The dynamics of airline deregulation have resulted in significant changes in airline competition and network structure. This dissertation examines airline competition and network structures in the presence of low-cost entry in a deregulated environment. / The first chapter investigates the effect of low-cost entry on the equilibrium network choice of a monopolistic air carrier. This essay differs from previous analyses in that it incorporates asymmetric city sizes, and distances as a determinant of costs into the model. Numerical exercises illustrate that the threat of entry may result in an entry accommodating, an entry deterring or even an interlining equilibrium, depending on demand and cost conditions and on the level of fixed costs of connecting city pairs. In particular, when the demand in city-pair markets are identical and cities are equal distance apart, the monopolist restructures its network in an attempt to minimize the competitive effect of entry. If demands vary across city pairs and distance is a factor of cost, then the restructuring of the network may be an entry deterring strategy. The incorporation of distance not only influences the number of direct connections between city pairs but may also affect how city pairs are connected within the network. / In Essay Two the model is extended to a duopolistic airline market in which network structures are endogenously determined by the competition between two incumbent airlines; numerical exercises are then used to demonstrate how the threat of entry by a low-cost airline affects the network choices of these incumbent carriers. The main result of the essay is that, in many situations, incumbent carriers restructure their networks in order to compete with potential entrants. The results indicate that incumbents' response to the threat of entry depends on the potential entrant's cost advantage and on the fixed costs of connecting city pairs. In particular, if the fixed costs of connecting city pairs are low and the cost advantage of the entrant is significant then entry may not affect the network structure of incumbent carriers. However, at higher fixed costs at least one incumbent will adjust its network in an attempt to soften the competitive effect of entry. Furthermore, the numerical exercises show that the threat of entry not only affects the equilibrium network structure but may also result in one incumbent leaving the industry and the potential entrant actually entering. / Essay Three studies network competition and welfare implications in partially and fully liberalized transatlantic markets using the model developed in Essay Two. This essay illustrates some conditions under which the price and welfare effects of an open-skies agreement depend on the equilibrium network choice of the competing airlines. In particular, network choices of airlines may result in higher prices on some transatlantic routes and if pre-liberalized domestic markets are competitive price reductions on domestic routes could be negligible. Another finding is that the opening of transatlantic markets mainly redistribute airlines' market shares and as a result the expected increase in passenger traffic may not be realized.

When a customer requests a discount fare, the airline must decide whether to sell the seat at the requested discount or to hold the seat in hope that a customer will arrive later who will pay more. I model this situation for a single leg flight with multiple fare classes and customers who arrive according to a semi-Markov process (possibly nonhomogeneous). These customers can request multiple seats (batch requests) and can be overbooked. Under certain conditions, I show that the value function decreases as departure approaches. If each customer only requests a single seat or if the requests can be partially satisfied, then I show that there are optimal booking curves which decrease as departure approaches. I provide counterexamples to show that this structural property of the optimal policy does not hold in general. When customers are allowed to cancel I show that booking curves exist and may be monotone in certain cases. I also consider the situation where the customer's request size and fare offered are not known, but their joint probability distribution is available, and show that under certain conditions existence of booking curves obtains, and that under further assumptions, they are monotone. Finally, the theoretical results are used in realistic numerical examples, which are compared to certain deterministic upper bounds and revenues obtained under heuristic policies. The airline yield management problem described above is an instance of a generic revenue management problem, which, in turn, can be cast into a finite horizon semi-Markov dynamic optimal control problem. I provide examples of other applications of revenue management.

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Thesis (Ph.D (Faculty of Engineering, Built Environment and Information Technology)) -- Univerersity of Pretoria, 2008. / Includes bibliographical references.

Thesis (M.B.A.)--University of Hong Kong, 1996. / Includes bibliographical references (leaf 114-119).

Thesis (M.B.A.)--University of Hong Kong, 1996. / Includes bibliographical references (leaf 135).

Thesis (M.B.A.)--University of Hong Kong, 1998. / Includes bibliographical references (leaf 115-119).

Thesis (M.S.)--Rochester Institute of Technology, 1993. / Typescript. Includes bibliographical references (leaves 75-95).

When a customer requests a discount fare, the airline must decide whether to sell the seat at the requested discount or to hold the seat in hope that a customer will arrive later who will pay more. I model this situation for a single leg flight with multiple fare classes and customers who arrive according to a semi-Markov process (possibly nonhomogeneous). These customers can request multiple seats (batch requests) and can be overbooked. Under certain conditions, I show that the value function decreases as departure approaches. If each customer only requests a single seat or if the requests can be partially satisfied, then I show that there are optimal booking curves which decrease as departure approaches. I provide counterexamples to show that this structural property of the optimal policy does not hold in general. When customers are allowed to cancel I show that booking curves exist and may be monotone in certain cases. I also consider the situation where the customer's request size and fare offered are not known, but their joint probability distribution is available, and show that under certain conditions existence of booking curves obtains, and that under further assumptions, they are monotone. Finally, the theoretical results are used in realistic numerical examples, which are compared to certain deterministic upper bounds and revenues obtained under heuristic policies. The airline yield management problem described above is an instance of a generic revenue management problem, which, in turn, can be cast into a finite horizon semi-Markov dynamic optimal control problem. I provide examples of other applications of revenue management. / Business, Sauder School of / Graduate

No description available.