Alessandro V. M. Oliveira

Airline Delays, Congestion Internalization and Non-Price Spillover Effects of Low Cost Carrier Entry

This paper develops an econometric model of flight delays to investigate the influence of competition and dominance on the incentives of carriers to maintain on-time performance. We consider both the route and the airport levels to inspect the local and global effects of competition, with a unifying framework to test the hypotheses of 1. airport congestion internalization and 2. the market competition-quality relationship in a single econometric model. In particular, we examine the impacts of the entry of low cost carriers (LCC) on the flight delays of incumbent full service carriers in the Brazilian airline industry. The main results indicate a highly significant effect of airport congestion self-internalization in parallel with route-level quality competition. Additionally, the potential competition caused by LCC presence provokes a global effect that suggests the existence of non-price spillovers of the LCC entry to non-entered routes.

Financiamento da infraestrutura de transportes

The transportation sector is marked by the presence of externalities and by typical characteristics of the infrastructure sector. This article discusses the financing of the expansion of sector infrastructure, including foreign direct investment and taking into account the underlying institutional and regulatory dimensions, related to the economic characteristics of the sector.

Competição, colusão e antitruste: estimação da conduta competitiva de companhias aéreas

A politica antitruste tem sido cada vez mais considerada como relevante mecanismo de promocao do bem-estar economico em mercados oligopolisticos recentemente liberalizados. O objetivo do presente trabalho e o de promover, por meio de modelo estrutural empirico, uma investigacao de um suposto comportamento de coordenacao de precos por parte das companhias aereas na Ponte Aerea Rio de Janeiro - Sao Paulo. A metodologia utiliza um parâmetro de conduta, relacionado com a abordagem da Nova Organizacao Industrial Empirica, e assim concentra-se nos efeitos das praticas colusivas, tendo por isso a vantagem de nao depender de evidencias de conluio, como a existencia de comunicacao previa entre as empresas envolvidas. Os resultados obtidos com a modelagem empirica utilizando-se um estimador em duas etapas (Two-Step Estimator) indicam que nao ha bases para se rejeitar a hipotese de que as empresas mantiveram uma conduta nao-cooperativa no mercado, ao contrario do que recentemente decidiram as autoridades de defesa da concorrencia brasileiras.

Econometric analysis to estimate the impact of holidays on airfares

The number of air transportation passengers during the holidays in Brazil has grown notably since the late nineties. One of the reasons is greater competition in airfares made possible by economic liberalization. This paper presents an econometric model of airline pricing aiming at estimating the impacts of holiday periods on fares, with special emphasis on three-day holiday events. It makes use of a database with daily collected data from the internet between 2008 and 2010 for the major Brazilian city, Sao Paulo. The econometric panel data model employs a two-way error components “within” estimator, controlling for airline/airport-pair fixed effect along with quotation and departure months effects. The decomposition of time effects between quotation and departure month effects is the main methodological contribution of the paper. Results allow for a comparative analysis of the performance of Sao Paulo’s downtown and international airports - respectively, Congonhas (CGH), and Guarulhos (GRU) airports. As a result, the price of tickets bought 60 days in advance for flights with two stops leaving from the downtown airport fell by most.

Assimetrias de informação e o provimento obrigatório de dados de firmas reguladas: estudo de caso do transporte aéreo

All sector economic regulation contains elements of asymmetry of information between regulatory authority and regulated. When performing their duties, the regulator routinely lies in low-level situation because of the scarcity of informational data, or, what is more common, spanning low, inadequate level of disaggregation and low quality of information available. Thus, it is not uncommon to observe regulators designing sub-optimal configuration way regulations. Additionally, plans for investments in basic infrastructure expansion of market access, as well as its own regulation, can be designed using information collected imperfectly. This increases the uncertainty inherent in the regulation, in addition to increasing the cost of the investment industry. This work aims to study the case of information asymmetry in the air transport sector. Greater emphasis is given to detailing the efforts of industry authorities carry out the regulation of the provision of regulated data, with a view to enhance the regulation and assist the consumer in their choices. A case study of framework of collecting, handling and dissemination of sector data implemented by North American regulator, the US Department of Transportation (DOT). And finally present some proposals that can change the question of provision of information by the ANAC, thus greater supervision by society.

Liberalização econômica e universalização do acesso no transporte aéreo: é possível conciliar livre mercado com metas sociais e ainda evitar gargalos de infraestrutura

The economic liberalization of the Brazilian air transportation has brought visible benefits to the sector, with lower prices and greater popularity. There was, however, more concentration of the operation at major airports and loss of regional coverage. This paper aims to analyze the development of the number of airports served by regular air transportation in Brazil, as well as the concentration indices of operations and coverage across the national territory. It will examine aspects from the process of economic deregulation that the Brazilian air market suffered in the 1990s and early 2000s, causing the national air transportation became more competitive and efficient, but also with operate more geographically concentrated. These factors resulted in benefits and in harms to passengers: on the one hand, lower prices, high induction air traffics and increased accessibility of new customer, on the other hand, pressed accelerated growth of airport infrastructure and airspace - with arising congestion generators bottlenecks and delays - and worst coverage. This study developed an econometric model that allowed for analysis of potential explanatory variables of the coverage of air transport as well as their influence and impact on the number of airports served.

Dynamic Pricing and Market Segmentation Responses to Low-Cost Carrier Entry: The Econometrics of Airline Distribution Management under Increased Competition

This paper develops an empirical model of online airfare determinants to inspect the impact of the entry of a low-cost carrier (LCC). In particular, we investigate whether the increased competition from a recently established LCC induces major carriers to respond in two competitive dimensions: pricing and distribution. We utilize an original database of airfares collected from the website of an online travel agent (OTA) comprising the domestic airport-pairs of the most populous metropolitan area in Brazil. We test whether incumbents reshape their airfare temporal profiles in an attempt to attract the price-sensitive passengers who constitute the target market of the newcomer. We find evidence that incumbents increase their airfare availability on the OTA by 11% and reduce fares by between 15% and 23% for advance purchases made approximately two months prior to departure. Our results suggest that LCC entry partially spoils the existing market segmentation schemes of incumbents, forcing them to revise their distribution management strategy, simplify their fare structure and migrate from a non-monotonic to a weakly monotonic price curve.

ECONOMIC INDICATORS FOR THE PUBLIC TRANSPORTATION AGGREGATE DEMAND ESTIMATION IN SÃO PAULO

This article investigates the application of economic indicators for the parametric estimation of public transportation aggregate demand. Since the transportation sector plays a vital role in a city infrastructure, the objective is to present a method of selecting economic indicators that assist in the study of urban public transport demand, taking as a case study the Metropolitan Region of São Paulo (MRSP). Using econometric modelling, it was estimated the effect of variables explaining total traffic in the transport system, and more specifically examine the role of fares and the employment and wage indicators. Statistical tests were performed to check the validity of the analyzed models and develop a rank of indicators according to their performance as regressors. The subset of indicators that were representative of industrial activity and more related to the local economy had the best performance as a forecasting tool.

OS CUSTOS COM ATRASOS AÉREOS E SEUS IMPACTOS: ESTUDO DE DEMANDA AEROPORTUÁRIA E SIMULAÇÃO DE CENÁRIOS DE BEM-ESTAR ECONÔMICO

This article purpose to analyze the impact of the costs of flight delays in domestic demand for air transportation. Using as a case study the Salvador Airport, an airport demand model was developed, having been made simulation scenarios of transmission costs to ticket prices in order to assess how a possible loss of competitiveness affects the demand for travel and economic well fare of passengers. The recent rise of new consumers segments meant a stimulus to the air demand especially in the case of a tourist destination and therefore a worsening of the problem on airport infrastructure. The counterfactual scenarios demand considering alternatives price transfers to passengers were built from the parameters estimated by econometric modeling using instrumental variables. The results show that an increase of 1% in the new consumer credit will result in an increase of 0,4603% of demand and an improvement of 1% in the economy will bring an increase of 0,7447% in the number of domestic passengers. The results also show that due to infrastructure problems and consequent combination of increases in crew, fuel and airport tax may reduce consumer welfare by 3,5% to 18,0% in a competition environment and from 12,1% to 25,0% in a duopoly, showing the importance of competition for the passenger’s welfare. Keywords: air demand, new consumers, economic welfare, air delays.

Portrait of a Newcomer: Azul Airlines, Some Facts, Figures and Comparisons

Azul Airlines is the latest case of successful entry into Brazilian domestic markets for scheduled passenger service. Born from the interest of David Neeleman, the businessman behind jetBlue and Westjet, and with initial capital in excess of US