An examination of ongoing trends in airline ancillary revenues

The airline industry seems permanently embedded in producing thin margins and continuously combatting downward pressure on yields. To perpetuate the problem, the industry remains eclipsed with high cost structures and low barriers to entry. However, a new sizzling concept continues to counterbalance these effects in the form of ancillary revenues. Globally, these revenues have increased by 121% from 2010 to 2014 – and the trend is set to continue as carriers are quickly implementing structural changes to accommodate these revenues streams. This paper examines the performance of the two core classifications of ancillary revenues, which are unbundled products and commission based income. It also investigates the willingness of passengers to pay for these services together with what type of ancillary items are acceptable at a particular price point. The study found that passengers value a narrow range of perceived ‘necessity’ products and services such as food and drink, checked baggage and seat assignment as opposed to perceived ‘optional’ unbundled or commission based products/services. It also found significant differences in WTP for specific ancillary services based on carrier type (FSC/LCC/Charter), length of flight (long and short haul) and journey purpose (business, leisure, VFR)

A review of commercial air policies: Identifying the gaps

Commercial Air Service Agreements remain the overwhelming focus when it comes to assessing the degree of liberalisation and deregulation in air transport markets. If individual countries are assessed for levels of traffic growth, competition and overall competitiveness, it becomes clear that there is a wide range of policy levers that can restrict markets but go way beyond the realms of official Air Service Agreements. This study provides a fresh holistic view of policy barriers restricting growth in world air transport markets by assessing non-ASA policies affecting the airline sector directly as well as levels of (de)regulation in the related airport sector. A selection of case countries provides evidence that if traffic growth, competition and resultant consumer welfare as a result of overall competitiveness are the objective functions of policy-makers, it is advisable for states to create much more comprehensive commercial air policy frameworks and more holistic measures/indices by which to benchmark levels of policy ‘liberalness’

An evaluation of Nigerian ports post-concession performance

Purpose: The quest for efficiency is claimed to be the major objective of port privatisation and this has led many ports in Africa to undertake port reforms. Based on this, Nigerian ports were concessioned and operations were handed over in one scoop to private operators between 2006 and 2007. This paper is looking to investigate in the reform that took place in a very short period of time improved the performance of Nigerian ports. This paper is also looking to provide a model for future evaluation. Research Approach: A window based DEA model with panel data will be employed to measure pre- and post concession Nigerian ports' performance to determine efficiency gains from port reform. Secondly, to demonstrate how concession influence efficiency, a DEA based Malmquist productivity Insex will be used to determine the sources of (in)efficiency by decomposing the efficiency into frontier shift effects and catch-up effects. Findings and Originality: The results revealed that none of the ports is hundred percent efficient before and after concession but rather a tremendous increase in throughput and ship traffic after the reform in most of the ports. Apapa port is the most efficient while Calabar and Warri are inefficient although there were fluctuations in efficiency in all the ports. The research is inconclusive because it is still ongoing Although some studies have investigated the relationship between port efficiency and privatisation however several gaps still exist as the studies are skewed in favour of container ports in the developed world, mainly in Europe. Therefore, the need arises to critically look at the overall efficiency of national port system to enhance the efficiency of global transport chain. Research Impact: The study will contribute to existing literature on port performance being the first to evaluate the post concession performance of a major maritime player in Sub-Saharan Africa. It will contribute to the never- ending debate by the Academia on the effect of ownership or privatisation on efficiency from the perspective of port institutional reforms in the third world countries Practical Impact: It will benefit the Federal Government of Nigeria as a reference document of the first five years of the port reform policy and help the Government to intervene in areas of observed inefficiencies and make adjustments where possible. On the part of the "Landlord" NPA it will help them in the performing their regulatory role by identifying the operators who are making inefficient use of the resources allocated to them and provide the basis for future evaluation. Finally, it will give the various stake holders in the Maritime Industry a full grasp of the effect of concession in a Nation's port as Nigeria is the first country in the world to hand over terminal operations in all her ports in one scoop

Look at Me Now: What Attracts U.S. Shareholders?

This paper investigates the underlying determinants of home bias using a comprehensive data set on U.S. investors' aggregate holdings of every foreign stock. Among those foreign stocks that are not listed on U.S. exchanges, which account for more than 96 percent of our usable data sample, we find that U.S. investors prefer firms with characteristics associated with greater information transparency, such as stronger home-country accounting standards. We document that a U.S. cross-listing is economically important, as U.S. ownership of a foreign firm roughly doubles upon cross-listing in the United States. We explore the cross-sectional variation in this "cross-listing effect" and find that the increase in U.S. investment is greatest for firms that are from weak accounting backgrounds and are otherwise informationally opaque, suggesting that the key effect of cross-listing is improvements in disclosure that are valued by U.S. investors. By contrast, cross-listing does not increase the appeal of stocks from countries with weak shareholder rights, suggesting that U.S. cross-listing cannot substitute for legal protections in the home country. Nor does the cross-listing effect appear to be driven simply by increased "familiarity"� with the stock or lowered cross-border transactions costs.

U.S. International Equity Investment

U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.

The future for African air transport: learning from Ethiopian Airlines

The African air transport market has been a laggard in development, remaining encircled by a plethora of problematic issues that curtailed its expansion and prosperity for decades. Regulatory restrictions, protectionism, inadequate infrastructure and prolonged loss making periods are regularly correlated with the plights of African carriers. Ethiopian Airlines is disrupting this negative manifestation and is exponentially expanding its African and international network footprint, enshrined in continuously profitability. The research quantifies that it is Africa’s most successful airline through a POA analysis by aggregating a series of pertinent airline indices to derive its prominence from amongst its peers. Three key pillars were deduced that specifically correlated with Ethiopian Airlines’ continued prosperity and can be used as template, which included a large intra-African network, a strong hub with multiple wave permutations for onward connecting traffic and forging a deep strategic partnership with a regional based African carrier

Development of intelligence-based ancillary revenues and products

Recent research has demonstrated that, despite the rising focus on ancillary revenues by airlines worldwide, only a few core secondary products and services have proven to be lucrative. This study investigates the benefits to airlines of using the pareto principle as a way to dedicate time and resources to the specific ancillary products that currently and potentially generate the most revenue. Combining the results of a 2015 survey of industry experts, with an application of the Pareto Priority Index (PPI), the merits of an intelligence based development of ancillary products is determined. It is found that, once the cost of investing and developing competencies in ancillary revenues are taken into account, it is often better to focus on the few core products and services that are most lucrative, although these ‘core’ products and services can vary by flight length (short/long-haul) and thus should be identified on a case-by-case basis

A Content Analysis of the Barriers and Challenges Associated With Third Party Logistics: A Comparison of the UK and Nigeria

This paper uses a comparative content analysis that is aimed at identifying, ranking, and comparing the main barriers and challenges of third-party logistics in the UK and Nigeria in order to find out and provide explanations as to why it is less practiced in Nigeria compared to the UK

Assessing Inequalities in access to air transport services across Europe (EEA + UK + Switzerland)

There has been a dearth of research specifically focussing on the extent to which inequalities in air transport access have developed and widened over time both within and between states at a sub-regional level. When dispersion effects have been examined, it has been primarily through the lens of network and spatial assessments. These assessments are useful in their own right but do not allow for the measurement and monitoring of overall disparities in levels of air transport connectivity and access by specific sub-region of residence. It is also currently difficult to gauge for any given population area, whether air transport network disparities are a simple reflection of underlying disparity in economic and social activity or not. In this study, inequality measures that are typically used within the macroeconomics domain have been applied to air transport connectivity indicators in order to help stakeholders more easily determine levels of air access inequality for any given state, region or sub-region. This data is then tempered by population data using the highest level of disaggregation possible. Europe has been selected as the case continent for this research, given that statistical data has been collated over a number of years on smaller regions and sub-regions within member states of the European Union and European Economic Area. This study has therefore been able to apply air access inequality measures to over 1,350 sub-regions across the continent (at NUTS3 level). There is also a more indepth phase to the research, that allows for more context and specific circumstances to be drawn out on a sub-sample of regions that are deemed to be the most cut-off and unequal in comparison to other sub-regions or indeed within individual countries by including further indicators of vulnerability and dependence. The baseline year is 2019 with the impact of the pandemic through 2020 being applied to the shortlist regions to see the extent to which the absolute and relative (inequality) level of access changed as a result of Covid related travel restrictions and accompanying economic downturns

Organisational Trust: A Case Application in the Air Transport Sector.

From a management perspective, it is important to know what the likely feedback effects of efficiency drives might be on levels of employee trust. This paper looks to apply this important question to a case application in the air transport sector by testing the use of recent efficiency measures in a case sample of air transport companies using a modified aggregate trust model. The findings of this study suggest efficiency creating tactics do not lead to resentment and conditions of mistrust in themselves. Rather, occupational group (flight crew/non-flight crew), airline type (FSA,LCC, Charter), and level of seniority (management/non-management level) all have a more important bearing on the employee-employer relationship. Pre-existing labour agreements and legacy arrangements with senior and certain occupational groups were found to have a more damaging effect on the trust relationship than anything else. An underlying level of resentment and defensiveness has developed due to historical agreements being changed and have been observed most notably among FSAs, flight-crew and middle-management staff. The mediating role of the unions in the employee-employer trust relationship was found to be insignificant among the sampled air transport organisations