Eastern Airlines Research Articles

Analyzing commercial aircraft fuel consumption during descent: A case study using an improved K-means clustering algorithm

The analysis of aircraft fuel consumption remains an important topic as fuel consumption constitutes a large portion of airline operational costs, and exhaust emissions generated by aircraft gradually have become an essential aspect of urban air pollution, especially during takeoff and descent. Previous studies have focused mainly on optimizing fuel loss and greenhouse gases emission via three key methods: reducing additional aircraft load, using inventive air transfer control methods, and identifying the best-performing aviation systems for all conditions. However, there are few studies that have considered the relationships among fuel consumption, pilot behavior, and flight factors. This study fills this gap by focusing on the relationships between fuel consumption and three factors during the descent phase: altitude, weight, and speed. Further, we propose an improved K-means clustering algorithm to analyze the flight data, conducting clustering analysis on multi-dimensional data based on real flight records of Boeing 737s operated by China Eastern Airlines. We conclude the highlights of this study into three aspects: (1) the relationship between aircraft descent and fuel consumption is investigated through clustering analysis to find a fuel-efficient aircraft descent. (2) an improved K-means clustering algorithm is proposed to analyze flight data. (3) the better aircraft descent is the suggestion for pilots by analyzing the clustering results, which is a good supplement to the Flight Crew Operating Manual (FCOM). In the case study, the improved K-means algorithm is used for the cluster analysis of data from the quick access recorders of two aircraft descending into Chengdu Shuangliu Airport (CTU) in China. Compared with the method that does not use the analysis results for the descending, the average fuel consumption per unit of time decreases by 17.5% when we use our proposed method. In the Shanghai Pudong Airport (PVG), our proposed method reduces average fuel consumption per unit of time by 19.3%.

Comparative analysis of route selection behaviors between full-service and low-cost airlines

In order to study the similarities and differences between the route selection strategies of full-service and low-cost airlines, Spring Airlines and Eastern Airlines are the representatives of low-cost and full-service airlines respectively, and based on the actual operation data of Spring Airlines and Eastern Airlines routes in the past seven years, the panel-probit model is used to investigate the impact of route characteristics, airport characteristics, characteristics of competing airlines, and the characteristics of airlines on the route selection behaviors of full-service and low-cost airlines. The results show that the route HHI, time slot control airport, airport size and number of competitors have a significant impact on the route decision of the Eastern Airlines, while the time slot control airport, airport HHI and serviced airports have a significant impact on the route decision of the Spring Airlines. Finally, based on the empirical results, the similarities and differences between the decision of Eastern Airlines and Spring Airlines routes are summarized, which provides a theoretical basis for the decision-making of full-service and low-cost airlines.

DEREGULATION CONTROL BY MERGERS AND ACQUISITIONS: A GAME THEORETIC ANALYSIS OF THE CHINESE AIRLINE INDUSTRY

The major challenges of deregulation are lax market entry, sudden surge in new market entrants, and the intense price wars that ensue, thus causing major losses for any industry. This paper investigates whether deregulation can be structured through a controlled Mergers and Acquisitions (M&As) process by means of government intervention, and how this promotes the performance of the players in the industry. We study this in the context of the Chinese aviation industry as an ideal microcosm of our problem statement. This is because China’s civil aviation industry has witnessed many of the above challenges since its deregulation and economic reforms in 1979, which saw the beginning of a transformation from a fully state-owned machinery to a rent-seeking private sector. The post controlled deregulation process through M&As led to three dominant carriers: Air China Limited (AC), China Southern Airlines (CS), and China Eastern Airlines (CE). Using a 3-player non-cooperative perfect information Cournot oligopoly game model, the strategic efficacy of the government intervention to consolidate the industry based on operating expenses, air passenger revenue, and profit data are investigated respectively. All three airlines are better off after the exercise, with the industry facing a more sustainable growth by the intervention.

Impact of oil price change on airline's stock price and volatility: Evidence from China and South Korea

Generally, the influence of crude oil price on the industries (enterprises) varies because they have different levels of reliance on crude oil. For airlines, the expenditure on fuel accounts for a considerable proportion of their gross costs; thus, airlines are unusually sensitive to changes in the crude oil price. The discussion on the relationship between crude oil price and airlines will help the airlines improve their ability to cope with the crude oil price risk. In addition, the responses of South Korean and Chinese airlines in the event of a price shock, that take, are also very important as the airplane is a basic form of transportation in many countries. This study investigates the impact of three crude oil price (WTI, Brent, Dubai) change on the stock price and volatility of four airlines (Korean Air, Asiana Airlines, Air China, and China Eastern Airlines) using VAR-GARCH-BEKK model. The main findings are as follows. There is return and volatility spillover effect between crude oil price and the stock prices of airlines. The volatility spillover effect between the crude oil price and airlines' stock price is more significant than the return spillover effect. Compared with the transportation industry, the stock prices of smaller airlines of South Korea and China are relatively more sensitive to the change in oil price. In addition, compared with Korea's airlines, China's airlines are influenced more by the oil price change, implying that spillover effects owing to oil price are closely related to the different characteristics of the air transport markets of the two countries.

A STUDY OF CHINA’S MAJOR DOMESTIC AIRLINES’ SERVICE QUALITY AT SHANGHAI’S HONGQIAO AND PUDONG INTERNATIONAL AIRPORTS

In a highly competitive market, service quality can be the core competitive advantage for airline’s profitability and sustained development. This paper has investigated the differences in the passengers’ expectations and perceptions of the service quality of China’s four major domestic airlines: Air China, China Southern Airlines, China Eastern Airlines, and Hainan Airlines in China’s domestic market. The results will assist airline management to improve service quality by reducing the difference. Surveys were conducted with domestic passengers at Shanghai Hongqiao Airport and Shanghai Pudong Airport in China. The results show that there are significant differences of service quality between passengers’ expectations and perceptions among major Chinese airlines. Passengers consistently rate ‘good safety records’ as the first priority of seven SERVQUAL dimensions, but low price remains the most important factor that passengers consider when choosing a Chinese airline. The conclusions reached in this work suggest that Chinese airlines should consider improving service quality rather than providing cheaper air tickets in order to gain competitive advantage.

An investigation of in flight service quality of Chinese carriers in Australia-China market

Provision of high quality service in a competitive environment is a core competitive advantage for airline's profitability and sustainable growth. The purpose of this paper is to investigate the in-light service quality of major Chinese airlines including Air China, China Southern Airlines, China Eastern Airlines, and Sichuan Airlines operating between Australia and China. Surveys were distributed to passengers at Melbourne airport. The results show that there are no significant differences between the in-flight service quality of these four carriers. Lower air fare remains the most significant factor influencing passengers' airline preferences. The findings suggest that airlines should consider improving service quality to gain competitive advantages rather than providing cheaper air tickets.

Financial Performance of Top 20 Airlines

This empricial research article intends to analyse the financial performance of the top 20 airlines in the Word for the period of year 2011 and 2014. In order to measure the financial performance of the airlines on a uniqie base,an hormonic index is propesed by considering performance areas of profitability, operating, efficiency and liquidity. Next, each performance area is defined by using a various of performance ratios. Finally, all airlines companies examined are listed by their harmonic index scores. The total assets of the 20 biggest airlines are amounted over $457 billion in 2014 and Delta Airlines with an assest size of $54 billion is the biggest ailines. On the other hand, the highest revenue generated by Luftansa in 2011, 2012 and 2013 over $40 billion per year The empricial results show that the worst scores of harmonic index refer American Airlines in 2011, Soutwest in 2012, China Eastern Airlines in 2013 and Quantas Airways in 2014, while the best scores of harmonic index point Delta in 2011, Hainan Airlines in 2012 and EasyJet in 2013 and 2014. This analysis supports that the measurement of financial performance based upon total revenuue or profitability is somehow weak and may be extented by including other indicators.

PERFORMANCE MEASUREMENT AND COMPETITIVE STRATEGY DEVELOPMENT OF STATE-OWNED ENTERPRISES IN CHINA

In the increasingly competitive market, the state-owned enterprises (SOEs) in China, which dominate the national economy, have to take actions to enhance their competitive advantages in response to the competition. On one hand, competitive advantage of a company has impacts on its performance. On the other hand, the enterprise needs to develop competitive strategies related to its goals. Therefore, the two elements interact with each other. However, most scholars only focus on one aspect to do research, which resulted in incomplete findings. This article summarizes the development process of performance measurement in China and Western countries, based on performance measurement theory, and points out the disadvantages of the performance measurement system of state-owned enterprises in China. In addition, competitive strategies of company are sorted out. On the basis of existing research results, the article built a performance measurement index system which is used as a theoretical tool for case study. Then, through theoretical analysis and case studies of the two state-owned enterprises in the civil airline industry (China Eastern Airlines Corporation and China Southern Airlines Corporation), this article comprehensively analyzes and compares performance measurement of the two companies and the industry environment, suggests relevant competitive strategies for both companies. Finally, this article sums up the research results and makes suggestions for performance improvement.

Merger between Airlines in Financial Distress

The merger in 2009 between China Eastern Airlines and Shanghai Airlines came at a time when both airlines were suffering heavy losses and were struggling for survival during the global financial crisis. An examination of the prices on China Eastern's seven domestic Shanghai-based routes suggests that on average fares on departure days increased by 22% post-merger. It appears that the merger conferred China Eastern with significant market power owing to the parallel nature of this acquisition, thereby resulting in the record profit reported in 2010. This reminds regulatory authorities to remain vigilant in handling airline mergers when numerous parallel routes are involved.

Market power and its determinants in the Chinese airline industry

This paper first measures the degree of Chinese airlines’ market power by using Lerner index, and then investigates its determinants. Our empirical results show that a certain degree of market power exists in the Chinese airline industry. Of the three dominant carriers, Air China exhibits the strongest market power whereas China Eastern Airlines the weakest, with China Southern Airlines being in the middle. Furthermore, the extent of market power varies significantly among regional markets, with China’s northeast region as the strongest, followed by the eastern and western regions, and the central area as the weakest. We also find a hub-premium effect similar to the result found in the US airline market. Our analysis shows that the existence of high-speed rail and low-cost carriers, income level, population size, seasonality, and number of competing airlines are the main determinants of competition in the Chinese airline market.

An investigation of airline service quality and passenger satisfaction - the case of China Eastern Airlines in Wuhan region

In a highly competitive circumstance the provision of high quality service satisfied by passengers is the core competitive advantage for an airline’s profitability and sustained development. The purpose of this paper is to investigate the impact of service quality on passenger satisfaction by using China Eastern Airlines (CEA) as a case study. Surveys were conducted for CEA’s domestic passengers at Wuhan Tianhe International Airport in China. The results show that there isn’t a significant difference between the passengers’ expectations of desired airline service quality of CEA and its actual service quality, and the quality of airline service is important to the improvement of the level of passenger satisfaction for CEA. The results also show that there is a significant difference between the expectations of airline service quality for different travel groups: business, tourist, and VFR (visiting friends/relatives), and that there are no significant differences between the passengers’ expectation of staff’s quality of CEA and its actual quality. The results of this paper imply that CEA should consider improving service quality to gain market share rather than providing cheaper air tickets in order to complete both its domestic and international counterparts.

A retrospective analysis of the effects of airline mergers on China Eastern's ‘lifeline’ routes: a difference-in-differences approach

We have seen a wave of mega airline mergers in the past few years including Air France/KLM, Delta/Northwest (NW) and United/Continental. However, literature examining the post-merger effects remains sparse. Using a difference-in-differences (DD) approach, this study examines the airfares on China Eastern's three ‘lifeline’ routes, Shanghai–Beijing, Shanghai–Guangzhou and Shanghai–Shenzhen, after the 2002 airline mergers that eliminated six state-owned airlines and resulted in three large airline groups. Passengers on these important routes seem to have not been adversely impacted, and even in 2007, the airfares were not significantly higher than that of the 2002 level despite the rise in fuel price, which may provide some evidence to support the 2009 merger between China Eastern and Shanghai Airlines and justify a lenient anti-trust treatment of mergers in China's airline industry. Retrospectively examining the actual effects of consummated mergers in China including this research has significant policy implications for the new Anti-Monopoly Law enforcement agencies that have little experience and knowledge in dealing with airline mergers and alliances at this stage.

The Process and Achievement of the Application of XBRL in Aviation Industry—Based on Eastern Airlines Application Example

In the field of accounting informationization, the establishment and development of XBRL has aroused wide concerns. Abandoning the constrain of the conventional theoretical study, this paper is based on the case of applying XBRL in Eastern Airlines (abbr. CEAIR) to integrate theory with practice. The authors researched the extension of the general taxonomy in specific industry, described the obstacles during the operation and the achievement it would obtain, as well as the valuable experience.

Method of Safety Assessment for Airport Baggage Conveyer Belt

On the base of deciding the weight of factors influencing safety performance of baggage conveyer belt with analytic hierarchy approach, a quantitative safety assessment method based on safety checklist is developed for airport baggage conveyer belt. As an application, the safety performance of airport baggage conveyer belt of the Beijing branch of China Eastern Airlines located at Capital International Airport Terminal T2 is assessed and its quantitative value of safety performance was gotten. Through the safety assessment, the hazards and its degree of the equipment were revealed validly.

Hub-and-spoke Construction Study of Air China

With the reform and development of the civil aviation industry in China, the three major group airlines, Air China,China Southern and China Eastern Airlines, were recomposed in the year 2002. The new composition of the threemajor Group Airlines represents the market competition of civil aviation industry has entered a new period.Based on the air route theory and the air route development of Air China, this paper conducts a deep analysis ofthe hub air route construction of Air China Beijing through the following two points: A systematic research into thepresent air route networks of Air China, which provides a necessary foundation for future research into the air routenetworks of the company; Discussing the hub air route networks of Air China in detail based on the marketbackground and competition analysis of the present air route networks.

Measuring the effects of China’s airline mergers on the productivity of state-owned carriers

This paper studies the impact of mergers between Chinese airlines on the productivity of state-owned carriers. The results show that there are improvements in productivity along with technical changes. Among the big three airline groups, Air China and China Southern Airlines have benefited significantly from the mergers but there has been little change in the productivity of China Eastern Airlines. In addition, medium sized state-owned airlines such as Sichuan Airlines, Shanghai Airlines and Shenzhen Airlines are also beneficiaries of this consolidation policy.

The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline

Middle Eastern airlines are changing the dynamics of international aviation as Emirates, Qatar Airways and Etihad Airways are quickly emerging as the new global challengers. The region’s airports are also undergoing a rapid transformation to remain in line with the exponential traffic growth that is forecast. This paper examines the relentless growth of Emirates, and investigates the various strategies that underpin its core competencies, which are responsible for its 20 years of consecutive profitability. The paper establishes that the underlying formula for Emirates’ success is largely attributed to its hub and spoke operation, competitive cost structure and the strong leverage of its brand.

Overbooking with bilateral transference in parallel flights

In the civil aviation market, overbooking has been a common approach for airlines to recover losses caused by cancelation and no-shows. However, overbooking would bring even more uncertainty into the system sometimes. As a solution, a new policy named transference is being implemented among flights in the route between Shanghai and Beijing by lots of airlines such as China Eastern Airlines, China Southern Airlines and Shanghai Airlines. This policy enables overflow passengers resulted from overbooking to take a later flight with a certain amount of compensations, while passengers who arrive at the airport ahead of their schedule to board any early flights with surplus capacity freely. As a result, the uncertainty is decreased while the revenue is increased. In this paper, we establish a model to describe the situation, design a procedure to handle two key problems in the model: the optimal transferring quantity among flights with different departure times and the overbooking limit of each flight, and show the revenue situation under the policy. At the end of the paper, we present a numerical example which shows our results coincide with reality.

Eastern Airlines Bankruptcy (C): The Ritchie Group

The C case represents the Ritchie Group, a potential new investor; the A, B, and D cases represent the other players.

Eastern Airlines Bankruptcy (a): Texas Air Corporation

This series of cases (A-D) provides teams of students the opportunity to obtain control of Eastern Airlines through reorganizing the firm in bankruptcy. Eastern, an unprofitable company for nearly two decades, filed for bankruptcy in the wake of a series of financial setbacks and deteriorating labor relations, caused in part by the aggressive management of Frank Lorenzo, who acquired the firm in 1986. At the date of this exercise, Lorenzo (via Texas Air), the unions, the creditors, and a potential new investor (the Ritchie Group) are jockeying for control of the firm. The task for any would-be owner is to devise a financial reorganization of the firm that satisfies the court and, indirectly, to creditors and unions. The B, C, and D cases represent the other players. The four cases in this exercise may be taught singly, or combined into a joint-negotiation exercise in which students are assigned roles to play. The student teams must value the assets of Eastern Airlines, prepare a financial-reorganization strategy, develop a negotiation strategy, bargain with counterparties, and attempt to consummate a transaction that best serves their own needs.