Inefficiencies caused by Governments’ interventions in airlines’ markets

At least seven of the indicators of market inefficiencies and/or failure are visible in the airline industry. These have been triggered by national, multi-national or supranational governments’ (NMSGs’) interventions trying to resolve political, social or environmental problems. These seven interventions (many lacking preliminary economic analysis) have been aimed at resolving lack of competition, filling missing markets, and neutralising the presence of negative externalities, free riders, social inequalities and moral panic. Desk research showed that just one of these NMSGs’ interventions was beneficial since it encouraged competition while the other six unintentionally triggered market inefficiencies or failures. Furthermore, it is possible that some of the interventions could eventually make advanced world airlines subsidise their advancing world competitors

The paradox of competition for airline passengers with reduced mobility (PRM)

Airline competition with customer service as product differentiator has forced down costs, air fares and investor returns. Two passenger markets operate in aviation: (a) able-bodied passengers for whom airlines compete and (b) passengers with reduced mobility (PRMs) – disabled by age, obesity or medical problems – for whom airlines do not compete. Government interference in the market intended to protect a minority of narrowly-defined PRMs has had unintended consequences of enabling increasing numbers of more widely-defined PRMs to access complimentary airline provisions. With growing ageing and overweight populations and long-haul travelling medical tourists such regulation could lead to even lower investors’ returns. The International Air Transport Association (IATA) (2013) examined the air transport value chain for competitiveness using Porter’s (2008) five forces but did not distinguish between able-bodied passengers and PRMs. Findings during an investigation of these two markets concurred with IATA-Porter that the markets for the bargaining powers of PRM buyers and PRM suppliers were highly competitive. However, in contrast to the IATA conclusions, intensity of competition, and threats from new entrants and substitute products for PRM travel were low. The conclusion is that airlines are strategically PRM defensive by omission. Paradoxically, the airline which delivers the best PRM customer service could become the least profitable

Politics vs economics: unintended consequences of Governments’ interventions in airlines’ markets

Overlaying theories of market inefficiencies and/or failure onto airline economics indicates that the industry encounters at least seven of the indicators which have triggered interventions by national, multi-national or supranational governments (NMSGs) trying to resolve political, social or environmental problems. The NMSGs’ interventions aimed to resolve lack of competition, fill missing markets, and neuter the presence of negative externalities, free riders, social inequalities and moral panic. Desk research showed that their interventions (many lacking preliminary economic analysis) either intentionally solved and/or unintentionally triggered market inefficiencies or failures. It is possible that some of the interventions could eventually make advanced world airlines subsidise their advancing world competitors

A framework for evaluating the European airline costs of disabled persons and persons with reduced mobility

In recent years, airlines have been servicing a greater variety, and increasing numbers, of disabled persons and persons with reduced mobility (PRMs), particularly associated with ageing, obesity and medical needs. With the quantity of PRMs likely to increase in the future, there will be a growing impact on the airlines' associated actual and opportunity costs, about which there is minimal literature and data. Therefore the aim of this paper is to identify standard functional key factors (FKFs) with which airlines could audit their PRMs costs, and which could be used by other interested bodies, such as governments, when considering relevant aviation policy. These FKFs are related to nine areas, namely PRMs’ transfers; mobility aids; aircraft delays/diversions costs; staff training costs; staff health, safety and welfare; aircraft fixtures and equipment costs; airport costs; transaction costs; and opportunity costs. Further research is needed to obtain the data for these FKFs

Exposing the myth of the 1:5:200 ratio relating initial cost, maintenance and staffing costs of office buildings

In an attempt to focus clients' minds on the importance of considering the construction and maintenance costs of a commercial office building (both as a factor in staff productivity and as a fraction of lifetime staff costs) there is an often-quoted ratio of costs of 1:5:200, where for every one pound spent on construction cost, five are spent on maintenance and building operating costs and 200 on staffing and business operating costs. This seems to stem from a paper published by the Royal Academy of Engineering, in which no data is given and no derivation or defence of the ratio appears. The accompanying belief that higher quality design and construction increases staff productivity, and simultaneously reduces maintenance costs, how ever laudable, appears unsupported by research, and carries all the hallmarks of an "urban myth". In tracking down data about real buildings, a more realistic ratio appears to depend on a huge variety of variables, as well as the definition of the number of "lifetime" years. The ill-defined origins of the original ratio (1:5:200) describing these variables have made replication impossible. However, by using published sources of data, we have found that for three office buildings, a more realistic ratio is 1:0.4:12. As there is nothing in the public domain about what comprised the original research that gave rise to 1:5:200, it is not possible to make a true comparison between these new calculations and the originals. Clients and construction professionals stand to be misled because the popularity and widespread use of the wrong ratio appears to be mis-informing important investment and policy decisions

Airline philanthropy - investment or expense?

Airlines are corporately socially and environmentally responsible (CSER). Unlike predecessor ‘CSR’, CSER acknowledges the importance of the environment. CSER-managed airlines obey the law, service customers safely, manage employees fairly, reward owners appropriately, pay suppliers promptly and mitigate environmental impacts. Unlike philanthropy (i.e. CSERplus), airlines’ CSER-management is underpinned by economics – the optimal allocation of resources. External pressures push airlines to go beyond economically-viable, strategic investments to make philanthropic donations which are voluntary, discretionary contributions purportedly to further their interests. If the CSERplus philanthropic contributions are non-strategic they could increase costs without any benefit. Husted and Salazar (2006) determined three motivations for corporate entities to engage in strategic CSERplus (philanthropic) activities: either to (a) prevent unfavourable government intervention (b) create product differentiation to increase sales or (c) trigger cost reductions. Content and theme analysis of the top 10 airlines’ CSER reports indicated that none of the three motivations applied to their philanthropic contributions. Philanthropy appeared to support the altruistic or egoistic interests of managers rather than the airlines. There were no success measures. In fact, philanthropic donations appeared to increase costs at a time when many airlines were reducing services and products to remain competitive. The conclusion is that airline philanthropy is an expense rather than an investment. This paper contributes to the paucity of current literature on philanthropic motivations and airline CSER management

Senior Inquiry: Stop, Collaboration, Listen

This collaboratively created poster summarizes, in graphic form, the Senior Inquiry students\u27 year-long course of study

Construction studies in higher education and the use of digital technology

The construction industry wants graduate employees skilled in relationship building and information technology and communications (ITC). Much of the relationship building at universities has evolved through technology. Government and the ITC industry fund lobby groups to influence both educational establishments and Government to incorporate more ITC in education _ and ultimately into the construction industry. This influencing ignores the technoskeptics’ concerns about student disengagement through excessive online distractions. Construction studies students (n=64) and lecturers (n=16) at a construction university were surveyed to discover the impact of the use and applications of ITC. Contrary to Government and industry technopositivism, construction students and lecturers preferred hard copy documents to online feedback for assignments and marking, more human interface and less technological substitution and to be on campus for lectures and face-to-face meetings rather than viewing on-screen. ITC also distracted users from tasks which, in the case of students, prevented the development of the concentration and deep thinking which a university education should deliver. The research findings are contrary to the promotions of Government, ITC industry and ITC departments and have implications for construction employers where a renewed focus on human communication should mean less stress, fewer delays and cost overruns