European Airlines Research Articles

Whether, when and which: Modelling advanced seat reservations by airline passengers

Motivated by the growing importance of ancillary revenues in the airline industry, we propose a statistical model for Advanced Seat Reservation (ASR). We focus on the questions of whether, when and which seats are selected by passengers. To answer these questions, we employ a discrete time duration model, combined with a multinomial choice model with varying consideration set. Unknown smooth covariate effects are used, along with seat-specific random effect terms for seat selection. The model is applied to a rich dataset of 485,279 bookings on five intercontinental routes, extracted from the complete booking database of a major European airline. We find strong evidence of ‘middle seat avoiding’ and ‘front seat preferring’ effects, along with substantial additional seat-specific heterogeneity. We also show that the probability of making an ASR depends on its price in relation to the ticket price, the distribution channel, the number of days to departure and seasonal effects. These and other insights allow for product differentiation and variable pricing in ASR for each and every seat. In addition, simple variations of the statistical model can also be used for other ancillary products—such as on-board dining and preferential baggage checking—that are purchased in the same way as ASR.

Factors influencing charter flight departure delay

This study aims to identify the main factors leading to charter flight departure delay through data mining. The data sample analysed consists of 5484 flights operated by a European airline between 2014 and 2017. The tuned dataset of 33 features was used for modelling departure delay (e.g., if the flight delayed >15 min). The results proved the value of the proposed approach by an area under the receiver operating characteristic curve of 0.831 and supported knowledge extraction through the data-based sensitivity analysis. The features related to previous flight delay information were considered as being the most influential toward current flight being delayed or not, which is consistent with the propagating effect of flight delays. However, it is not the reason for the previous delay nor the delay duration that accounted for the most relevance. Instead, a computed feature indicating if there were two or more registered reasons accounted for 33% of relevance. The contributions include also using a broader data mining approach supported by an extensive data understanding and preparation stage using both proprietary and open access data sources to build a comprehensive dataset.

The Organization as a Prototype

Some of the most valuable companies in the world accumulated their fortunes as a result of a business model innovation built upon matured technologies. Now the majority of them are investing and shifting their focus to the development of new technologies such as AI, blockchain and genetic editing. If an organization is to remain profitable, it needs to be able to quickly adjust its structure to the rapidly changing context. We contend that a way to do so is to build an organizational structure that is conductive to both generative and evaluative prototypes. We report on our action research with a leading European airline following the transformation of a team of four into a new department, through the lenses of continuous prototyping. We then propose an initial framework that conceptualises organizational prototypes and provides a rational and systematic way of approaching the devising of such. Finally, we outline several directions for further research.

Whether, When and Which: Modelling Advanced Seat Reservations by Airline Passengers

Motivated by the growing importance of ancillary revenues in the airline industry, we propose a statistical model for Advanced Seat Reservation (ASR). We focus on the questions of whether, when and which seats are selected by passengers. To answer these questions, we employ a discrete time duration model, combined with a multinomial choice model with varying consideration set. Unknown smooth covariate effects are used, along with seat-specific random effect terms for seat selection. The model is applied to a rich dataset of 485,279 bookings on five intercontinental routes, extracted from the complete booking database of a major European airline. We find strong evidence of ‘middle seat avoiding’ and ‘front seat preferring’ effects, along with substantial additional seat-specific heterogeneity. We also show that the probability of making an ASR depends on its price in relation to the ticket price, the distribution channel, the number of days to departure and seasonal effects. These and other insights allow for product differentiation and variable pricing in ASR for each and every seat. In addition, simple variations of the statistical model can also be used for other ancillary products—such as on-board dining and preferential baggage checking—that are purchased in the same way as ASR.

IFRS 16 and its Impacts on Aviation Industry

Current differences between the accounting models for a financial and an operating lease and their critics from the users of the financial statement forced the IASB issued a new Leases Standard, IFRS 16, which supersedes IAS 17 Leases and its related interpretations in January 2106. IFRS 16 will eliminate dual accounting model for lessees and it is assumed to have significant business implications, especially from lessee’s point of view. The paper focuses on quantification of the impact of IFRS 16 on selected financial statement items and financial analysis ratios of fifteen European airlines. The research is also concerned with comparison of the article outputs with the previous cases studies. The paper confirmed that lease capitalization under IFRS 16 will have a material impact on the reported numbers in the balance sheet and income statement and result in significant changes to return and leverage ratios.

A practical dynamic programming based methodology for aircraft maintenance check scheduling optimization

This paper presents a practical dynamic programming based methodology to optimize the long-term maintenance check schedule for a fleet of heterogeneous aircraft. It is the first time that the long-term aircraft maintenance check schedule is optimized, integrating different check types in a single schedule solution. The proposed methodology aims at minimizing the wasted interval between checks. By achieving this goal, one is also reducing the number of checks over time, increasing aircraft availability and, therefore, reducing maintenance costs, while respecting safety regulations. The model formulation takes aircraft type, status, maintenance capacity, and other operational constraints into consideration. We also validate and demonstrate the proposed methodology using fleet maintenance data from a European airline. The outcomes show that, when compared with the current practice, the number of maintenance checks can be reduced by around 7% over a period of 4 years, while computation time is less than 15 minutes. This could result in saving worth $1.1M–$3.4M in maintenance costs for a fleet of about 40 aircraft and generating more than $9.8M of revenue due to higher aircraft availability.

New methods for two-door airplane boarding using apron buses

Apron buses are widely employed by European airlines to transfer passengers from airport terminals to airplanes. However, the vast majority of current boarding methods are designed for use with jet-bridges and one-door boarding of airplanes and thus are not well suited for apron buses and passengers boarding simultaneously through both a front door and a back door of an airplane. This study describes and tests 13 new boarding methods that assign each passenger to one of two apron buses—based on the passenger's seat on the airplane. Our simulation platform, developed in NetLogo, investigates the time to complete boarding of the airplane for the boarding methods for varying amounts of luggage carried aboard the plane. The results indicate that the new boarding methods could decrease the boarding time by 5.6%–36.6% compared to the best method previously published in the literature for this context of two apron buses and two-door boarding of airplanes.

Entry and Exit in a Liberalised Market

We analyze the entry and exit activity in the European Airline Markets in the post-liberalisation period and study the dierential traits between tradi- tional and low cost carriers. Alongside with the characteristics traditionally highlighted as determinants of entry (such as airport presence and network economies), we …nd that the existence of charter or seasonal operators, prod- uct dierentiation opportunities and the level of quality provided by the in- cumbents are also relevant in explaining entry and/or exit. Despite the liber- alisation policies, the contestability of important large markets still seems to be limited. J.E.L. Classi…cations: L11, L93

Factores críticos de éxito en aerolíneas de bajo costo en Europa de 1999 a 2018

El objetivo principal de este artículo fue analizar los factores críticos de éxito en las aerolíneas de bajo costo europeas. Para ello, primero se realizó un análisis bibliométrico y luego uno estadístico en el cual se aplicaron dos tipos de pruebas (Pearson y técnica R) para verificar si existe una relación entre las variables seleccionadas. En concreto, se trabajó con una muestra de 60 aerolíneas: las más representativas durante el período 1999-2018. Los resultados del estudio muestran la relación entre el aumento en el uso de vuelos de bajo costo y el costo de viaje con características de confort mínimas aceptables.

Amsterdam to Dublin Eventually Delayed? LSTM and Transfer Learning for Predicting Delays of Low Cost Airlines

Flight delays impact airlines, airports and passengers. Delay prediction is crucial during the decision-making process for all players in commercial aviation, and in particular for airlines to meet their on-time performance objectives. Although many machine learning approaches have been experimented with, they fail in (i) predicting delays in minutes with low errors (less than 15 minutes), (ii) being applied to small carriers i.e., low cost companies characterized by a small amount of data. This work presents a Long Short-Term Memory (LSTM) approach to predicting flight delay, modeled as a sequence of flights across multiple airports for a particular aircraft throughout the day. We then suggest a transfer learning approach between heterogeneous feature spaces to train a prediction model for a given smaller airline using the data from another larger airline. Our approach is demonstrated to be robust and accurate for low cost airlines in Europe.

STOCK MARKET REACTIONS TO REGULATORY EVENTS ON EMISSION TRADING: EVIDENCE FROM THE EUROPEAN AIRLINE INDUSTRY

The inclusion of international aviation emissions into the European Union Emission Trading Scheme starting from 2012 is expected to bring additional costs to flights having either origins or destinations at a European Union airport. In turn, this should bring new costs to airlines. The aim of this paper is to analyze how financial markets reacted to the official announcements on this regulatory change. Our findings, using an event-study methodology and employing a sample of 20 European airlines’ stocks, reveal that the stock markets tend not to take these regulatory changes into account in the valuation of the European airlines’ stocks. We also document that the magnitude of the reaction of low-cost airlines is not statistically significant than that of full-service network airlines’ reaction.

Developing a low-cost airline in a semi-protected regime: Comparing China to Europe and the US

The US and Europe have long experienced the expansion of low-cost carriers (LCCs) in the aftermath of extensive aviation liberalisation offering free access to the market for US and European airlines, respectively. More recently, following the opening of the progressive aviation market, China has also emerged as a country that welcomed LCCs to some extent, but has not subscribed to full liberalisation. In this context, our paper compares China's largest LCC, Spring Airlines, to the largest European (Ryanair and EasyJet) and US (Southwest and JetBlue) low-cost airlines. Comparisons in this context include volumes supplied, spatial coverage, network geography and financial results. This comparative study found that Spring Airlines is still a small/emerging LCC compared to the European and US giants and in terms of China's potential market. This is notably due to the lack of whole free access to the market and trunk routes that are still protected to some extent in favour of the Big Three in China. However, Spring uses its production means in an efficient way and generates good financial results, especially compared to those of China's Big Three airlines. Finally, Spring appears to be a composite case rather than a duplicate of a reference LCC.

Analysis of direct operating cost of wide-body passenger aircraft: A parametric study based on Hong Kong

Analysis of the Direct Operating Cost (DOC) of aircraft is an important step towards achieving financially sustainable aviation operations. However, the value of the DOC for different aircraft types and flight scenarios is not widely available. In this study, we perform a systematic analysis of the DOC of every wide-body passenger aircraft currently in production, using the method of the Association of European Airlines (AEA). The elements of the DOC, e.g. financial costs, maintenance costs, and flight costs, are evaluated individually. Several realistic flight scenarios are considered, each with differences in route distance, fuel price, passenger number, and seating arrangement. For each flight scenario, the most cost-efficient aircraft type is identified and evaluated in the context of operations from Hong Kong International Airport. The information provided in this study could be useful to airline operators and policy makers.

Assessing diversity in multiplex networks

Diversity, understood as the variety of different elements or configurations that an extensive system has, is a crucial property that allows maintaining the system’s functionality in a changing environment, where failures, random events or malicious attacks are often unavoidable. Despite the relevance of preserving diversity in the context of ecology, biology, transport, finances, etc., the elements or configurations that more contribute to the diversity are often unknown, and thus, they can not be protected against failures or environmental crises. This is due to the fact that there is no generic framework that allows identifying which elements or configurations have crucial roles in preserving the diversity of the system. Existing methods treat the level of heterogeneity of a system as a measure of its diversity, being unsuitable when systems are composed of a large number of elements with different attributes and types of interactions. Besides, with limited resources, one needs to find the best preservation policy, i.e., one needs to solve an optimization problem. Here we aim to bridge this gap by developing a metric between labeled graphs to compute the diversity of the system, which allows identifying the most relevant components, based on their contribution to a global diversity value. The proposed framework is suitable for large multiplex structures, which are constituted by a set of elements represented as nodes, which have different types of interactions, represented as layers. The proposed method allows us to find, in a genetic network (HIV-1), the elements with the highest diversity values, while in a European airline network, we systematically identify the companies that maximize (and those that less compromise) the variety of options for routes connecting different airports.

How Do Market Standards Inhibit the Enactment of Digital Capabilities?

Digital capabilities can improve organizations’ performance by supporting complex decision-making processes. However, when market standards constrain their enactment, the potential benefits promised by digital capabilities do not realize. The paper explores this tension by means of the critical case of a European airline, which had difficulty to enact a novel pricing approach and finds that market standards are entrenched in the airline’s pricing and distribution ecosystem. This causes the organization to focus on local improvements and IT-based workarounds instead of enacting a dramatically new and potentially improved digital pricing capability.

Impact of multi-criteria optimized trajectories on European airline efficiency, safety and airspace demand

Today the European airspace is facing multiple capacity constraints which are regulating demand during busy traffic periods of the day. These capacity limits cause inefficiencies in flight and airport ground handling. Current market forecasts predict an annual growth in passenger air traffic demand between 4.5 percent and 4.8 percent. This growth will be realized by an increasing number of aircraft movements reflected in an expected annual growth of jet airplanes by 3.3 percent with a negative impact on airspace capacity. To better manage the rare airspace capacity, the Single European Sky ATM Research (SESAR) and the Next Generation Air Transportation System (NextGen) program suggest free route airspaces, a Performance Based Navigation (PBN) and harmonized airspace structures as efficient concepts of improvement in air traffic efficiency. Beside today's minimum fuel and time objectives, a growing public awareness of the anthropogenic environmental impact necessitates further functions for flight planning and execution. Additionally, today's high safety standards must not be negatively influenced by the introduction of free route airspaces. In this paper, we present a trajectory calculation model capable of exploiting a 4D free route optimization potential while considering the divergent targets of safety, efficiency and environmental compatibility. In particular, the environmental effects of condensation trails depending on the time of the day are carefully considered. To further estimate the impact of free routes on airspace demand and on safety issues, the model is implemented in the simulation environment TOMATO, and the European flight intentions have been optimized for an entire day based on departure airports, arrival airports and original departure times July 2016. The resulting trajectories are evaluated against the number, location and duration of separation infringements. Despite constantly changing air speeds and cruising altitudes induced by the optimization target functions, the number and duration of separation infringements could be reduced by 30% due to optimized lateral and vertical trajectories. The results of this case study show a high potential for an increased airspace capacity under free routing conditions. Furthermore, fuel burn (20%) and airline direct operational costs (40%) could be significantly reduced.

Understanding price elasticity for airline ancillary services

Recently, the general trend in the airline industry has been to generate ancillary revenue by offering additional services. Instead of completely separating ancillary services from tickets as optional components, most of the traditional airlines offer the so-called branded fares which bundle some of the ancillary components to an inclusive fare preventing a possible negative impact on the customers’ perception and brand image (mixed bundling). For instance, seat reservation and baggage transportation are often already included in the default fare. In this study, we analyse data to evaluate different bundle-pricing policies within the mixed bundling context. We use statistical regression methods to infer individual behaviour by analysing aggregated data on market level from a major European airline. We tackle the question of how to optimally price bundled fares. With the General Data Protection Regulation in place today, such high-level models which only require aggregated market data and no individual personal data are becoming more relevant for business analytics. We demonstrate how aggregate data still allow to investigate individual behaviour and our data analysis reveals the existence and variability of price elasticity. The results can help companies to segment their markets based on price elasticity and optimise their ancillary offerings accordingly.

Exploring Service Quality of Low-Cost Airlines in Europe: an Integrated MCDM Approach

This study aims to evaluate service quality performance of major LCCs (Low Cost Carriers) in Europe by the MCDM (Multi-Criteria Decision Making) methodology. In addition it focuses on managerial business models and includes the international airline service providers that have applied the cost leadership strategy. In the study passenger reviews based on customer-rating systems are adopted as an alternative data source. For this purpose 24,971 passenger reviews, including 7 evaluation criteria, are analyzed. In this integrated methodology the Entropy method is used to weight the service quality criteria and the WASPAS method is used to rank the airlines. A sensitivity analysis is also applied and the robustness and stability of the application are confirmed. Consequently Jet2.com demonstrates the best service performance overall and legroom is the most important evaluation criterion.

Realistic scheduling agreement: Defining principles and objectives

Airline rostering consists of a complex sequence of tasks that, depending on time away from the event, are shared in multiple stages between several rostering departments. Their synchronisation, as well as the roster production, is a complex and a vital process that is continuously subject to discussions between rostering departments, operators, regulators, and local negotiating parties, as well as between individual crew members. From the regulatory and legislative aspects, EASA member states adopted EASA Flight Time Limitations (FTL). FTLs are mandatory for operator Airlines, and their scheduling departments respectively. Operators often see the limitations as a target to achieve maximum duty times and minimum rest times. However, FTLs were designed as a recommendation to operator Airlines and under no circumstances describe the FTL as a limit. The primary task of an individual roster plan, given an optimum amount of crew members, is to cover the required amount of flights. Altogether, the regulations and limitations must be adhered to. Additionally, the roster should find a fair balance between the operational needs and effective usage of crew member’s capacities. However, in real-world conditions, an individual roster plan has a significant impact on a crew member’s work-life balance, in terms of ruling an individual’s sleep pattern and social life. By adding up operational delays and unforeseen circumstances, the individual might eventually face challenges such as fatigue or even burnout. Thus, a more protective agreement between the operator and local negotiating authority, called a realistic scheduling agreement, aims to protect workforce interest and improve the work-lifestyle balance. This article discusses issues around rostering at European airlines and describes matters that might arise when building such an agreement between the Company and local negotiating authority. The scope of this discussion paper is to outline the inevitable place of a realistic scheduling agreement within an airline by highlighting some of the controverse aspects of EASA FTL’s. As a methodology, the author chose a discussion approach rather than a comparison of quantitative data. While most of the available research papers focus on roster optimising parameters in the scheduling process, the author would like to outline the impact of the current FTL’s on individual lifestyle balance and their management with respect to fatigue mitigation.

Strategic Behavior of European Low-Cost Airlines: A Review and Economic Analysis

Strategic Behavior of European Low-Cost Airlines: A Review and Economic Analysis