IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v111y2018icp101-112.html
   My bibliography  Save this article

Carriers’ entry patterns under EU-US open skies agreement

Author

Listed:
  • Zhang, Shengrun
  • Derudder, Ben
  • Fuellhart, Kurt
  • Witlox, Frank

Abstract

This paper investigates route entry patterns of carriers in the context of the EU-US open skies agreement (OSA). A carrier’s dominance in market share and existing presence at both endpoint airports have positive impacts on route entry. Competitors’ presence at both endpoint airports and route concentration are two significant deterrents of entry. The role of London Heathrow and the establishment of joint ventures within international alliances also show significant impacts, although the effects vary across different markets. Separating transatlantic markets into “new” versus “existing” markets helps disentangling the complex relationships between the OSA and route entry.

Suggested Citation

  • Zhang, Shengrun & Derudder, Ben & Fuellhart, Kurt & Witlox, Frank, 2018. "Carriers’ entry patterns under EU-US open skies agreement," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 101-112.
    • Handle: RePEc:eee:transe:v:111:y:2018:i:c:p:101-112
    DOI: 10.1016/j.tre.2018.01.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554517307342
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2018.01.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Shengrun & Derudder, Ben & Witlox, Frank, 2013. "The impact of hub hierarchy and market competition on airfare pricing in US hub-to-hub markets," Journal of Air Transport Management, Elsevier, vol. 32(C), pages 65-70.
    2. Dobruszkes, Frédéric & Graham, Anne, 2016. "Air transport liberalisation and airline network dynamics: Investigating the complex relationships," Journal of Transport Geography, Elsevier, vol. 50(C), pages 1-3.
    3. Charles Boguslaski & Harumi Ito & Darin Lee, 2004. "Entry Patterns in the Southwest Airlines Route System," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(3), pages 317-350, August.
    4. O'Connor, Kevin & Fuellhart, Kurt, 2013. "Change in air services at second rank cities," Journal of Air Transport Management, Elsevier, vol. 28(C), pages 26-30.
    5. Germa Bel & Xavier Fageda, 2010. "Intercontinental Flights From European Airports: Towards Hub Concentration Or Not?," Articles, International Journal of Transport Economics, vol. 37(2).
    6. David Pitfield, 2011. "The Impact of the EU–US Open Skies Agreement and the Resulting British Airway's Open Skies Initiative: Passenger Numbers in London, Amsterdam and Paris," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 185-197.
    7. Humphreys, Barry & Morrell, Peter, 2009. "The potential impacts of the EU/US Open Sky Agreement: What will happen at Heathrow after spring 2008," Journal of Air Transport Management, Elsevier, vol. 15(2), pages 72-77.
    8. Mayor, Karen & Tol, Richard S.J., 2008. "The impact of the EU–US Open Skies agreement on international travel and carbon dioxide emissions," Journal of Air Transport Management, Elsevier, vol. 14(1), pages 1-7.
    9. Bernardo, Valeria & Fageda, Xavier, 2017. "The effects of the Morocco-European Union open skies agreement: A difference-in-differences analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 98(C), pages 24-41.
    10. Gillen, David & Hinsch, Holger, 2001. "Measuring the economic impact of liberalization of international aviation on Hamburg airport," Journal of Air Transport Management, Elsevier, vol. 7(1), pages 25-34.
    11. Burghouwt, Guillaume, 2014. "Long-haul specialization patterns in European multihub airline networks – An exploratory analysis," Journal of Air Transport Management, Elsevier, vol. 34(C), pages 30-41.
    12. Homsombat, Winai & Lei, Zheng & Fu, Xiaowen, 2014. "Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 1-16.
    13. Sismanidou, Athina & Tarradellas, Joan & Bel, Germà & Fageda, Xavier, 2013. "Estimating potential long-haul air passenger traffic in national networks containing two or more dominant cities," Journal of Transport Geography, Elsevier, vol. 26(C), pages 108-116.
    14. Berry, Steven T, 1990. "Airport Presence as Product Differentiation," American Economic Review, American Economic Association, vol. 80(2), pages 394-399, May.
    15. Federico Ciliberto & Elie Tamer, 2009. "Market Structure and Multiple Equilibria in Airline Markets," Econometrica, Econometric Society, vol. 77(6), pages 1791-1828, November.
    16. Gillen, David & Harris, Richard & Hoon Oum, Tae, 2002. "Measuring the economic effects of bilateral liberalization air transport," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(3-4), pages 155-174, May.
    17. Dunn, Abe, 2008. "Do low-quality products affect high-quality entry? Multiproduct firms and nonstop entry in airline markets," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1074-1089, September.
    18. Morrell, Peter, 2008. "Can long-haul low-cost airlines be successful?," Research in Transportation Economics, Elsevier, vol. 24(1), pages 61-67.
    19. Fu, Xiaowen & Lei, Zheng & Wang, Kun & Yan, Jia, 2015. "Low cost carrier competition and route entry in an emerging but regulated aviation market – The case of China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 3-16.
    20. Kathrin Müller & Kai Hüschelrath & Volodymyr Bilotkach, 2012. "The Construction of a Low‐Cost Airline Network – Facing Competition and Exploring New Markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 33(7-8), pages 485-499, October.
    21. Severin Borenstein, 1989. "Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 344-365, Autumn.
    22. Jia Yan & Xiaowen Fu & Tae Oum, 2008. "Exploring Network Effects of Point-to-Point Networks: An Investigation of the Spatial Entry Patterns of Southwest Airlines," Working Papers 2008-21, School of Economic Sciences, Washington State University.
    23. Frédéric Dobruszkes & Anne Graham, 2016. "Air transport liberalisation and airline network dynamics: Investigating the complex relationships," ULB Institutional Repository 2013/224517, ULB -- Universite Libre de Bruxelles.
    24. Ryerson, Megan S. & Kim, Hyun, 2013. "Integrating airline operational practices into passenger airline hub definition," Journal of Transport Geography, Elsevier, vol. 31(C), pages 84-93.
    25. Maertens, Sven, 2010. "Drivers of long haul flight supply at secondary airports in Europe," Journal of Air Transport Management, Elsevier, vol. 16(5), pages 239-243.
    26. Barrett, Sean D., 2009. "EU/US Open Skies – Competition and change in the world aviation market: The implications for the Irish aviation market," Journal of Air Transport Management, Elsevier, vol. 15(2), pages 78-82.
    27. Kenneth Button & Rui Neiva & Junyang Yuan, 2014. "Economic development and the impact of the EU--US Transatlantic Open Skies Air Transport Agreement," Applied Economics Letters, Taylor & Francis Journals, vol. 21(11), pages 767-770, July.
    28. Button, Kenneth, 2009. "The impact of US–EU “Open Skies†agreement on airline market structures and airline networks," Journal of Air Transport Management, Elsevier, vol. 15(2), pages 59-71.
    29. Evans, William N & Kessides, Ioannis N, 1993. "Localized Market Power in the U.S. Airline Industry," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 66-75, February.
    30. Pitfield, D.E., 2009. "The assessment of the EU–US Open Skies Agreement: The counterfactual and other difficulties," Journal of Air Transport Management, Elsevier, vol. 15(6), pages 308-314.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Li-Hao & Liu, Chunxiao & Zhang, Cheng & Wang, Shanshan, 2023. "Upstream encroachment and downstream outsourcing in competing shipping supply chains," International Journal of Production Economics, Elsevier, vol. 255(C).
    2. Zhang, Li-Hao & Zhang, Yang-Guang & Wang, Shan-Shan, 2022. "Ocean shipping company’s encroachment with outsourcing competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 167(C).
    3. Zhang, Shengrun & Fuellhart, Kurt & Yang, Wendong & Tang, Xiaowei & Witlox, Frank, 2019. "Factors shaping non-stop airline services in the transatlantic air transport market: 2015–2017," Journal of Transport Geography, Elsevier, vol. 80(C).
    4. Soyk, Christian & Ringbeck, Jürgen & Spinler, Stefan, 2021. "Effect of long-haul low-cost carriers on North Atlantic air fares," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    5. Wang, Kun & Tsui, Wai Hong Kan & Li, Lan-Bing & Lei, Zheng & Fu, Xiaowen, 2020. "Entry pattern of low-cost carriers in New Zealand - The impact of domestic and trans-Tasman market factors," Transport Policy, Elsevier, vol. 93(C), pages 36-45.
    6. Atallah, Stephanie & Hotle, Susan L. & Mumbower, Stacey, 2018. "The evolution of low-cost Carrier operational strategies pre- and post-recession," Journal of Air Transport Management, Elsevier, vol. 73(C), pages 87-94.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Shengrun & Fuellhart, Kurt & Yang, Wendong & Tang, Xiaowei & Witlox, Frank, 2019. "Factors shaping non-stop airline services in the transatlantic air transport market: 2015–2017," Journal of Transport Geography, Elsevier, vol. 80(C).
    2. Zhang, Yahua & Sampaio, Breno & Fu, Xiaowen & Huang, Zhibin, 2018. "Pricing dynamics between airline groups with dual-brand services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 112(C), pages 46-59.
    3. Ma, Wenliang & Zhang, Anming & Zhang, Yahua & Xu, Shiteng, 2021. "The growing influence of low-cost carriers in Northeast Asia and its implications for a regional single aviation market," Journal of Air Transport Management, Elsevier, vol. 91(C).
    4. Bilotkach, Volodymyr & Lakew, Paulos Ashebir, 2014. "On sources of market power in the airline industry: Panel data evidence from the US airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 288-305.
    5. Federico Ciliberto & Elie Tamer, 2009. "Market Structure and Multiple Equilibria in Airline Markets," Econometrica, Econometric Society, vol. 77(6), pages 1791-1828, November.
    6. Gayle, Philip G. & Wu, Chi-Yin, 2013. "A re-examination of incumbents’ response to the threat of entry: Evidence from the airline industry," Economics of Transportation, Elsevier, vol. 2(4), pages 119-130.
    7. Federico Ciliberto & Jonathan W. Williams, 2010. "Limited Access to Airport Facilities and Market Power in the Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 53(3), pages 467-495.
    8. Bilotkach, Volodymyr & Kawata, Keisuke & Kim, Tae Seung & Park, Jaehong & Purwandono, Putut & Yoshida, Yuichiro, 2019. "Quantifying the impact of low-cost carriers on international air passenger movements to and from major airports in Asia," International Journal of Industrial Organization, Elsevier, vol. 62(C), pages 28-57.
    9. Suau-Sanchez, Pere & Voltes-Dorta, Augusto & Rodríguez-Déniz, Héctor, 2016. "The role of London airports in providing connectivity for the UK: regional dependence on foreign hubs," Journal of Transport Geography, Elsevier, vol. 50(C), pages 94-104.
    10. Oliveira, Bruno F. & Oliveira, Alessandro V.M., 2022. "An empirical analysis of the determinants of network construction for Azul Airlines," Journal of Air Transport Management, Elsevier, vol. 101(C).
    11. Fu, Xiaowen & Jin, Huan & Liu, Shaoxuan & Oum, Tae H. & Yan, Jia, 2019. "Exploring network effects of point-to-point networks: An investigation of the spatial patterns of Southwest Airlines’ network," Transport Policy, Elsevier, vol. 76(C), pages 36-45.
    12. Wang, Kun & Tsui, Wai Hong Kan & Li, Lan-Bing & Lei, Zheng & Fu, Xiaowen, 2020. "Entry pattern of low-cost carriers in New Zealand - The impact of domestic and trans-Tasman market factors," Transport Policy, Elsevier, vol. 93(C), pages 36-45.
    13. Njoya, Eric Tchouamou & Christidis, Panayiotis & Nikitas, Alexandros, 2018. "Understanding the impact of liberalisation in the EU-Africa aviation market," Journal of Transport Geography, Elsevier, vol. 71(C), pages 161-171.
    14. Wang, Kun & Tsui, Kan Wai Hong & Liang, Liping & Fu, Xiaowen, 2017. "Entry patterns of low-cost carriers in Hong Kong and implications to the regional market," Journal of Air Transport Management, Elsevier, vol. 64(PB), pages 101-112.
    15. Jan Brueckner & Darin Lee & Ethan Singer, 2014. "City-Pairs Versus Airport-Pairs: A Market-Definition Methodology for the Airline Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(1), pages 1-25, February.
    16. Hüschelrath, Kai & Müller, Kathrin & Bilotkach, Volodymyr, 2011. "The construction of a low cost airline network," ZEW Discussion Papers 11-052, ZEW - Leibniz Centre for European Economic Research.
    17. Wang, Kun & Zhang, Anming & Zhang, Yahua, 2018. "Key determinants of airline pricing and air travel demand in China and India: Policy, ownership, and LCC competition," Transport Policy, Elsevier, vol. 63(C), pages 80-89.
    18. , 2023. "Price Competition and Endogenous Product Choice in Networks: Evidence from the US airline Industry," Working Papers 950, Queen Mary University of London, School of Economics and Finance.
    19. Du, Yan & McMullen, B. Starr & Kerkvliet, Joe R., 2008. "The economic impact of the ATA/Southwest Airlines code-share agreement," Research in Transportation Economics, Elsevier, vol. 24(1), pages 51-60.
    20. Kai Huschelrath & Kathrin Muller, 2014. "The Value Of Bluer Skies. – How Much Do Consumers Gain From Entry By Jetblue Airways In Long-Haul U.S. Airline Markets?," Articles, International Journal of Transport Economics, vol. 41(1).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:111:y:2018:i:c:p:101-112. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.