The analyses on transportation economics and network modeling

Pao Yue-kong Library Electronic Theses Database

The analyses on transportation economics and network modeling


Author: Homsombat, Winai
Title: The analyses on transportation economics and network modeling
Degree: Ph.D.
Year: 2012
Subject: Airlines -- Management.
Shipping -- Management.
Hong Kong Polytechnic University -- Dissertations
Department: Dept. of Logistics and Maritime Studies
Pages: xii, 130 leaves : ill., 1 map ; 30 cm.
Language: English
InnoPac Record:
Abstract: The transport and logistics industry is of critical importance to the world's economy. It not only directly contributes to economic growth in terms of employment, tax revenue, and value-adding activities, but also provides essential inputs to other sectors such as trade, tourism, and supply chain management. Therefore, it is important for policy makers and industrial practitioners to accurately measure performances of the industrial organizations and examine industrial dynamics in the sector, so that the correct government policy and management strategies can be formulated. This thesis contributes to such an objective by innovatively applying the methods of economic analysis and network modeling to transport and logistics industry. Conceptually, it includes two parts. The first part focuses on the issue of how to evaluate an industrial organization's performance, and how to identify the factors and market dynamics leading to a given performance. This part focuses on the measurement of what actually happened in the market using observed market data. The second part deals with the issue of how to design and evaluate alternative government policies for the transport and logistics industry. This part involves the modeling and prediction of market outcome/equilibrium under alternative policies. The first part of this thesis consists of three chapters. These chapters, Chapter 2 to Chapter 4, empirically investigate the performance and market dynamics of the aviation industry, from which rich data are available. Chapter 2 benchmarks airline efficiency performance. Chapter 3 investigates the performance and competitive effects of the airlines-in-airlines strategy, in which an airline group operates a full-service airline and a low-cost carrier at the same time. Chapter 4 benchmarks the key performance indicators and competitiveness of the major hub airports in Southeast Asia and Hong Kong, and identifies the key factors behind this development pattern. The second part includes two chapters on policy analysis for the maritime industry. Since industry data are relatively limited in this sector, these studies rely on analytical models and comparative statistics. In particular, Chapter 5 analyzes the effects of regional cooperation on the management of port pollution, by considering the introduction of a market-based policy on pollution control into a region with multiple ports. Chapter 6 investigates the implications of the ongoing process of production base relocation for major ports in the Pearl River Delta region. The key findings of each chapter are as follows. Chapter 2 benchmarks airline productivity and cost competitiveness. By examining the changes in these measures over an eighteen-year period, the key factors underlying the changes are then identified. The analysis of the nine major North American airlines during the 1990 to 2007 period indicate that the airlines' productivity levels significantly improved over the study period, although they were clearly influenced by the overall economy and the industrial shocks. In terms of cost competitiveness, significant productivity gains were largely offset by the sharp increase in fuel prices. However, labor costs remained the most important determinant of airlines' cost competitiveness. There is no evidence that airlines' productivity levels were converging, although they served many overlapping markets. Other factors, such as fleet expansion strategies and bankruptcy protection, also had non-negligible impacts on the airlines' operating efficiency.
Chapter 3 analyzes the performance and competitive effects of the airlines-in-airlines strategy by empirically studying airline pricing and network configuration pattern of the Qantas airline group (Qantas Group), which runs a full-service airline (Qantas Airways) and a low-cost carrier (Jetstar Airways) simultaneously. Using data from the Australian domestic market, the fare regression results reveal that when Qantas and Jetstar operate simultaneously on a route, these two airlines are able to charge higher prices, whereas the rival low-cost carrier's price will be reduced. Overall, the average price in the market is increased. The investigation of Jetstar's network configuration shows that there is no significant correlation between an established Qantas route and a new Jetstar's network configuration. However, on a route where Qantas faces competition from other low-cost carriers, there is a significantly higher chance that Jetstar will also serve this route. All these results suggest that Jetstar is designed as a fighting brand in response to low-cost carrier competition. There is also preliminary evidence that Qantas Group derives some quality benefits from this dual-brand strategy. These results provide fresh insights into the competitive effects of the airlines-in-airlines strategy and explain why this strategy is being used by an increasing number of Asian airlines. Chapter 4 benchmarks key performance measures of the major hub airports in Southeast Asia and Hong Kong so as to identify the key determinants of their competitiveness. The investigation suggests the following. First, Hong Kong airport is a leader with outstanding performance in several operational measures. Second, Bangkok airport's growth has been constrained by political instability and weak hub airline development; however, the airport has great long-term potential. Third, the development of low-cost carriers has become a major driver for traffic growth, but the implications for airport connectivity are unclear. Fourth, despite limited progress on regional liberalization, intra-Asia routes are clearly contributing to traffic growth and hub airport connectivity. Finally, governments should safeguard airline competition by promoting market liberalization and airport capacity investments. Chapter 5 attempts to model the government policy. It investigates a market-based policy, namely environmental taxation, to address pollution control in a region with multiple ports where pollution from a port's operation can spread out over a wide region. The investigation reveals that in the absence of inter-port coordination, pollution spill-over and inter-port competition can lead to distorted pollution taxation and emission constraints. As a result, there will be excessive pollution and sub-optimal social welfare. Therefore, despite the potential competition among ports in a region, it is important for them to coordinate their pollution control efforts. The analysis recommends a regional approach to pollution control and suggests areas where inter-port cooperation is needed among competing ports. Chapter 6 develops an economic model to assess the impacts of production base relocation on intra-and inter-port cluster competition. The study focuses on the major ports in the Pearl River Delta (PRD) region, namely the ports of Hong Kong and Shenzhen, and the competition of these ports with other clusters such as Shanghai in the Yangtze River Delta (YRD). The analysis shows that such a process, in every case, will harm the performance of the port of Hong Kong, but benefit the port of Shanghai. The implication for Shenzhen is more complex as it shares the same transportation corridor to inland China as Hong Kong, but also competes with Hong Kong at the same time. The analytical results suggest that a more competitive port of Hong Kong is in a better position to cooperate with the neighboring port of Shenzhen, and it is important for Hong Kong to improve its cross-border cargo flow.

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