Concentration in the airline industry: Evidence of economies of scale?

Johnston, Ahren; Ozment, John

doi:10.22237/jotm/1317427500

Cited by 8 publications

(3 citation statements)

References 24 publications

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“…Giaume and Guillou (2004) examined the relationship between price discrimination and concentration in the European air transport market using the Herfindahl-Hirschman index. Johnston and Ozment (2011) analysed the concentration in the US airline industry between 1970 and 2009 with the Herfindahl-Hirschman and n-Firm Concentration Ratio indices. Oliveira and Oliveira (2018) measured the market concentration in the Brazilian air transport city-pair market between 2002 and 2013 with the Herfindahl-Hirschman and n-Firm Concentration Ratio indices.…”

Section: Studies Measuring Competition and Market Concentration In Ai...mentioning

confidence: 99%

The effects of airport slot allocation method on competition: Empirical analysis of competition through slots at JFK International Airport

AVCI¹,

Ateş²

2022

Pressacademia

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Purpose- This study aims to indicate the effects of the current slot allocation method specified in the IATA Worldwide Slot Guidelines, which is used to allocate airport slots to airlines, on airline transport market concentration and competition. Methodology- John F. Kennedy Airport (JFK), which allocates slots to airlines with the IATA method, was taken as a sample in the study. Airline’s JFK slot data obtained from the Federal Aviation Administration's Slot Administration Office were analysed with the Herfindahl-Hirschman Index (HHI) and the n-Firm Concentration Ratio (CRn). Findings- According to the findings obtained from the analyses, it has been stated that the concentration in the JFK International Airport market is high and the competition is low. It has been determined that the majority of the slots are owned by 3 long-established US airlines using the airport as their base airport, and the remaining slots are shared by many airlines. Conclusion- As a result of the study, it is revealed how the historical rights and pool system in the current slot allocation method affect concentration, competition, new entrants to the market and the power of new entrants to increase their shares. Keywords: Airport slot, market concentration, competition, Herfindahl-Hirschman, CRn JEL Codes: B22, D40, L93

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Section: Studies Measuring Competition and Market Concentration In Ai...mentioning

confidence: 99%

The effects of airport slot allocation method on competition: Empirical analysis of competition through slots at JFK International Airport

AVCI¹,

Ateş²

2022

Pressacademia

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“…At the same time, airlines' productivity is closely related to the revenues realized per supplied Heshmati, Kumbhakar and Kim Persistent and Transient Efficiency of International Airlines capacity. Studies by Assaf et al (2009);Graham (1983); Parast and Fini (2010); and Johnson and Ozment (2011) include the load factor in the modelling of airline productivity and efficiency analyses.…”

Section: Airlines' Characteristicsmentioning

confidence: 99%

Persistent and Transient Efficiency of International Airlines

Heshmati

Kumbhakar

Kim

2018

European Journal of Transport and Infrastructure Research

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This paper examines the efficiency of international airlines for the period 1998-2012 using some competing stochastic frontier (SF) panel data models. It estimates a cost function for multi-output airline services, separating passenger and goods transportation at the national and international levels. Our preferred SF model distinguishes airlines heterogeneity from time-invariant persistent inefficiency, and transient (time-varying) inefficiency from random the noise component. This four component SF model is compared with two other competing SF models in which one of the four components is missing. All the models are estimated using the maximum likelihood method. The models give predicted values of persistent, transient and overall efficiency for each airline and time period. The mean and dispersion of cost efficiency amongst airlines differ by model specifications and according to their geographical area of operations. The performance difference may be a consequence of different market structures and deregulation processes and of specific competitive conditions such as resource availability and strategic alliances with competitors. The results confirm that, in general, none of the airlines is able to achieve full cost efficiency. We find that carriers based in the Asia region are more efficient than those operating in the European and North American regions. The bigger airlines are unable to take full advantage of economies of scale and are not more efficient than their smaller cousins.

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“…We used the Herfindahl-Hirschman Index (HHI) to measure changes in hop industry competitiveness by way of measuring market concentration. A similar methodological approach was used to measure market concentration in the airline industry [8]. According to the 2020 U.S. Federal Register, HHI was used to evaluate the acquisition of the Craft Brew Alliance, Inc. (CBA) by Anheuser-Busch InBev SA/NV ("ABI") and Anheuser-Busch Companies, LLC ("AB Companies").…”

Section: Introductionmentioning

confidence: 99%

Proprietary Varieties’ Influence on Economics and Competitiveness in Land Use within the Hop Industry

MacKinnon

Pavlovič

2023

Land

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To evaluate changes to hop industry concentration and competitiveness the Herfindahl-Hirschman Index (HHI) was used. The ownership of hop proprietary varieties, their acreage and production were compared with public varieties. Market share for each proprietary hop variety acreage and production was calculated between 2000 and 2020. The quantity of land under centralized control in the U.S. hop industry due to increased proprietary variety acreage between 2000 and 2020 was quantified. Assuming tacit collusion between the participants in the oligopoly, the HHI enabled us to quantify the portion of land under oligopoly control. The HHI analysis of hop acreage and hop production demonstrated that market concentration rose rapidly between the years 2010 (0.0376 and 0.0729) and 2020 (0.4927 and 0.5394). This resulted in decreasing business competitiveness within the market during this period caused primarily by rapid consolidation of ownership during increased proprietary variety acreage and production increases. Calculations revealed that in 2016 a tipping point had been reached concerning market concentration, which resulted in higher sustained season average prices of hops—a key raw material in brewing.

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Concentration in the airline industry: Evidence of economies of scale?

Cited by 8 publications

References 24 publications

The effects of airport slot allocation method on competition: Empirical analysis of competition through slots at JFK International Airport

The effects of airport slot allocation method on competition: Empirical analysis of competition through slots at JFK International Airport

Persistent and Transient Efficiency of International Airlines

Proprietary Varieties’ Influence on Economics and Competitiveness in Land Use within the Hop Industry

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