The Emergence and Effects of the Ultra-Low Cost Carrier (ULCC) Business Model in the U.S. Airline Industry

The effects of “low-cost carriers” (LCCs) such as Southwest Airlines and JetBlue Airways on the competitive landscape of the U.S. airline industry have been thoroughly documented in the academic literature and the popular press. However, the more recent emergence of another distinct airline business model—the “ultra-low-cost carrier” (ULCC)—has received considerably less attention. By focusing on cost efficiencies and unbundled service offerings, the ULCCs have been able to undercut the fares of both traditional network and low-cost carriers in the markets they serve. In this paper, we conduct an analysis of ULCCs in the U.S. aviation industry and demonstrate how these carriers’ business models, costs, and effects on air transportation markets differ from those of the traditional LCCs. We first describe the factors that have enabled ULCCs to achieve a cost advantage over traditional LCCs and network legacy carriers. Then, using econometric models, we examine the effects of ULCC and LCC presence, entry, and exit on base airfares in 3,004 U.S. air transportation markets from 2010 – 2015. We find that in 2015, ULCC presence in a market was associated with market base fares 21% lower than average, as compared to an 8% average reduction for LCC presence. We also find that while ULCC and LCC entry both result in a 14% average reduction in fares one year after entry, ULCCs are three times as likely to abandon a market within two years of entry than are the LCCs. The results suggest that the ULCCs represent a distinct business model from traditional LCCs and that as the ULCCs grow, they will continue to play a unique and increasingly important role in the U.S. airline industry.members of the MIT Airline Industry Consortiu

Aplastic anemia and hepatitis C: Molecular biology exonerates another suspect

Objective. – To test the hypothesis that the rare, often fatal, syndrome of hepatitis-associated aplasia is associated with hepatitis C virus infection. Design. – Case series. Setting.-Tertiary referral centers in the United States, Japan, Italy, and Germany. Patients. – Twenty-eight patients with onset of aplastic anemia within 90 days after seeking medical attention for jaundice, or having serum transaminase levels 150% or more of normal (hepatitis-associated aplasia patients) and three patients who developed aplastic anemia following liver transplantation for non-A, non-B, hepatitis. Outcome Measures. - Presence of hepatitis C in serum, bone marrow, and liver samples, detected by the polymerase chain reaction; antibody testing; and percentage of activated peripheral cytotoxic T lymphocytes determined by immunophenotyping. Results. – Hepatitis ribonucleic acid was present in the serum samples of 10 (36%) patients with hepatitis-associated aplasia. However, hepatitic C virus viremia was associated with transfusions received after the onset of aplasia: seven (58%) of 12 patients with hepatitis-associated aplasia who had received 21 or more units of blood products at the time of serum sampling were viremic, compared with only three (19%) of 16 patients with hepatitis-associated aplasia who had received 20 or less units of blood products ( P <.05). Hepatitis C virus was not found in blood and bone marrow samples of three National Institutes of Health case patients tested at the time of diagnosis. None of three livers from non-A, non-B hepatitis patients who developed aplastic anemia after liver transplantation contained hepatitis C virus ribonucleic acid. Activated CD8 + T lymphocytes were elevated three- to 20-fold early in the course of hepatitis-associated aplasia. Conclusions. – Our results implicate a novel, non-A, non-B, and non-C agent in both hepatitis-associated aplasia and fulminant hepatitis.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/38390/1/1840170227_ftp.pd

Arachidonic acid metabolism is altered in sarcoid alveolar macrophages,

Macrophages produce various arachidonic acid (AA) metabolites which may either enhance or suppress inflammatory processes. We investigated AA metabolite production by alveolar macrophages (AMs) from 11 patients with pulmonary sarcoidosis and 9 normal volunteers. We assessed the production of both cyclooxygenase products (prostaglandin (PG) E2, thromboxane B2 (TXB2), PGF2[alpha], and 6-keto-PGF1[alpha]) and lipoxygenase products (leukotrienes (LT) and hydroxyeicosatetraenoic acids (HETEs)) in AM cultures. We found that sarcoid AMs produced less PGE2, TXB2, 6-keto-PGF1[alpha], and HETEs in both the unstimulated and the calcium ionophore-stimulated states compared with normal AMs. Sarcoid AMs also produced less PGF2[alpha] and LTs in the unstimulated state after 1 hr of incubation, but following calcium ionophore stimulation, these differences did not achieve statistical significance. We conclude that sarcoid AMs have a reduced capacity to produce AA metabolites compared with that of normal AMs.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/26855/1/0000420.pd

Tumor necrosis factor stimulates interleukin-1 and prostaglandin E2 production in resting macrophages

We have investigated the effect of tumor necrosis factor on the release of interleukin-1 and PGE2 from murine resident peritoneal macrophages. Tumor necrosis factor causes an increase in the production of interleukin-1 and PGE2 with a maximum induction for both noted at 5.9 x 10-8M. While indomethacin decreased tumor necrosis factor induced PGE2 production, this cyclooxygenase inhibitor augmented tumor necrosis factor induced interleukin-1 production. Our data suggests that tumor necrosis factor may be an important immunopotentiating agent in addition to its previously described cytolytic and metabolic activities.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/26197/1/0000276.pd

Pulmonary host defenses and oropharyngeal pathogens

The lower respiratory tract is repetitively inoculated with oropharyngeal bacteria and yet pneumonia is an infrequent event. Efficient mechanisms of antibacterial defense are present in the respiratory tract that eliminate microbes before their presence or multiplication leads to disease in the majority of instances. Resident pulmonary defenses consist of aerodynamic defenses, the mucociliary apparatus, alveolar macrophages, complement, and surfactant. These resident defenses can be augmented by the development of an inflammatory response or the development of specific immunity. Significant species variability exists in the efficiency and mechanisms of clearance for oropharyngeal organisms. Streptococci are cleared promptly, Branhamella catarrhalis is cleared slowly, whereas non-typable Haemophilus influenzae multiply before being cleared. A dual phagocytic system of alveolar macrophages and recruited polymorphonuclear leukocytes is required for clearance of most oropharyngeal microbes. Systemic immunization can significantly enhance clearance of non-typable H. influenzae, suggesting immunoprophylaxis might be possible for this organism.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/28575/1/0000378.pd

Basement Membrane and Repair of Injury to Peripheral Nerve: Defining a Potential Role for Macrophages, Matrix Metalloproteinases, and Tissue Inhibitor of Metalloproteinases-1

Injury to a peripheral nerve is followed by a remodeling process consisting of axonal degeneration and regeneration. It is not known how Schwann cell–derived basement membrane is preserved after injury or what role matrix metalloproteinases (MMPs) and their inhibitors play in axonal degeneration and regeneration. We showed that the MMPs gelatinase B (MMP-9), stromelysin-1 (MMP-3), and the tissue inhibitor of MMPs (TIMP)-1 were induced in crush and distal segments of mouse sciatic nerve after injury. TIMP-1 inhibitor activity was present in excess of proteinase activity in extracts of injured nerve. TIMP-1 protected basement membrane type IV collagen from degradation by exogenous gelatinase B in cryostat sections of nerve in vitro. In vivo, during the early phase (1 d after crush) and later phase (4 d after crush) after injury, induction of TNF-α and TGF-β1 mRNAs, known modulators of TIMP-1 expression, were paralleled by an upregulation of TIMP-1 and gelatinase B mRNAs. At 4 days after injury, TIMP-1, gelatinase B, and TNF-α mRNAs were localized to infiltrating macrophages and Schwann cells in the regions of nerve infiltrated by elicited macrophages. TIMP-1 and cytokine mRNA expression was upregulated in undamaged nerve explants incubated with medium conditioned by macrophages or containing the cytokines TGF-β1, TNF-α, and IL-1α. These results show that TIMP-1 may protect basement membrane from uncontrolled degradation after injury and that cytokines produced by macrophages may participate in the regulation of TIMP-1 levels during nerve repair

Renal cell carcinoma induces interleukin 10 and prostaglandin E2 production by monocytes

Immunotherapy with interleukin 2 (IL-2) is not an effective anti-cancer treatment in the majority of patients with renal cell carcinoma (RCC), suggesting that the activation of cytotoxic T cells or NK cells may be impaired in vivo in these patients. The production of immunosuppressive factors by RCC was investigated. Using immunohistochemistry, IL-10 was detectable in 10 of 21 tumour samples tested. IL-10 was undetectable in the supernatant of cell lines derived from these RCCs. However, these cell lines or their conditioned medium (RCC CM), but not normal renal epithelial cells adjacent to the RCC or breastcarcinoma cell lines, were found to induce IL-10, as well as prostaglandin E2 (PGE2) and tumour necrosis factor (TNF)α production by autologous or allogeneic peripheral blood mononuclear cells (PBMCs) and monocytes. IL-10 production induced by RCC CM was found to be dependent on TNF-α and PGE2 since an anti-TNF-α antibody (Ab) inhibited 40–70% of IL-10 production by monocytes, and the combination of anti-TNF-α Ab and indomethacin, an inhibitor of PGE2 production, inhibited 80–94% of RCC CM-induced IL-10 production by monocytes. The RCC CM of the five cell lines tested were found to induce a down-regulation of the expression of HLA-DR and CD86, as well as a strong inhibition of mannose receptor-dependent endocytosis by monocytes. The blockade of HLA-DR and CD86 expression was partially abrogated by indomethacin and anti-IL-10 Ab respectively, and completely abrogated by an anti-TNF-α Ab. The inhibition of mannose receptor-dependent endocytosis was partially abrogated by an anti-IL-10 Ab and completely abrogated by an anti-TNF-α Ab. These esults indicate that RCCs induce IL-10, PGE2 and TNF-α production by monocytes, which down-regulate the expression of cell-surface molecules involved in antigen presentation as well as their endocytic capacity. © 1999 Cancer Research Campaig

United States airline business models 2006-2015 : trends and key impacts

Thesis: S.M. in Transportation, Massachusetts Institute of Technology, Department of Civil and Environmental Engineering, 2017.This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.Cataloged from student-submitted PDF version of thesis.Includes bibliographical references (pages 121-125).This thesis focuses on the evolution of U.S. airline business models from 2006-2015, and the impacts of these changes on other stakeholders in the U.S. air transportation system. The U.S. airline industry has been affected by increasingly volatile profit cycles since its deregulation in 1978. This volatility has led to major changes in the industry, including cost convergence between traditional Low Cost Carriers (LCCs) and Network Legacy Carriers (NLCs), multiple rounds of consolidation, and most recently a period of "Capacity Discipline" where high fuel prices and a reduced number of competitors led to slower-than-average capacity growth. The combined effects of these changes led to the emergence of a new business model: the "Ultra Low Cost Carrier" (ULCC). In this thesis, we conduct an analysis of ULCCs in the U.S. and demonstrate how these carriers' business models, costs, and effects on air transportation markets differ from those of the traditional LCCs. We also explore how the network and fleet strategies of airlines using all three business models have changed, highlighting key trends such as the decline in 50 seat jet use by NLCs and the varying network strategies of ULCCs. In the second half of the thesis, we examine how these changes in airline business models have affected other stakeholders in the U.S. transportation system. We describe how average fares have changed from 2006-2015 in the top U.S. markets. Then, using econometric models, we examine the effects of ULCC and LCC presence, entry, and exit on base airfares, and how these effects have changed over time. We also explore how evolving airline business models have impacted communities and their local airports. We find that seat capacity has grown at large hub airports from 2006-2015, whereas smaller airports have all seen declines in service levels to varying degrees. In particular, we examine how secondary airports in major metro areas have been affected by changing LCC strategies, and how the smallest airports have experienced significant declines in NLC service, yet some gains in ULCC service. Finally, we discuss the public policy implications of these service changes, and what policy options airports and communities have at both a local and national level to improve their level of commercial air service.by Alexander R. Bachwich.S.M. in Transportatio