An aggregate demand model for domestic airlines

Ghobrial, Atef

doi:10.1002/atr.5670260203

Cited by 12 publications

(4 citation statements)

References 7 publications

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“…If the most liquidityconstrained airlines are always initiating rate hikes, they are never in a position to match. 12 Overall, our findings suggest that competition weakens and cooperation increases as industry financial distress increases. In the case of airfare rate hikes, which are costly to initiate, this manifests itself in the most desperate airlines initiating the hikes and the rest of the industry being more likely to follow suit when they are financially distressed.…”

Section: Resultsmentioning

confidence: 68%

“…On the surface, our findings are at odds with the existing evidence on financial condition and airline pricing. Using data spanning 1985-1992and 1997-2008, Borenstein and Rose (1995, Busse (2002), and Phillips and Sertsios (2013) find that financial distress is associated with more competitive pricing because distressed firms benefit most from the immediate revenues generated from cutting prices. The theory of Staiger and Wolak (1992) rationalizes this apparent inconsistency by showing that the benefits of price wars are increasing in idle capacity.…”

Section: Introductionmentioning

confidence: 99%

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Financial Condition and Product Market Cooperation

Gustafson

Ivanov

Ritter

2014

FEDS

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We provide evidence that existing studies relating financial condition to product market cooperation produce mixed results because of unique features of the industries examined. In particular, all evidence suggesting that poor financial condition decreases cooperation comes from the airline industry during periods of high idle capacity. Using a unique data set of aggregate airfare hikes and a more recent low-idle-capacity period, we find that poor financial condition is positively associated with product market cooperation. Although financially weak airlines appear to value the immediate cash flows of increased cooperation, only liquidity-constrained firms seem willing to incur the cost of cooperative attempts.

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Section: Resultsmentioning

confidence: 68%

Section: Introductionmentioning

confidence: 99%

Financial Condition and Product Market Cooperation

Gustafson

Ivanov

Ritter

2014

FEDS

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“…This complicates the choice of the most appropriate measure and hampers the simultaneous use of similar variables in econometric analysis. Ghobrial (1992) studies the effects of some network characteristics over the aggregated airline's demand and find some "instability" in the estimated coefficients, largely due to the correlation among the network characteristics. For these reasons, we propose to apply a PCA on the most common graph theory measures used in the literature to build tractable indicators.…”

Section: Literature Reviewmentioning

confidence: 99%

Measuring the development of airline networks: Comprehensive indicators

Roucolle

Seregina

Urdanoz

2020

Transportation Research Part A: Policy and Practice

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The literature on airlines presents few studies analyzing the airlines network evolution. We believe that this gap is due to the difficulty of capturing the network complexity in a simple manner. This paper proposes new simple and continuous indicators to measure the airlines' network structure. The methodology to build them is based on graph theory and principal component analysis. We apply this approach to the US domestic market for 2005-2018, and obtain three network indicators. The first one measures how close the network is to a single-center structure. The second indicator measures the airline's ability to provide alternative routes. The third indicator captures the network size. We analyze the indicators evolution across time and show their robustness under different scenarios.

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“…If location B produces/generates something that location A requires, then an interaction is possible because a supply/ demand relationship has been established between those two locations; they have become complementary to one another. The same applies in the other direction (A to B), which creates a situation of reciprocity common in commuting or international trade [16].…”

Section: Theory Of Spatial Interaction In International Air Transportmentioning

confidence: 99%

The Dynamics for Evaluating Forecasting Methods for International Air Passenger Demand in Nigeria

Adeniran¹,

Ms²

2018

J Tourism Hospit

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This paper examines the dynamics for evaluating different forecasting methods for international air passenger demand in Nigeria. It achieved the objectives by forecasting international air passenger demand in the year 2018 using two single moving average, four single moving average and six single moving average; the same forecast was also achieved by using simple exponential smoothing, with smoothing constants of 0.7, 0.8, and 0.9 respectively. The most appropriate forecasting method was determined by comparing all the single moving averages with exponential smoothing. This study is very essential to airport management, airline management, concessionaires of aeronautical and non-aeronautical services, third-parties, government agencies and ministries, economic regulators, transport policy analysts and planners, and other concerned agencies, for accurate planning which affect the overall operations of international air transport movement and help to prevent problems of having excess air transport demand over air transport supply or having excess air transport supply over demand particularly in the international level. The data involved for this study was between the periods of year 2001 to year 2017, meanwhile single moving average and simple exponential smoothing were the quantitative forecasting methods adopted for forecasting, the two forecasting methods were compared using Mean Squared Deviation (MSD). It was revealed that the MSD of exponential smoothing with constant 0.8 appears to give the best year 2018 forecast as it has a lower MSD when compared to the MSD of the other forecasts.

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An aggregate demand model for domestic airlines

Cited by 12 publications

References 7 publications

Financial Condition and Product Market Cooperation

Financial Condition and Product Market Cooperation

Measuring the development of airline networks: Comprehensive indicators

The Dynamics for Evaluating Forecasting Methods for International Air Passenger Demand in Nigeria

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