European Aviation Economics and Management Prize
During the European Aviation Conference, the winners of the European Aviation Economics and Management Prize are announced. Sponsored by the German Aviation Research Society (G.A.R.S.) and Ashgate Publishers, outstanding papers by young researchers in the field of aviation economics and aviation management are awarded. There are two prize categories; one prize for the best paper at the BA/MA level; and the other for the best paper at the PhD level. The winners are selected amongst the participants of the annual G.A.R.S. Junior research workshop. The papers are assessed by distinguished scholars in the field of aviation economics and aviation management, and the prize is awarded by the members of the Scientific Committee of the European Aviation Conference.
The European Aviation Economics and Management Prize is sponsored by the Hong Kong Polytechnic University and Routledge.
BA/MA category Price Winner: James Bedford
James completed a Bachelor’s degree in Economics at Newcastle University. His paper is based on his thesis. James in now working with Oxford Economics in London.
The paper: ‘Competition on the UK-Australasia Market: Evidence from Skyscanner Data’ uses a sample of actual purchased tickets, obtained from Skyscanner, to estimate the relationship between market concentration and airfares on a sample of the UK-Asia and UK-Australasia markets. The results show a significant positive relationship between HHI and price, and the magnitude of the effect is similar to what has been reported in the literature for markets in other parts of the world.
PhD category Prize Winner: Charles Howell
Charles Howell is currently a PhD Student and Researcher in Management, Economics and Organization at the Universitat Autònoma de Barcelona. His research interests, stemming from 20 years in private industry as a manager of pricing and forecasting, are Industrial Organization, Competition Policy and Pricing. Before moving to Spain, Charles completed an Economics MA, an MBA and enjoyed working as an adjunct professor.
The paper, “Output Attributes and the Relationship Between Competition and Price Dispersion: Evidence from the US Airline Market”, utilizes a novel unit cost index to identify the degree of differentiation in an airline route. We find that the response of price dispersion to changes in competition is conditioned by the level of differentiation, response both in magnitude and direction. These results help to explain contradictions in previous theoretical and empirical studies.
PhD category Prize Winner: Marina Efthymiou
Dr Marina Efthymiou is an Assistant Professor in Aviation Management at Dublin City University Business School, Ireland. In the past, she held posts at the University of West London, UK and EUROCONTROL, the international organisation for the safety of air navigation in Europe, based in Brussels. Marina's research interests focus on management of air navigation service providers, air traffic management and policy issues, aviation governance and performance regulation, as well as the implications of aviation for the environment in a sustainable context.
The paper ‘EU Emissions Trading Scheme in aviation: Policy analysis and suggestions’ examines policy issues related to EU ETS in aviation. Allocation methods (i.e. benchmarking, auctioning, grandfathering) of allowances, linking of EU ETS to other ETS in different counties/continents and the interconnection of the scheme with other environmental solutions/policies are among the elements discussed in the paper. Delphi method in two rounds was used to evaluate aspects of the EU ETS from an empirical point of view. The sample consists of 31 experts from airlines, Air Navigation Service Providers (ANSPs), Civil Aviation Authorities (CAAs), Individual experts/consultants/academics, Governmental institutions and International Air Transport Association (IATA). Based on the results of the Delphi, the paper makes policy recommendations, investigating the standpoints of the different stakeholders.
PhD category Prize Winner: Gerben de Jong
Gerben de Jong (born 1989) holds a master’s degree in Transport and Supply Chain Management, and is currently a PhD student at the School of Business and Economics, VU University Amsterdam. His research interests are consumer behavior, industrial organization and applied econometrics. Most of his work is focused on the air transport industry, where he currently studies how international airlines compete and how they (can) achieve competitive advantages.
The paper ‘Airline loyalty (programs) across borders: a boundary discontinuity approach’ analyzes brand loyalty advantages of national airlines in their home countries, by estimating differences in frequent flier program activity by domestic and foreign consumers. To take into account that domestic and foreign consumers are not randomly distributed across space, the analysis focusses on domestic and foreign consumers that reside very close to the national borders of the program’s sponsoring airlines. The findings demonstrate that there are substantially drops in participation and activity at these borders and thereby contribute to an explanation as to why international flights by third country carriers are still a small share of the market.
PhD category Prize Winner: Claudio Noto
Claudio obtained his PhD in Management at the University of St. Gallen (Switzerland) in 2016, and a MA in Economics from the University of Zurich in 2005. The awarded paper is a revised excerpt from his original PhD thesis.
Claudio’s paper “Perspectives for Airport Quotas, Secondary Trading and Congestion Pricing with a dominant Network Airline” provides a theoretical framework to investigate the efficiency of different airport capacity allocation schemes under congestion externalities and imperfect competition. Its innovation is to consider an asymmetric market structure featuring a single dominant network carrier at its hub airport that endogenously differentiates its flights based on passenger benefits from network density. Based on a partial equilibrium analysis of the generic model, the investigation qualitatively evaluates the ambiguities on allocation efficiency, which arise with capacity allocation in a market that faces multiple distortions.
The results show that both, the current airport capacity allocation scheme as well as alternative instruments proposed in the literature do not provide first-best allocation efficiency in an asymmetric market structure that faces multiple distortions. All instruments may yield second-best results under certain conditions but also include a welfare caveat.
BA/MA category Price Winner: Alexandra Musewald
Alexandra holds a Bachelor’s degree in Aviation Systems Engineering and Management from the City University of Applied Sciences Bremen. During this program she studied one semester at the Universidad Técnica Federico Santa María in Santiago de Chile and received her flight training at the Lufthansa Flight Training pilot school in Bremen as well as in the USA. Furthermore, she holds a Master’s degree in Aeronautical Management from the City University of Applied Sciences Bremen. After completing her Master’s degree she started working as an engineer in the aircraft maintenance industry.
The paper “Internalization of NOx emissions in aviation” is based on Alexandra’s Master thesis. The aim of this paper is to develop a concept to internalize the externalities arising from NOx and other emissions in aviation which can be easily adopted. Several concepts are compared, using a uniform modelling approach and a comprehensive dataset. The paper is highly interdisciplinary, applying concepts and data from economics, flight operations, and engineering.
BA/MA category Prize Winner: Marcin Dziedzic
Marcin is an alumnus of two universities: University of Huddersfield (where he received a Bachelor's degree in Air Transport and Logistics Management) and of the UITM Rzeszow (Poland, Bachelor's degree in Economics, specialisation in aviation management)
His paper, The role of secondary airports in light of low-fare airlines hybridisation analyses how the three major European low-fare airlines, i.e. Ryanair, easyJet and Norwegian, behave in the four largest markets (UK, Italy, Spain and Germany). The paper describes how the airport choice factors for LFAs have changed. It then analyses the airlines’ historical and current capacity data to identify how the low-fare traffic at secondary airports has evolved, establishing that while cost, efficiency and demand are still the most important criteria for LFAs, they have become more interested in serving business passengers, which is why they increasingly move to primary airports. It also concludes that the evolution of LFAs increases competition between primary and secondary airports. In most cases, the secondary gateways lose a significant amount of low-fare traffic and sustain flights to less important destinations. Therefore, the paper questions the importance of secondary airports for LFAs in the future. However, as not all the airports have been impacted by the hybridisation of LFAs to the same extent, the results are not equally applicable to the whole industry.
PhD category Prize Winner: Eric Tchouamou Njoya
Eric holds a bachelor's degree in Sociology awarded by the University of Douala and a diploma degree in Economics from the University of Applied Sciences Bremen. He received his PhD from the University Karlsruhe, Karlsruhe Institute of Technology.
The paper “Tourism and Poverty Reduction in Kenya: A Dynamic Micro-Simulation General Equilibrium Analysis” explores the link between tourism expansion and income distribution among household groups in Kenya. The CGE model comprises nineteen sectors, twenty household groups and five factors of production, making it particularly appropriate for welfare analyses. Results reveal that additional tourism is positive for the Kenyan economy. Simulation results show that tradable sectors contract while non-tradable sectors expand in response to additional tourism. Furthermore, there is an increase in overall welfare and a marginal fall in poverty in urban areas in the short and long term. At the national level, households endowed with semi-skilled and skilled labor are the main beneficiaries from the tourism boom in income terms. Rural households at the lowest expenditure decile experience a worsening of their situation in the short run with a slight improvement in the long run.
BA/MA category Price Winner: Gerben de Jong
Gerben studied at the Faculty of Economics and Business Administration, VU University Amsterdam.
The paper “The influence of passenger terminal service quality on leisure passengers’ departure airport choice” explores the relationship between passenger terminal service quality and leisure passengers’ departure airport choice. Approximately 200 Dutch leisure passengers completed a stated preference survey, choosing amongst two hypothetical airports that differ in price, accessibility, shopping and dining possibilities, crowdedness, cleanliness and staff friendliness. The findings suggest that leisure passengers will not pay more or travel further for airports that are less crowded or offer better opportunities to engage in shopping and dining. However, the results show a substantial willingness-to-pay for terminal cleanliness and staff friendliness, indicating that the cost consciousness leisure passengers still have a great concern for these airport service areas. This points on a clear dichotomy between passenger terminal service quality attributes that are perceived as frills and those that passengers believe are essential.”
PhD category Prize Winner: Christiaan Behrens
Christiaan Behrens (1985) is a postdoctoral researcher at the Department of Spatial Economics, VU University Amsterdam. In 2013 he successfully defended his PhD dissertation on ‘Product differentiation in aviation passenger markets: The impact of demand heterogeneity on competition’.
The paper ‘Loyalty programs and consumer behavior: The impact of FFPs on consumer surplus’ provides an understanding of the impact of frequent flyer programs (FFPs) on actual consumer usage levels. Although loyalty programs are key in customer relationship management strategies in various industries, only a few empirical studies have analyzed the long term effects of such programs. Panel data covering a representative sample of active FFP members of a focal airline over a three-year period are used in the paper. A change in the FFP program halfway through this three-year period is used to study non-linear impacts on consumer purchase frequency and transaction size.
BA/MA category Prize Winner: Ruowei Chen
Ruowei Chen has recently completed her MSc in Air Transport Management at Cranfield University. Her research interests are aviation policy, industrial organization and applied econometrics. Her thesis examined the effects of airport dominance on airline pricing power using data on hub premiums in the Chinese domestic market. She holds a Bachelor of Engineering degree in Engineering Mechanics from Tsinghua University in China.
The Paper ‘Low-cost Carrier and Airline Competition in Chinese Domestic Market’ investigates the competitive responses of an established airline, China Eastern Airlines, to the entry of a low-cost carrier, Spring Airlines, into its hub airports in Shanghai. The analysis takes into account the actual and adjacent competition for both low-cost carriers (LCCs) and full-service airlines (FSAs) within an airport-pair framework. The results of the panel data analysis showed that Spring Airlines put downward pressure on the average fares of China Eastern and other FSAs. But China Eastern responded aggressively to Spring’s entry by cutting prices more deeply than other FSAs on routes from the focal and nearby airports.
PhD category Prize Winner: Hugo Silva
Hugo Silva (1986) holds a Master’s degree in Transportation Science from Universidad de Chile and is currently a Ph.D. candidate at the Department of Spatial Economics, VU University Amsterdam. His research interests are transport economics, transport policy and industrial organization.The paper "Airlines’ strategic interactions and airport pricing in a dynamic bottleneck model of congestion" analyzes efficient pricing at a congested airport dominated by a single firm. Unlike much of the previous literature, it combines a dynamic bottleneck model of congestion and a vertical structure model that explicitly considers the role of airlines and passengers. It shows that a Stackelberg leader interacting with a competitive fringe partially internalizes congestion, and that there are various toll regimes that induce the welfare maximizing outcome, widening the set of choices for regulators. In particular, the paper shows that charging the congestion toll that would apply for fully competitive carriers (that ignores any internalization) to both the leader and the fringe, yields the first-best outcome.
BA/MA category Prize Winner: Boris Oestmann
Boris Oestmann holds Bachelor’s and Master’s degrees from the University of Applied Sciences Bremen in Economics and Business Administration. His paper is based on his master’s thesis. Boris in now with Bankhaus Lampe, Düsseldorf.
The paper ‘Quantifying Prediction Errors Induced by Anti-Cartel Policy in the Air Cargo Industry’ uses an event study to test the hypothesis that unannounced investigations and the charging of fines decrease the stock value of cartel members. This research study is based on a major global air cargo cartel investigation initiated in 2006. The findings indicate that enforcement actions in terms of raids lead to a decrease in shareholder value, but there is very limited evidence that fines impact cartel members’ stock value.