Revenue and Operational Impacts of Depeaking Flights at Hub Airports
Total Page：16
File Type：pdf, Size：1020Kb
REVENUE AND OPERATIONAL IMPACTS OF DEPEAKING FLIGHTS AT HUB AIRPORTS A Dissertation Presented to The Academic Faculty By Donald Samuel Katz In Partial Fulfillment Of the Requirements for the Degree Doctor of Philosophy in Civil Engineering Georgia Institute of Technology December, 2012 REVENUE AND OPERATIONAL IMPACTS OF DEPEAKING FLIGHTS AT HUB AIRPORTS Approved by: Dr. Laurie A. Garrow, Advisor Dr. Jorge A. Laval School of Civil and Environmental School of Civil and Environmental Engineering Engineering Georgia Institute of Technology Georgia Institute of Technology Dr. Michael O. Rodgers Dr. Jeffrey P. Newman School of Civil and Environmental School of Civil and Environmental Engineering Engineering Georgia Institute of Technology Georgia Institute of Technology Dr. Matthew J. Higgins Date Approved: November 6, 2012 Ernest Scheller Jr. School of Business Georgia Institute of Technology ACKNOWLEDGEMENTS I would like to show my gratitude to the professors at Georgia Tech who have helped me along the way in preparing my thesis work. My advisor Dr. Laurie Garrow has helped steer me in the right direction as I progressed through my project, aiding in getting me feedback from inside and outside the department, and scoping my project based on my interest. I would also like to thank Dr. Jorge Laval, Dr. Michael Rodgers, Dr. Jeffrey Newman, and Dr. Matthew Higgins for serving on my committee and providing helpful feedback to help make this project stronger. I am grateful to my Airport Cooperative Research Program Graduate Award panel members who graciously gave their time to review my work and meet to discuss my progress. Dr. Irina Ioachim, Dr. Annalisa Weigel, and John Fischer provided excellent feedback and helped the research move forward. Thank you also to Larry Goldstein for administering the program, arranging the committee, and helping to organize meetings. I would like to extend thanks to my fellow students in Dr. Garrow’s research group who have provided aid along the way. I particularly would like to thank Brittany Luken for teaching me to use SAS and aiding in the development of minimum and maximum connection times. I would also like to thank Susan Hotle in aiding to develop the count models to verify the regression models. Finally, a thank you to Gregory Macfarlane who has kindly allowed me to bounce ideas off of him and who I have sought the advice of throughout the project. I would most certainly like to thank my father, mother, and sister for listening to me during the highs and lows of developing and performing my research work. I am glad to have the strong foundation you have given me. Thank you also to Felix and Janet Dessel for encouraging me as I worked, and for providing detailed edits on the text. I lastly would like to thank my wife Amy, who has supported and encouraged me through every step of performing my research and writing my dissertation. Your love, patience, and encouragement have made the completion of my degree a better experience. This dissertation was aided by the support of the National Science Foundation. I am forever grateful to have received the honor of earning a Graduate Research Fellowship, which has allowed me the freely explore a topic of my choice. iii TABLE OF CONTENTS ACKNOWLEDGEMENTS ............................................................................................... iii LIST OF TABLES ........................................................................................................... viii LIST OF FIGURES ......................................................................................................... xiii LIST OF ABBREVIATIONS ........................................................................................ xviii SUMMARY ..................................................................................................................... xix CHAPTER 1 INTRODUCTION ........................................................................................ 1 1.1 Overview .............................................................................................................. 1 1.2 Context ...................................................................................................................... 2 1.3 Research Problem ..................................................................................................... 4 1.4 Research Question .................................................................................................... 7 1.5 Purpose Statement ..................................................................................................... 7 1.6 Contributions............................................................................................................. 9 1.7 Note on Naming Conventions ................................................................................. 10 CHAPTER 2 LITERATURE REVIEW ........................................................................... 11 2.1 Introduction ............................................................................................................. 11 2.2 Rise of Banked Schedules ....................................................................................... 12 2.2.1 Development of Hub-and-Spoke System .......................................................... 12 2.2.2 Banked Schedules at the New Hubs ................................................................. 17 2.2.3 Adding to Banked Schedules ............................................................................ 19 2.2.4 Looking for Another Option ............................................................................. 21 2.3 The Switch to Depeaked Schedules ........................................................................ 22 2.3.1 Depeaking’s Need - Problems with Banked Schedules .................................... 23 2.3.2 Why Not Depeak? ............................................................................................. 26 2.3.3 Difference from Low Cost Carrier Scheduling ................................................. 27 2.3.4 Climate for Depeaking ...................................................................................... 29 2.3.5 Choosing to Depeak a Specific Airport ............................................................ 30 2.4 Uncertainty in Effects of Depeaking ....................................................................... 32 2.4.1 Hubbing and Price ............................................................................................. 32 2.4.2 Peaking and Price .............................................................................................. 33 2.5 History of Airline Depeaking.................................................................................. 34 2.5.1 Major Airline Events of the Early 2000s .......................................................... 35 2.5.2 Airline Depeaking Timeline.............................................................................. 36 2.5.3 American Airlines’ Depeaking ......................................................................... 38 2.6 Competition’s Reaction to Depeaking .................................................................... 40 2.7 Hubbing in Other Sectors........................................................................................ 42 2.8 Affiliate Airlines ..................................................................................................... 44 2.8.1 Affiliate Airline Basics and Benefits ................................................................ 45 2.8.2 Types of Affiliate Airline Contracts ................................................................. 46 2.9 The Hub Airport and Its Revenue ........................................................................... 48 iv 2.9.1 Issues with Being a Hub ................................................................................... 49 2.9.2 Commercial Revenue ........................................................................................ 51 2.9.3 Commercial Revenue for Hub Airports ............................................................ 52 2.9.4 Positive Purchasing Environment ..................................................................... 55 CHAPTER 3 METHODOLOGY ..................................................................................... 58 3.1 Introduction ............................................................................................................. 58 3.2 Study Structure........................................................................................................ 58 3.2.1 Project Motivation and Goal ............................................................................. 59 3.2.2 Research Questions ........................................................................................... 60 3.3 Datasets ................................................................................................................... 61 3.3.1 Supply Data ....................................................................................................... 61 3.3.2 Demand Data .................................................................................................... 62 3.3.3 Supplemental Datasets ...................................................................................... 64 3.4 Preparing the Datasets............................................................................................. 67 3.4.1 Time Zones ......................................................................................................