There are many differentiated product industries in which firms offer multiple products in the same market. In making strategic decisions regarding entry, quality and quantity to be supplied for their multiple products firms must consider the competition with rivals as well as cannibalization of their own products that are close substitutes. In this setting, understanding the relationship between the behavior of consumer demand and firms decisions' regarding product characteristics and strategic variables like advertising are fundamental issues in industrial organization. This dissertation empirically explores these fundamental issues in the pharmaceutical and airline industries. The first paper of my dissertation estimates consumer demand for different anti-cholesterol drugs using panel data on a nationally representative sample of individuals who were diagnosed with cholesterol problems in the period 1996-2002. The data provides detailed information on individuals' medical conditions, medical and drug insurance coverage, drug purchases (if any), and other demographic and medical information. Individuals choose whether to purchase an anti-cholesterol rug and, if so, which drug to buy. The model permits flexible substitution patterns among drug choices and persistence in those choices by incorporating both observed and unobserved consumer heterogeneity. The estimates suggest that lower income patients without prescription drug insurance are very price sensitive: they are less likely to use drugs and, if they do use them, they tend to purchase the less expensive drugs. I find that roughly 500 thousand individuals without drug insurance who are currently not purchasing anti-cholesterol drugs would do so in the counterfactual world in which they are given the standard co-payment plan. The second paper also looks at consumer demands for anti-cholesterol drugs. While the first paper focused on the differentiated products, this paper explores the market expansion effects of direct-to-consumer advertising (DTCA). The study combines the individual data used in the first paper with monthly expenditure data on DTCA for the period 1996-2002. The dynamic demand model estimated in this paper explores the heterogeneous effects of DTCA. Overall, I find a positive effect from DTCA with short term elasticity of 0.107. Through persistence in consumer demand this effect lasts over multiple time periods. I find that individuals not taking a cholesterol drug respond more to advertising than those on the drug. In addition, I find that less educated individuals, those that may be unaware of their health condition, and those without health insurance are most responsive to DTCA. Finally, the third paper studies the effect of product ownership and quality on entry in the airline industry. Specifically, this paper empirically examines the decision of an airline to offer high quality nonstop service between cities given that the airline may or may not be offering lower quality one-stop service. I find that airlines that offer one-stop service through a hub are less likely to enter that same market with nonstop service than those that do not. In addition, the quality of the one-stop service is another determinant of entry. Airlines are more likely to enter a market with nonstop service if their own or their rival's one-stop service in the market are of lower quality. / text

By today’s date there are a lot of companies that are in great need of restructuring their paperwork in a more organized way. This can be excellent arranged with the help of properly constructed computer software. The aviation industry is no exception, but actually a good example of this. Täby Air Maintenance (TAM) is a company which is situated in Örebro. Their main business is aircraft maintenance on a variety of aircraft models. TAM has so far handled their work by hand or with the help of a majority of small computer programmes. The information has now become too abundant and the different kinds of software being used are no longer a working tool for the company. There is therefore a demand for an exhaustive programme which has the capacity to take care of all parts in logistics and production. The purpose is to examine and evaluate three different makes of software and form a recommendation to TAM of which one suits their needs the best. The software was Airsoft, MX System and System Airline Management (SAM). The evaluation has been performed with the help of demo versions of the programmes, manuals and support from contacts at the different manufacturers. The programmes were initially dealt with one at a time and then compared towards each other and towards the demands from TAM. The software which in the end was recommended was SAM, and the decision was based on a number of reasons. The main reason was the user friendliness of the software - the fact that its logical structure makes it easy for its user to swiftly understand the concept and thus learn how to use it quickly. This results in profits, both in time and money. / Idag är många företag i trängande behov av att strukturera upp sitt pappersarbete på ett mer ordnat sätt. Detta kan ske på ett effektivt sätt med ett anpassat och ändamålsenligt strukturerat datorprogram. Flygbranschen är inget undantag, snarare ett bra exempel på detta. Täby Air Maintenance (TAM) är ett företag som är beläget i Örebro och utför underhåll på flygplan i varierande storlek. TAM har hittills skött arbetet för hand och med hjälp av ett flertal mindre datorprogram. Informationen har dock blivit alldeles för omfångsrik och de olika programmen är inte längre ett fungerande instrument för verksamheten. Det krävs därför ett heltäckande program som har kapaciteten att ta hand om alla delar, såväl logistik som produktion. Syftet är att undersöka tre olika program och ge en rekommendation på det som passar företaget bäst. Programmen är Airsoft, MX System och System Airline Management (SAM). Undersökningen har utförts med hjälp av demoversioner, manualer och stöd från kontaktpersoner hos tillverkarna. Programmen undersöktes först var för sig och därefter jämfördes de mot varandra och mot TAMs krav. Det program som rekommenderades var SAM. Detta beror på en mängd orsaker, där den främsta orsaken var programmets användarvänlighet - det faktum att dess logiska uppbyggnad gör det lätt för användaren att snabbt kunna sätta sig in i strukturen och därmed lättare kunna lära sig att använda det. Detta i sin tur ger vinster i både tid och pengar.

This dissertation investigates the economic consequences from hedge accounting signals and risk management disclosure. I first examine the product market consequences to these accounting signals and related disclosure in Chapter 1, then stock market reactions to disclosure requirements in Chapter 2. Chapter 1 examines potential entrants’ strategic entry decisions in response to incumbents’ accounting information and related disclosure. I predict that potential entrants are more likely to enter markets in which the incumbents’ accounting information suggests higher future production costs that are specific to the incumbents themselves. I further hypothesize that the relation is stronger when the accounting signals are accompanied by more disclosure. Using detailed U.S. airline industry data and hedge accounting disclosure under SFAS 133, I find that potential entrants are more likely to enter routes in which the incumbents’ lower accumulated other comprehensive income from fuel hedges suggests their higher future production costs. This entry pattern is stronger when incumbents have more transparent annual report disclosure regarding their fuel hedge programs. The entry pattern is also stronger after a systematic increase in risk management disclosure requirements following the (exogenous) adoption of SFAS 161. Chapter 2 analyzes stock returns of U.S. airlines around events leading up to the adoption of SFAS 161. SFAS 161 enhanced the disclosure requirements for derivatives and hedging activities. I find that U.S. airlines experienced statistically significant positive returns around the key events leading up to the adoption of SFAS 161. I then examine the cross-sectional variation of the returns around these events. Regression results provide initial support for the real effects theory that greater disclosure requirements could distort firms’ hedging and production decisions and lead to suboptimal behavior. In summary, this dissertation provides evidence that competitors use hedge accounting signals and related disclosure in making product market decisions. Meanwhile, additional risk-management disclosures may also distort firms’ hedging and production behavior, leading to suboptimal decisions. This dissertation sheds light on the ongoing projects by the FASB and the IASB on hedge accounting and disclosure and informs the regulators that costs and benefits should be weighted in hedge accounting policy setting.

Although the airline industry has drastically changed since its deregulation in 1978, publically available sources of data have remained nearly the same. In the U.S., most researchers and decision-makers rely on government data that contains highly aggregated price information (e.g., average quarterly prices). However, aggregate data can hide important market behavior. With the emergence of online distribution channels, there is a new opportunity to model air travel demand using detailed price information. This dissertation uses online prices and seat maps to build a dataset of daily prices and bookings at the flight-level. Several research contributions are made, all related to leveraging online data to better understand airline pricing and product strategies, and how these strategies impact customers, as well as the industry in general. One major contribution is the finding that the recent product debundling trend in the U.S. airline industry has diluted revenues to the U.S. Airport and Airways Trust Fund by at least five percent. Additionally, several new behavioral insights are found for one debundling trend that has been widely adopted by U.S. airlines: seat reservation fees. Customers are found to be between 2 and 3.3 times more likely to purchase premium coach seats (with extra legroom and early boarding privileges) when there are no regular coach window or aisle seats that can be reserved for free, suggesting that the ability of airlines to charge seat fees is strongly tied to load factors. Model results are used to explore optimal seat fees and find that an optimal static fee could increase revenues by 8 percent, whereas optimal dynamic fees could increase revenues by 10.2 percent. Another major contribution is in modeling daily bookings and estimating price elasticities using ordinary least squares (OLS) regression without correcting for price endogeneity and two-stage least squares (2SLS) regression, which corrects for endogeneity. Results highlight the importance of correcting for price endogeneity (which is not often done in air travel applications). In particular, models that do not correct for endogeneity find inelastic demand estimates whereas models that do correct for endogeneity find elastic demand estimates. This is important, as pricing recommendations differ for inelastic and elastic models. A set of instrumental variables are found to pass validity tests and can be used to correct for price endogeneity in future models of daily flight-level demand.

This dissertation investigates the economic consequences from hedge accounting signals and risk management disclosure. I first examine the product market consequences to these accounting signals and related disclosure in Chapter 1, then stock market reactions to disclosure requirements in Chapter 2. Chapter 1 examines potential entrants’ strategic entry decisions in response to incumbents’ accounting information and related disclosure. I predict that potential entrants are more likely to enter markets in which the incumbents’ accounting information suggests higher future production costs that are specific to the incumbents themselves. I further hypothesize that the relation is stronger when the accounting signals are accompanied by more disclosure. Using detailed U.S. airline industry data and hedge accounting disclosure under SFAS 133, I find that potential entrants are more likely to enter routes in which the incumbents’ lower accumulated other comprehensive income from fuel hedges suggests their higher future production costs. This entry pattern is stronger when incumbents have more transparent annual report disclosure regarding their fuel hedge programs. The entry pattern is also stronger after a systematic increase in risk management disclosure requirements following the (exogenous) adoption of SFAS 161. Chapter 2 analyzes stock returns of U.S. airlines around events leading up to the adoption of SFAS 161. SFAS 161 enhanced the disclosure requirements for derivatives and hedging activities. I find that U.S. airlines experienced statistically significant positive returns around the key events leading up to the adoption of SFAS 161. I then examine the cross-sectional variation of the returns around these events. Regression results provide initial support for the real effects theory that greater disclosure requirements could distort firms’ hedging and production decisions and lead to suboptimal behavior. In summary, this dissertation provides evidence that competitors use hedge accounting signals and related disclosure in making product market decisions. Meanwhile, additional risk-management disclosures may also distort firms’ hedging and production behavior, leading to suboptimal decisions. This dissertation sheds light on the ongoing projects by the FASB and the IASB on hedge accounting and disclosure and informs the regulators that costs and benefits should be weighted in hedge accounting policy setting.

The aviation industry is undeniably playing a very significant role in our day-to-day life. A vast and inter-connected web of flights ensures swift passenger travel and cargo traffic. However, in the name of security, otherwise intrinsic technicalities tend now not only to hinder on further development of aviation facilitation but also take over and lead towards the exact opposite result. What are the current measures taken by the international community to streamline passenger travel? What are the new initiatives which ought to be implemented? How is the future of aviation facilitation going to look like? How is it going to affect air travel and what legal implications is it rising? Throughout this thesis we will present the legal framework applicable to aviation facilitation and discuss the main initiatives that are being considered by ICAO and IATA in this respect. While Facilitation and Security should be considered as "two faces of the same coin", in reality they appear to "compete" against each other. Hence, we will provide our arguments in support of this theory.

As you probably know, to board the B777-300ERi in Geneva for Anchorage via London, is not just that simple. With your ticket you bought several days before, you come to the airport, check in, pay airport's fees, go through the customs and security checks, walk in the terminal following signs, maybe you stop in the duty free shops, and finally find your gate. By this time, you are ready to board, about one hour after you enter the airport. / We will be essentially interested in air law that is why, the purpose of this master's thesis is to consider the legal aspect of facilitation in civil aviation. The term facilitation refers to the process that passengers, crew, luggage, cargo and mail have to go through when they cross borders to fly from a point A to a point B. / Recently, an aspect of facilitation took an outstanding importance: health issues. At the end of last year, the Severe Acute Respiratory Syndrome (SARS) outbreak was a real threat to international civil aviation because passengers (and crews) could have been exposed to an infected person inside the terminal or on board the plane, also, aircrafts were considered a fast vector of this disease through the world. The economic consequences for airlines and airports were very painful. / iBoeing 777-300 Extended Range.

Thesis (Ph. D.)--Miami University, Dept. of Political Science, 2008. / Title from second page of PDF document. Includes bibliographical references (p. 152-162).

abstract: Revenue management is at the core of airline operations today; proprietary algorithms and heuristics are used to determine prices and availability of tickets on an almost-continuous basis. While initial developments in revenue management were motivated by industry practice, later developments overcoming fundamental omissions from earlier models show significant improvement, despite their focus on relatively esoteric aspects of the problem, and have limited potential for practical use due to computational requirements. This dissertation attempts to address various modeling and computational issues, introducing realistic choice-based demand revenue management models. In particular, this work introduces two optimization formulations alongside a choice-based demand modeling framework, improving on the methods that choice-based revenue management literature has created to date, by providing sensible models for airline implementation. The first model offers an alternative formulation to the traditional choice-based revenue management problem presented in the literature, and provides substantial gains in expected revenue while limiting the problem’s computational complexity. Making assumptions on passenger demand, the Choice-based Mixed Integer Program (CMIP) provides a significantly more compact formulation when compared to other choice-based revenue management models, and consistently outperforms previous models. Despite the prevalence of choice-based revenue management models in literature, the assumptions made on purchasing behavior inhibit researchers to create models that properly reflect passenger sensitivities to various ticket attributes, such as price, number of stops, and flexibility options. This dissertation introduces a general framework for airline choice-based demand modeling that takes into account various ticket attributes in addition to price, providing a framework for revenue management models to relate airline companies’ product design strategies to the practice of revenue management through decisions on ticket availability and price. Finally, this dissertation introduces a mixed integer non-linear programming formulation for airline revenue management that accommodates the possibility of simultaneously setting prices and availabilities on a network. Traditional revenue management models primarily focus on availability, only, forcing secondary models to optimize prices. The Price-dynamic Choice-based Mixed Integer Program (PCMIP) eliminates this two-step process, aligning passenger purchase behavior with revenue management policies, and is shown to outperform previously developed models, providing a new frontier of research in airline revenue management. / Dissertation/Thesis / Doctoral Dissertation Industrial Engineering 2016

Esta pesquisa trata o Problema de Programação de Tripulantes (PPT), presente no planejamento operacional das empresas aéreas. O principal objetivo do PPT é atribuir um conjunto de tarefas aos tripulantes, considerando as regulamentações trabalhistas, as regras de segurança e as políticas das empresas, de tal maneira que o custo da tripulação seja mínimo. O PPT é normalmente dividido em dois subproblemas, resolvidos sequencialmente: Problema de Determinação das Viagens (PDV) e Problema de Atribuição de Escalas (PAE). No PDV, determina-se um conjunto de viagens que cubra todos os voos planejados. Em seguida, no PAE, as escalas, compostas pelas viagens escolhidas e outras atividades como folgas, sobreavisos, reservas, treinamentos e férias, são atribuídas aos tripulantes. Esta decomposição justifica-se pela natureza combinatória do PPT, porém não incorpora as disponibilidades e as preferências dos tripulantes em ambos os subproblemas (PDV e PAE), gerando assim custos extras relacionados aos conflitos que surgem durante a atribuição das escalas aos tripulantes no PAE. Além disso, as estimativas de custos adotadas no PDV não possuem caráter global, já que o custo real da programação só pode ser obtido após a atribuição das escalas. O estado da arte envolve a solução integrada do PPT, em que se elimina a necessidade de resolver inicialmente o PDV, provendo assim uma melhor estimativa de custo e uma programação final com melhor qualidade, por considerar os custos da tripulação, as disponibilidades e preferências dos tripulantes de forma global. O problema, no entanto, é NP-Difícil. Assim sendo, a metodologia proposta nesta pesquisa objetiva a solução do PPT de forma integrada, através de um Algoritmo Genético Híbrido (AGH) associado a um procedimento de busca em profundidade, levando em conta as particularidades da legislação brasileira. A metodologia foi testada, com sucesso, para a solução de instâncias baseadas na malha real de uma empresa aérea brasileira. / This master of science research treats the Crew Scheduling Problem (CSP), as part of the airlines operational planning. The main aim of the CSP is to assign a set of tasks to crew members, considering the labor regulations, safety rules and policies of companies, such that the crew cost is minimal. The CSP is divided into two subproblems, solved sequentially: Crew Pairing Problem (CPP) and Crew Rostering Problem (CRP). First, CPP provides a set of pairings that covers all the planned flights. Then, in the CRP, the rosters, encompassing the pairings and other activities such as rest periods, alert duties, reserve duties, training times and vacations, are assigned to the crew members. This decomposition is justified by the combinatorial nature of the CSP, but it not incorporates the crew members availabilities and preferences in both subproblems (CPP and CRP), generating extra costs related to conflicts that arise during the assignment of rosters to the crew members in the CRP. Besides, the costs estimations adopted in the CPP does not have a global character, since the real cost of the global schedule can be only obtained after the assignment of the rosters. The state of the art involves the integrated solution of CSP, where the CPP does not need to be solved, thus providing a better estimated cost and a better schedule quality, considering crew costs and also crew members availabilities and preferences globally. The problem, however, is NP-Hard. Therefore, the methodology proposed in this master of science research aims to obtain an integrated solution of the CSP, through an hybrid algorithm genetic associated with a depth-first search procedure, taking into account the Brazilian legislation. The methodology was tested, with success, to solve instances related a real network of a Brazilian airline.