Rico Merkert

Benchmarking of train operating firms – a transaction cost efficiency analysis

Abstract Benchmarking of rail firms has become a matter of substantial interest and many authors have emphasised the importance of transaction costs in regard to assessing the desirability of vertical separation. However, due to data and methodological limitations, previous rail efficiency studies have been unable to explicitly analyse the role that transaction cost measures play in determining the relative efficiency performance of different rail firms or rail systems. This paper incorporates recently produced measures of transaction costs into a two-stage bootstrapped data envelopment analysis (DEA), applied to a sample of 43 Swedish, German and British train operating firms. In the first stage, the number of transaction staff is included as a separate (physical) input within the DEA. This is followed by a second-step Tobit regression which seeks to evaluate the impact of institutional (vertical separation and type of operation), environmental (competition) and transactional (monetary values of transaction costs) factors on technical efficiency. The results of the analysis show that transactional factors are more important in determining technical efficiency than institutional factors and the opening-up of competition.

A Review of Different Benchmarking Methods in the Context of Regional Airports

This paper reviews the existing literature on airport benchmarking. In addition to assessing the advantages and disadvantages of partial productivity measures (PPM), we also discuss parametric and non-parametric methods with reference to previous applications to the airport sector. Our analytical framework for research synthesis is based on a comparative study of the existing research findings and includes not only results from longitudinal, cross-sectional and panel data analyses but also findings of our own two-stage data envelopment analysis (DEA) case study. Our findings suggest that the more sophisticated approaches can deliver powerful insights into the performance of regional airports. The data for such an analysis are available, yet no previous attempt has been made to apply these methods to the context of regional airports. However, challenges do exist, especially for very small airports, in terms of the reliability, quality, robustness and complexity of such an efficiency analysis. As a result we recommend that an appropriate methodology for comparing the efficiency of regional airports should be based on a combination of PPM with either a two-stage DEA or a stochastic frontier approach approach.

Tactical production planning in a hybrid Make-to-Stock–Make-to-Order environment under supply, process and demand uncertainties: a robust optimisation model

In this paper, we consider a hybrid ‘Make-to-Stock–Make-to-Order’ environment to develop a novel optimisation model for medium-term production planning of a typical multi-product firm based on the competencies of the robust optimisation methodology. Three types of uncertainties: suppliers, processes and customers, are incorporated into the model to construct a robust practical model in an uncertain business environment. The modelling procedure is started with applying deterministic linear programming to develop a new multi-objective approach for the combination of multi-product multi-period production planning and aggregate production planning problems. Then, the proposed deterministic model is transformed into a robust optimisation framework and the solution procedure is designed according to the Lp-Metric methodology. Next, using the IBM ILOG CPLEX optimisation software, the proposed model is evaluated by applying the data collected from an industrial case study. Final results illustrate the applicability of the proposed model.

An empirical study on the transaction sector within rail firms

In general, there is a growing debate on transaction costs in regard to vertical separation of rail infrastructure from train operations, but there is still only little or almost no systematic work on their measurement in railways. This article applies a top–down approach to transaction cost measurement to reveal the size of the transaction sector within train operation and rail infrastructure firms. It aims to estimate the resulting transaction costs and their share in total operating costs for the first time. The results reveal differences in the relative size of the transaction sector at the firm level, supporting, in general, the argument that complete vertical separation results in relatively higher transaction costs. However, their level is substantially less decisive than suggested by earlier studies and the lower transaction costs of partially integrated rail firms are to some extent offset by more parent company support and the level of rail system-wide transaction costs.

Exploring Perceived Safety, Privacy, and Distrust on Air Travel Choice in the Context of Differing Passenger Screening Procedures:

This article examines perceptions of how safe airline travel is and respondents’ level of concern over privacy and trust of authorities. These attitudes are then used to understand the choice to travel under passenger screening processes with differing levels of invasiveness. We find that travelers who are more trusting of authorities are more likely to choose to travel internationally, whereas those with low overall feelings of safety while onboard an aircraft are predisposed to not travel. Our analysis reveals what attitudes and potential screening measures are linked to this feeling of overall safety, chief among which is the presence of visible uniformed police. Our results are also novel as they study these attitudes in the context of a spate of recent air-related disasters; finding no desire to accept screening processes that invade privacy beyond what is currently practiced.

Success Factors and Pitfalls of Regional Rail Franchising in Germany

Since 1996 regional rail passenger services in Germany have been subject to franchising. The franchising framework is characterised by a strong decentralisation of responsibilities, a considerable degree of freedom for the responsible authorities regarding contract design, a sound financial basis for awarding contracts, and the free choice of authorities between tendering procedures and direct awarding of franchise contracts. This paper analyses the key outcomes of this franchising approach. We conclude that regionalization of responsibilities and franchising positively impacts on service provision, patronage, customer satisfaction, service quality and costs, in particular through better targeting of services. However, these positive outcomes could have been even greater if the failures in the institutional set-up, foremost the vertical integration of the DB group and insufficient regulation, were resolved. Overall, competitive tendering appears to bear further potential for additional cost savings and quality improvements, although for already competitively awarded contracts the improvements will not be as great as those from the first round.

The Economic and CO2 Emissions Performance in Aviation: An Empirical Analysis of Major European Airlines

The sustainability of aviation in global supply chains is of increasing importance to airline management and policy makers. With mounting environmental pressures and market volatilities, airlines need to find strategies for simultaneously managing their economic and environmental (emissions) performance, two objectives that can support but also contradict each other. This chapter aims to evaluate the relative performance of airlines’ carbon and cost efficiency and how this relationship has changed over time. We compute and compare the carbon efficiency of 14 major European airlines for the period of 1986–2007. As jet fuel is the most important resource in the aviation supply chain, we examine whether there is a relationship between fuel prices and carbon efficiency. We also test whether unit cost, distance flown and load factors have an impact on airline carbon efficiency. The results show that the fuel prices and their volatility have affected and improved carbon efficiency of airlines. Our findings also confirm previous anecdotal evidence suggesting a significant negative relationship between carbon efficiency and unit cost.

Managing Freight Operations Chains of Passenger Airlines at International Airports

Abstract Based on our experience related to the passenger terminal re-design at Sydney airport and its impact on belly-hold freight chains at the airport, this chapter takes a more general view on managing freight chains at large international airports. We aim to review literature and documents related to this area and also to undertake a fleet/traffic analysis of the 100 largest multi-function airports (when measured in terms of scheduled cargo traffic) to get a better understanding of current practice, particularly in the light of potential conflicts or benefits of the joint production of passenger and freight services. While most literature has focused on hub-and-spoke aspects of international hubs, relatively little has been done on economies of scale and scope of passenger and freight airline operations (including timing) at such hubs. This chapter explores to what extent terminal organisation of international airports impacts on the use of dedicated freighter of combination airlines and hence airline efficiency. A key finding in terms of airline efficiency is that economies of scale of air cargo operation appear to exist at the aircraft level as dedicated freighters are used more often if a sufficient threshold of air freight demand is observed at the airport level.