therefore, it is essential to assess the performances of the air carriers operating in different PSO routes. The present study uses Data Envelopment Analysis (DEA) to assess the efficiency of PSO routes within the European Union and compares them with the performances of the operating airlines, both when operating under this subsidy program and when operating their regular flights. First, DEA was applied to the annual data of several European airlines, and then applied to the data of their PSO routes, so that a comparison can be made between the performance obtained on regular flights and flights under the PSO regime. The results identify which airlines had the best and worst performances, as well as the routes and respective regions of Europe where the airlines tend to score higher and lower in terms of efficiency. Results suggest that the Nordic European countries and the United Kingdom were the regions where air carriers obtained the lowest results, and thus, this empirical evidence should support the public authorities to consider revisiting their PSO contracts, in order to improve their operation.

Lookahead approximate dynamic programming for stochastic aircraft maintenance check scheduling optimization

This paper proposes a lookahead approximate dynamic programming methodology for aircraft maintenance check scheduling, considering the uncertainty of aircraft daily utilization and maintenance check elapsed time. It adopts a dynamic programming framework, using a hybrid lookahead scheduling policy. The hybrid lookahead scheduling policy makes the one-step optimal decision for heavy aircraft maintenance based on deterministic forecasts and then determines the light maintenance according to stochastic forecasts. The objective is to minimize the total wasted utilization interval between maintenance checks while reducing the need for additional maintenance slots. By achieving this goal, one is also reducing the number of maintenance checks and increasing aircraft availability while respecting airworthiness regulations. We validate the proposed methodology using the fleet maintenance data from a major European airline. The descriptive statistics of several test runs show that, when compared with the current practice, the proposed methodology potentially reduces the number of A-checks by 1.9%, the number of C-checks by 9.8%, and the number of additional slots by 78.3% over four years.

State Aid to Airlines in the Context of Covid-19: Damages, Disturbances, and Equal Treatment

The aviation industry has been hardly hit by the pandemic, with travel restrictions, health measures, and dramatic drop in demand. A significant amount of state aid was granted to European airlines by Member States in the last year, following guidance on the relaxation of state aid rules. The state aid schemes were authorised by the Commission under both Article 107 (2)(b) TFEU and Article 107 (3)(b) TFEU. Several recent judgments of the General Court uphold the state aid measures for airlines and dismiss allegations on equal treatment and possible negative effects of competition; however, three measures were found to be inadequately justified. Nearly 30 years after the liberalisation of air transport, the European Union has succeeded to a great extent in creating an internal market. European air carriers are subject to a uniform regime with regard to their establishment and their operation, while they enjoy absolute freedom to perform intra-EU air transport services. The concept of national air carrier is no longer relevant, since it is replaced by the notion of European air carrier, in the sense of an air carrier with an operating license granted by a Member State under Regulation 1008/2008 on common rules for the operation of air services in the Community. Accordingly, state aid rules in the aviation sector were adjusted to the operation of the internal market and European Commission has been very active in safeguarding a competitive environment.1

Climate change, where do we come from and where are we going? European aviation sector behaviour

Climate change has caused great pressure on the air transport sector. European airlines are subject to a pioneering CO2 emissions regime. This paper sets out, first, to ascertain whether the European aviation sector has adapted since the launch of the European Union (EU) Emissions Trading Scheme (ETS). Second, based on the answer to the above, we predict the situation of the sector in the medium and long term. The study sample was formed by the top 10 European airlines. The years covered are those since the inclusion of the airline sector in the emissions regime (2012–2019). Clusters were defined by eco-efficiency level using K-means cluster analysis and the Markov model was applied to predict future behaviour. The results have shown, on the one hand, that the larger airlines were the most eco-efficient throughout the study period. On the other hand, companies focused on a low-cost strategy have behaved worse since, although they have also experienced significant improvements in their use of air traffic capacity, even above the large airlines, they have not evolved to a higher level of CO2 emission efficiency and even getting worse in some cases. However, in the medium and long term, our estimate for the sector is a trend towards minimal eco-efficiency in CO2 emissions. As governments continue to increase emission limitation requirements, in order not to jeopardise the sustainability of the aviation sector, it is advisable to encourage investments in the development of biofuels and their supply chain, international agreements to optimise flight routes or projects to improve the energy efficiency of new engines.

Impact of COVID-19 on different business models of European airlines

ABSTRACT In addition to social damage, the first wave of the COVID-19 pandemic also caused huge economic losses in the beginning of 2020, especially for companies in the tourism sector. The airline market was no exception. This study examines the significance of the business model of European listed airlines – low cost carriers (LCCs), full service carriers (FSCs) – for stock market performance. We use event study on the 11 airlines included in the sample. In terms of cumulative average abnormal returns, i.e. the most significant deviations from expected returns, negative phases can be detected in the entire and third stage of the pandemic. FSCs performed significantly better than LCCs at the time of the pandemic on 24 February, when European stock markets suffered the most damage; the business model overwrote financial indicators during the toughest period of the crisis. Although most LCCs had higher cash/assets ratios, they still produced worse results than the average performance of companies with lower cash/assets ratios. This analysis helps to ensure that, in addition to examining financial indicators, the enumeration of the business model in this industry can also be decisive. The future possibilities of the research are discussed at the end of the study.

Strategic responses by European airlines to the Covid-19 pandemic: A soft landing or a turbulent ride?

The coronavirus (COVID-19) pandemic has dramatically affected the aviation industry. This paper investigates how 20 European airlines communicated their crisis messages during the pandemic by employing Situational Crisis Communication Theory (SCCT) to airline responses. This qualitative study consisting of a systematic review and content analysis, examined 7237 messages from social media channels and press releases posted between December 1, 2019, and May 25, 2020, when the crisis unfolded worldwide. The results indicate that the airlines primarily emphasized instructing and adjusting crisis communication strategies. Further, Twitter replaced Facebook as the primary communication channel. This study provides insights on how airlines can and should communicate crisis-related messages amidst a severe pandemic. The study concludes with the implications of these findings and recommendations for airline stakeholders moving forward.

Перспективы развития Международного аэропорта «Симферополь» в условиях преодоления кризиса макроэкономической нестабильности

The article presents the results of a study of the activities of the International Airport "Simferopol". After the Republic of Crimea became a part of the Russian Federation, one of the priorities of the state's domestic policy was the development of the regional infrastructure of the Crimean Peninsula. Simferopol International Airport occupies a special position in the structure of regional airports of the Southern Federal District. Regional airports of the Southern Federal District serve a significant part of the seasonal tourist flow of citizens coming from the regions of the Russian Federation. Based on the analysis of the tourist flow of the Republic of Crimea in the period from 2014 to 2020, as well as on the basis of a comparative analysis of Simferopol International Airport with other regional airports in the Southern Federal District and the analysis of the experience of European airlines in developing the route network on the basis of regional airports, a model of the prospective development of Simferopol International Airport in the period 2021-2025 was developed. It is important to note that the positive economic effect of the airport development will be achieved both at the regional and national level.

Integrated flight scheduling and fleet assignment with improved supply-demand interactions

Flight scheduling and fleet assignment are important steps of an airline planning process. In light of the reciprocal relationship between air transport supply and demand, a key element of these models is to devise effective methods to both incorporating estimation of total market demand and allocating passengers over the available itineraries in a specific market. In this paper, we present a novel mixed integer nonlinear flight scheduling and fleet assignment optimization model wherein air travel demand generation and allocation are simultaneously and consistently endogenized. Using a nested logit formulation, we jointly model competition among air travel itineraries and appraise the contribution of specific itinerary attributes to demand generation, therefore yielding a more comprehensive and explicit representation of supply-demand interactions. Computational testing based on realistic problem instances reveals that the model can optimize mid-size hub-and-spoke networks within reasonable time. Further analyses illustrate the benefits that can be derived from the application of the proposed approach using real-world data for a major European airline. Results demonstrate that the proposed approach can significantly enhance operating profits by up to 6.9% and better reveal opportunities for demand stimulation against a conventional approach using inelastic trip generation.

The Impact of Globalization on European Airline Market

Airline industry is very important for modern society as the biggest player in the globalization process by connecting regions, promoting global trade and tourism, facilitating economic and social development. However, here is a lack of research on relationship between globalization and airline industry in Europe. It remains unclear how to measure the impact of globalization on performance of airline companies and industry. The article aims at investigation of the impact of globalization on operational and financial performance of European airlines before pandemics.The authors applied a nonexperimental quantitative research design to analyze the relationship between independent globalization variables (level of globalization in Europe, globalization opportunity, globalization threat) and dependent airlines’ operational and financial performance indicators. Research is done using secondary data from annual reports of 19 European airlines members of European Common Aviation Area (ECAA). The panel data analysis was applied for 2007–2017 with multiple regression analysis using STATA. The results show that globalization exerts a significant positive effect on operational performance. On financial performance only revenue per passenger kilometers is positively influenced by globalization. Globalization affects low-cost airlines and full-service airlines performance differently.

Political interventions in state-owned enterprises: The corporate governance failures of a European airline

This paper is based on the theory of hybrid organizations and we investigate the context, factors, mediators, and outcome of a public scandal involving a Romanian state-owned company in the civil aviation sector. This retrospective case study is part of a research design that alternates between inductive and deductive procedures devised to test relevant hypotheses, integrate several theories, and construct the causal mechanism of the corporate scandal. Four theories have been selected to address multiple aspects of the case: the hybrid organization theory, the agency theory, the fraud triangle theory, and the legitimacy theory. Several hypotheses have been proposed at the confluence of these frameworks, and the data collection process was conducted to ensure the credibility, dependability, and transferability of results. In addition to the themes and categories that have emerged from the thematic analysis, the paper also uses the process-tracing method to propose a causal graph and an event-history map in support of the hypotheses. The paper puts forward a series of recommendations on how to improve the corporate governance of state-owned enterprises, and to prevent potential scandals. The authors suggest that the separation of ownership and control is beneficial for strategy implementation in state-owned enterprises and can alleviate an entity’s financial difficulties.

Aircraft Fleet Health Monitoring with Anomaly Detection Techniques

Predictive maintenance has received considerable attention in the aviation industry where costs, system availability and reliability are major concerns. In spite of recent advances, effective health monitoring and prognostics for the scheduling of condition-based maintenance operations is still very challenging. The increasing availability of maintenance and operational data along with recent progress made in machine learning has boosted the development of data-driven prognostics and health management (PHM) models. In this paper, we describe the data workflow in place at an airline for the maintenance of an aircraft system and highlight the difficulties related to a proper labelling of the health status of such systems, resulting in a poor suitability of supervised learning techniques. We focus on investigating the feasibility and the potential of semi-supervised anomaly detection methods for the health monitoring of a real aircraft system. Proposed methods are evaluated on large volumes of real sensor data from a cooling unit system on a modern wide body aircraft from a major European airline. For the sake of confidentiality, data has been anonymized and only few technical and operational details about the system had been made available. We trained several deep neural network autoencoder architectures on nominal data and used the anomaly scores to calculate a health indicator. Results suggest that high anomaly scores are correlated with identified failures in the maintenance logs. Also, some situations see an increase in the anomaly score for several flights prior to the system’s failure, which paves a natural way for early fault identification.

An empirical investigation of European airline business models: Classification and hybridisation

Airline business models are evolving and what was once a clear distinction between low-cost carriers (LCCs) and full-service carriers (FSCs) is now less apparent. LCCs and FSCs are merging into new hybrid carrier business models, a convergence accomplished in different ways by various airlines. This paper aims to establish how many types of business models exist and to examine the defining characteristics of the various levels of hybridisation. This is an empirical study based on a sample of 49 European airlines. Data are collected in a categorical format, where appropriate, or transformed into categorical variables if numerical. The methodology employed for analysis is the well-established k-modes technique. The clustering process indicates that there are four observable airline categories: FSCs, LCCs, and two hybrid types in between.

Flight delays in European airline networks

In this paper we apply an index of interconnectedness to air transport networks. We study empirically how service quality, measured in average minutes of arrival delay, differs between network structures operated by European airlines. We observe that airlines with contrasting business models, low-cost carriers versus full-service carriers, prefer different network types. We run panel data fixed-effects on a sample of over two million flights that were operated in Europe between April 2015 and March 2016. Our main finding is, that airlines are more successful in managing delay when they operate a network with hub-and-spoke characteristics, especially if flights originate at one of their own hubs, compared to airlines that operate a network with point-to-point characteristics. Our findings support the hypothesis that at hubs, where the carriers have a dominant position, airlines internalize congestion into their own operations.

A longitudinal Perspective on Efficiency of Airlines in Europe and the U.S

The aviation industries in Europe and the US have been well-established since a very early age and have attracted great attention from both industry practitioners and academics. To derive a different perspective on the efficiency levels of airlines operating in the two matured markets, we adopted dynamic data envelopment analysis (DEA). Using the data of the period 2014 – 2016 of 7 European airlines and 9 US airlines that are publicly traded, the study offers an overall picture of airlines' efficiency in the two regions. Notably, the resource flow between the consecutive periods is incorporated into the measure to yield a longitudinal perspective on airlines' efficiency. The study reveals the two major findings. First, most publicly traded airlines in Europe and the US are efficient, except for Hawaiian airline headquartered in the US. Second, Hawaiian airline's inefficiency is majorly contributed by the overuse of the number of employees, consumed fuel, and the deficit of revenue seat-miles in 2014 and 2015. To improve the efficiency level, Hawaiian airlines could consider increasing employee productivity, using more fuel-efficient aircraft, and implementing new marketing strategies to boost sales.

Analyzing the Environmental Efficiency of Global Airlines by Continent for Sustainability

The study of environmental sustainability in the aviation industry mainly focuses on research targeting specific regions such as the United States, Europe, and China. However, for the environmental sustainability of the aviation industry, global airlines on all continents around the world must implement efficient environmental management. This study divides the world into six continents and attempts to verify environmental efficiency for airlines belonging to each continent. Using data from 2014 to 2018 of 31 global airlines, this study compares environmental efficiency in the aviation industry by continent and individual airline. Data envelopment analysis (DEA), which is actively used in efficiency studies was adopted as an analysis method. We find that, first, airlines in Europe and Russia have the highest environmental efficiency, and airlines in North America and Canada are the second highest, which can be a good benchmark for other airlines. Second, in technical efficiency (TE) values, airlines in Africa and the Middle East and Latin America generally have low efficiency; but, in the airlines in Africa and the Middle East, environmental efficiency is steadily improving slightly. In comparison, airlines in Latin America showed a decrease in environmental efficiency value, requiring a lot of effort and investment to improve efficiency. Third, for airlines in North America and Canada, the scale efficiency (SE) value was the lowest, even though there was a high level of overall environmental efficiency, indicating the need for efficiency improvement through economies of scale. This study has implications, in that, it suggests how airlines can perform efficient environmental management for sustainability according to the continent to which they belong.

On-board emergency medical equipment of European airlines

BackgroundMedical emergencies frequently occur in commercial airline flights, but valid data on causes and consequences are rare. Therefore, optimal extent of onboard emergency medical equipment remains largely unknown. Whereas a minimum standard is defined in regulations, additional material is not standardized and may vary significantly between airlines. MethodsEuropean airlines operating aircrafts with at least 30 seats were selected and interviewed with a 5-page written questionnaire including 81 items. Besides pre-packed and required emergency medical material, drugs, medical devices, and equipment lists were queried. If no reply was received, airlines were contacted up to three times by email and/or phone. Descriptive analysis was used for data interpretation. ResultsFrom a total of 305 European airlines, 253 were excluded from analysis (e.g., no passenger transport). 52 airlines were contacted and data of 22 airlines were available for analysis (one airline was excluded due to insufficient data). A first aid kit is available on all airlines. 82% of airlines (18/22) reported to have a “doctor's kit” (DK) or an “Emergency Medical Kit” (EMK) onboard. 86% of airlines (19/22) provide identical equipment in all aircraft of the fleet, and 65% (14/22) airlines provide an automated external defibrillator. ConclusionsWhereas minimal required material according to European aviation regulations is provided by all airlines for medical emergencies, there are significant differences in availability of the additional material. The equipment of most airlines is not sufficient for treatment of specific emergencies according to published in-flight medical guidelines (e.g., for CPR or acute myocardial infarction).

A bin packing approach to solve the aircraft maintenance task allocation problem

This paper addresses the scheduling of aircraft maintenance tasks that must be carried out in multiple maintenance checks to keep a fleet of aircraft airworthy. The allocation of maintenance tasks to maintenance opportunities, also known as the task allocation problem (TAP), is a complex combinatorial problem that needs to be solved daily by maintenance operators. We propose a novel approach capable of efficiently solving the multi-year task allocation problem for a fleet of aircraft in a few minutes. We formulate this problem as a time-constrained variable-sized bin packing problem (TC-VS-BPP), extending the well-known variable-sized bin packing problem (VS-BPP) by adding deadlines, intervals, and arrivals for the repetition of tasks. In particular, we divide the planning horizon into variable size bins to which multidimensional tasks are allocated, subject to available labor power and task deadlines. To solve this problem, we propose a constructive heuristic based on the worst-fit decreasing (WFD) algorithm for TC-VS-BPP. The heuristic is tested and validated using the maintenance data of 45 aircraft from a European airline. Compared with the solution obtained with an approach using an exact method, the proposed heuristic is more than 30% faster for all the test cases discussed with the airline. Most of the cases have optimality gaps below 3%. Even for the extreme case, the optimality gap is still smaller than 5%.