Research Report

This paper discusses the issues facing Philippine Airlines in its ever evolving and changing landscape in the domestic, regional and international markets. The Philippine aviation industry had its safety status downgraded to Category 2 for six years by the International Civil Aviation Organization and the US Federal Aviation Administration. This downgrading of the status severely limited Philippine Airlines from expanding internationally, but its reinstatement provides huge opportunities for the incumbent. However, in the domestic and regional markets it faces a threat from rapidly encroaching low-cost carriers. The Philippines has the highest domestic low-cost carrier penetration rate in the world, while the incumbent has rebranded its low-cost subsidiary, AirPhil, to a full-service carrier, PAL Express, which has impacted its ability to compete in short-haul markets. Philippine Airlines' new routes to the Middle East and Europe have the potential to be profitable, but their success is hampered by the lack of domestic connectivity and no feeder traffic from partner airlines

The governance and performance of universities: evidence from Europe and the US

"We test the hypothesis that universities are more productive when they are both more autonomous and face more competition. Using survey data, we construct indices of university autonomy and competition for both Europe and the United States. We show that there are strong positive correlations between these indices and multiple measures of university output. To obtain causal evidence, we investigate exogenous shocks to US universities' expenditures over three decades. These shocks arise through the political appointment process, which we use to generate instrumental variables. We find that an exogenous increase in a university's expenditure generates more output, measured by either patents or publications, if the university is more autonomous and faces more competition. Exploiting variation over time in the 'stakes' of competitions for US federal research grants, we also find that universities generate more output for a given expenditure when research competitions are high stakes. We draw lessons, arguing that European universities could benefit from a combination of greater autonomy and greater accountability. Greater accountability might come through increased reliance on competitive grants, enhanced competition for students and faculty (promoted by reforms that increase mobility), and yardstick competitions (which often take the form of assessment exercises)." Copyright (c) CEPR, CES, MSH, 2010.