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  • Guest Editors’ Introduction
  • Sveinn Vidar Gudmundsson, Vice President ATRS, Renato Redondi, and Tae Hoon Oum

The Impact of Liberated Air Services on Networks and Air Carrier Consolidation

For this special issue of the Transportation Journal, we have selected four papers from 193 papers that were presented at the 16th Air Transport Research Society (ATRS) World Conference. The conference was held in Tainan, Taiwan, in June 2012 and attracted some 248 participants. The selected papers are related to our theme for this special issue on the impact of liberated air services on networks and air carrier consolidation. The United States shows signs of maturity in the domestic market with estimated 2.6 percent average domestic growth and 4.3 percent international growth. In comparison, the international average is 5.2 and 5.3 percent for domestic and international, respectively (“Airlines to Welcome 3.6 Billion Passengers in 2016,” IATA press release no. 50, December 2012). It is in this background that we present our special issue. The opportunities for further growth in international markets are substantial for US air carriers and liberalized air services agreements (ASAs) and branded alliances play an important role by softening some of the regulatory restrictions imposed on market access in many countries around the world. Yet, as is evident in our special issue, the impact of increased liberalization is not always as expected at the outset.

In their work, Ke and Windle extend previous work that underscores the positive impact of ASAs on passenger growth. Interestingly, their articles examines US-China ASAs in the context of the general state of liberalization when the agreements are signed. This approach allows Ke and Windle to control for the level of liberalization showing that the increase in passengers stemming from new ASAs depends on the level of liberalization in at least one of the signatory states. Consequently, as the authors point out, the benefits of liberalization cannot be evenly divided between the two countries.

Morandi, Malighetti, Paleari, and Redondi provide us with an important insight to the network consequences of the EU-US Open Skies Agreement (OSA) that took effect in 2008. They ask if the EU-US OSA has led to more choices for transatlantic travelers. To dissect this question they look into competition between carriers, impact on alliances, and hubbing. What this [End Page 271] article shows is that the number of direct transatlantic connections and served airport pairs decreased. Further, competition only increased for indirect traffic. Finally, the authors show that impact varies across European countries and is not in accordance with the previous regulatory regime.

Fleurquin, Ramasco, and Eguíluz focus on the properties of flight delays in the US air-transportation network by studying the topological structure of the network and aircraft rotation in the network. In their work it is evident that delay distributions are robust to changes in takeoff and landing operations, different times of the year, and most airports. The exception, however, is airports in remote areas, such as Hawaii, Alaska, and Puerto Rico, which can show distributions biased toward long delays. Finally, the authors show that flights with long delays tend to be influenced by the destination airport.

Manuela and Rhoades examine the announcement and postmerger effects of three US airline mergers—America West and US Airways, Delta and Northwest, and United and Continental. The time-series data consist of daily and cumulative abnormal returns using the Standard & Poor’s 500 as the benchmark index. The event study methodology uses ±60 trading days around the announcement and merger dates. The share prices of United and America West increased while Delta’s decreased due to the slowing US economy at the time of its merger with Northwest. The impact of the merger announcement on target airlines is positive except for Northwest, again due to the concurrent weakening demand for air transport in the United States. The share prices of acquiring and target airlines increased around the merger completion date, suggesting that new information is available as the merger nears completion.

In sum, this special issue discusses many aspects of network impacts of liberalized bilaterals and the restructuring of the industry in the background of market maturity in the United States. In...

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