Thesis (Ph. D.)--Industrial & Systems Engineering, Georgia Institute of Technology, 2007. / Dr. Dirk Gunther, Committee Member ; Dr. Hayriye Ayhan, Committee Member ; Dr. Ellis L. Johnson, Committee Chair ; Dr. Pinar Keskinocak, Committee Co-Chair ; Dr. Julie Swann, Committee Member

D.Comm. / Economic conditions in deregulated domestic air transport markets developed differently from what was originally anticipated and the commercial conduct of airlines also differed from the conduct foreseen at the time of deregulation. The result was also different from what governments that had implemented air transport policies based on economic deregulation had expected. The overall result in such deregulated market was more consolidation and less competition than had originally been anticipated. It has been established that market access by means of economic deregulation is not sufficient to ensure a competitive domestic air transport market. Certain regulatory steps need to be taken to promote competition in the domestic air transport industry. It was established that competition in the airline industry differs from competition in many other industries in the following respects: •Airlines compete over networks. •Airlines compete using multiple competitive tools. •The air transport industry, as a network industry, has fundamentally different characteristics from those of the other industries on which traditional classic microeconomic models have been based. Apart from supply side efficiencies that are central in the traditional microeconomic models, the demand side effects within the airline industry have given rise to many of the commercial practices that the airlines have perfected (like loyalty programmes, including FFPs). These commercial practices have been designed to raise the switching costs for users of air services to change suppliers and to reduce the level of competition for the preferred customers. This would have to be taken into account in the formulation of policy. It was found that certain economic features of network industries, however, are also applicable in the airline industry and that this creates competition concerns as a result of the following features: •The bigger the network of an airline, the more useful it is. •The demand for air services on a particular airport-pair, city-pair, or even country-pair is derived from a multitude of separate origin/destination markets - a fact which creates a need for complex market definitions in airline competition. •The “indivisibility” of seating capacity on aircraft and of the deployment of aircraft within route networks can result in extremely low short-run marginal costs, with consequent difficulties in applying competition law to cases involving allegations of predatory pricing. •Many of the costs are sunk and unrecoverable once they are committed. •There is a history relating to cyclical provision of an overall excess capacity in the industry. Economies of scope in the airline industry clearly indicate that a larger network of services would be more attractive to the traveller, since the traveller will have more destinations and frequency of services to choose from and have a larger probability of finding a suitable connection from the passenger’s particular origin to any given destination. In particular, on a firm level, it has been found that economies of scope on the demand side are intensified by certain airline marketing practices including: •Frequent flyer programmes (FFPs). •Travel agent overriding commission agreements (TACOs). •Corporate discount schemes. The above create synthetic economies of scope on the demand side of the airline industry as they make it more attractive for passengers and travel agents to concentrate their demand on one airline and increase the loyalty of the customers towards the airline through an artificial increase in the switching costs. Predatory behaviour in the airline industry differs from such behaviour in other industries, where it mostly revolves around the approach of predatory pricing, as the increase of the provision of capacity cannot normally be implemented or dispersed as rapidly in other industries as in the airline industry. The air transportation industry was found to be especially susceptible to predatory responses of dominant airlines compared to dominant firms in other industries owing to the following factors: •Mobility of aircraft, as incumbents incur virtually no additional sunk costs when they increase capacity on challenged routes, while new entrants can be readily induced to depart because of their ability to move their equipment out of particular routes. As a result, network airlines can shift resources between markets much more readily to increase service frequency and capture a disproportionate share of traffic. •Access of airlines to comprehensive, “real time” information on their competitors’ activities through booking and other data generated by computer reservations systems (CRS). •Extreme sophistication of the yield-management practices of the major airlines using CRS, which enables such airlines to increase sharply the availability of deeply discounted fares on individual routes in response to competitive challenge and to withdraw them when the challenge disappears. •Ability of a major airline to price-discriminate to a much greater extent and to adjust its prices much faster in advance of flights actually taking place. As a result, airlines can respond to competitive initiatives more precisely and swiftly than enterprises in other industries, which implies that the competition rules should take cognisance of the differences in the commercial practices of airlines in the air transportation industry compared to those of enterprises in other industries. A number of problems relating to the competition policy and legislation in South Africa have been identified. They included the following: •Prohibited agreements are not immediately void in terms of the South African Competition Act. •Applying a narrow cost based standard of marginal or average variable cost is inappropriate for the airline industry in South Africa when compared to the principle of avoidable cost. •No specific guidance currently exists in the domestic air transport industry in South Africa relating to the particular forms of conduct that would be regarded as having an anti-competitive effect. •No measures currently exist in South Africa that enable the competition authorities to respond timeously (as required in the airline industry) to prevent anti-competitive or predatory conduct, to stop such conduct (in contravention of those guidelines) by means of cease and desist orders and effective interim orders where there is a danger that competition will be eliminated. •The dominant airline in South Africa, South African Airways (SAA), which is owned by the State, has not achieved an adequate return on assets and has received substantial financial state aid without any published conditions that would mitigate the anti-competitive effect of such state aid and promote competition in the air transport market. The risk of such state aid could enable the dominant state-owned airline, SAA, to: Deploy too much capacity on an uneconomical basis. Operate many services (frequency) at a lower income level than the cost of providing such services. Dump excess capacity on competitive routes at a lower fare than needed to provide a reasonable return on assets, and Conduct operations with the objective of earning a lower return on investment than would be required as a reasonable return on assets by competitors that are subject to normal financial markets and do not receive state financial aid. This study specifically dealt with: •The specific commercial practices adopted by airlines in domestic passenger air transport markets as well as the use of a combination of commercial practices in an anti-competitive or predatory manner. Some measures adopted elsewhere to mitigate the anti-competitive effect of such commercial practices and to stimulate competition following economic deregulation or liberalisation of such domestic air transport markets were identified. •Most importantly, the occurrence of anti-competitive conduct as well as predatory behaviour by airlines was investigated: generally, and specifically in the United States of America (USA) as well as in Canada. It was found that, in particular, predatory conduct in the airline industry that involves price cuts combined with significant capacity expansion by dominant incumbent airlines appears to be the most troublesome in domestic air transport industries in respect of a number of jurisdictions. In addition, it was established that incumbent airlines also conduct predatory actions in response to new entry by using tools other than price and quantity. An important recommendation is that a policy objective approach should be adopted to enhance or promote competition as criteria for regulatory consideration in the South African domestic air transport market. In this regard, the recommendations include an active involvement by the Department of Trade and Industry (DTI) in matters affecting competition in the South African domestic air transport market and that the Competition Commission, the Commissioner of Competition and the Competition Tribunal be given greater authority to specifically deal with particular aspects of concern relating to the air transport market. Recommendations have also been made relating to competition policy, competition legislation and some commercial practices within the domestic air transport industry in order to promote competitiveness in the South African domestic air transport industry. / Prof. J. Walters

Zugl.: Hamburg, University, Diss., 2006.

Written for the Institute of Air and Space Law. Title from title page of PDF (viewed 2010/04/14). Includes bibliographical references.

Thesis (M.B.A.)--University of Hong Kong, 1996. / Includes bibliographical references (leaf 61-65).

Thesis (MBA)--Stellenbosch University, 2004. / ENGLISH ABSTRACT: This qualitative study is anchored on Jim Collins' business bestseller entitled, "Good to Great: Why Some Companies Make the Leap ... & Others Don't". It draws on its main business paradigms and models designed to help firms to make the quantum leap from not only being "good", but to become "great" world class performers and brands if they follow his dictums and business advocacy in overcoming obstacles and archaic business thinking. I have chosen for this dissertation, South Africa's latest low~cost carrier (Lee), "I Time", which has just entered this lucrative but highly competitive aviation industry dominated by SAA and with a small market share fought over by Kulula, the very first Lee challenger. It is a 000- empirical case study as it is focused on 1 Time and with a solo interview drawn from Glenn Orsmond and augmented by research data glimpsed from the company and also the media and other sources. After the introduction and overview, from Chapter 3 onwards, in each of the chapters, my approach is to highlight the Collins key business models [and in some cases, interspersed with other models drawn from other business writers] that help companies to migrate from good to great covering such determinants as leadership, corporate culture, human asset, technology, competitive strategies and so on. This is then interwoven with the strategic thoughts of Glenn Orsmond, the CEO of "1 Time" low·cost budget carrier whom I managed to interview for this thesis and supplemented with my own research inputs and analysis. I conclude this study with highlights and recommendations as to how "I Time" can achieve this long-term objective, as it is a new entrant and challenger, hence riding the learning curve and competing with the traditional carrier, SAA as well as Kulula, the major Lee. The challenge now is for 1 Time to enter into the "Good" loop and then take drastic as well as incremental steps to migrate to "Great," the highest aspiration for companies that are prepared for long term survival built on a lasting set of strategies. Collins has termed good as the nemesis of great and thus entrepreneurs and CEOs need to have a deep understanding of the underlying principles and determinants in their great leap forward by thinking aloud that good is merely average. / AFRIKAANSE OPSOMMING: Die volgende kwalitatiewe studie is gebaseer op die topverkoper van Jim Collins getiteld. "Good to Great: Why some companies make the leap ... & others don't" USA: Harpers Business 2001. Die uitsprake en besigheidsbeginsels van Collins help besighede om die brug tussen "goed" en "onverbeterlik" te oorbrug. As die inhoud van bogenoemde uitsprake en besigheidverbeteringe en aanbevelings nagekom word, sal verouderde besigheiddenke en ander struikelblokke verwyder word sodat die volgende stelling van pas is. Ek het vir hierdie proefskrif "I Time", Suid-Afrika se nuutste lae koste vlug vrag draer gekies. "1 Time" het so pas hierdie winsgewende en hoogs kompeterende mark betree, wat tot dusver gedomineer is deur SAL, en 'n ander klein vlugvragdraer, naamlik Kulula, wat die eerste lae koste vlug vrag draer was. Die gevalle studie is nie gebaseer op absolute besigheidsteorie nie, maar fokus sIegs op " I Time", met 'n persoonlike onderhoud wat met Glenn Ormond gevoer is en uitgebrei is deur navorsings data wat aan my voorsien deur "1 Time" asook deur die media en ander bronne. Die benadering wat deurentyd gevolg word, vanaf hoofstuk 3, is Collins se sleutel besigheidsmodelle uit te lug en te koppel met [in sommige gevalle, ander besigheidsskrywers se modules] wat maatskappye help om te migreer van goed na uitsonderlik en determinante soos leierskap, korporatiewe kultuur, menslike hulpbronne, tegnologie, kompeterende strategie dek en so voorts. Dit is dan geinterweef in strategiese denke van Glen Orsmond, die Hoof Uitvoerende Beampte van "1 Time" lae-koste begroting draer waar ek die kans gehad het om 'n onderhoud te voer vir hierdie proefskrif ondersteun deur my eie navorsing en analise. Ek sluit die studie af met uitgeligte punte en aanbevelings hoe "1 Time" hulle langtermyn doelwitte kan bereik, siende dat hulle die mark as nuweling betree en bekend wil wees as die nuutste aanspraakmaker in die lae-koste vlugvrag draer industrie, sal hulle bereid moet wees om die lae kurwe te moet deurloop terwyl hulle kompeteer met SAL en Kulula, die huidige hoof kompetisie in die lae-koste draer bedryf, Die ommiddellike uitdaging vir "1 Time" is om die "Goeie" situasie te betree en dan met inkrimentele stappe te migreer na die "Onverbeterlike" vlak, die hoogste aspirasie vir maatskappye wat voorbereid is om hulle lang termyn bestaan wat op volgehoue besigheids strategie gebaseer is te behou. Collins bepaal dat die "Goeie" vlak die wraakgodin is van die "Onverbeterlike" vlak en dat CEO's en ondernemers moet waak om 'n diep verstandhouding van die grondbeginsels en beslissende faktore in hulle tog in hulle groot sprong voorentoe en dat die "goeie" vlak moet gesien word as 'n onaanvaarbare gemiddelde prestasie.