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Air cargo alliances and competition in passenger markets

Author

Listed:
  • Zhang, Anming
  • Hui, Yer Van
  • Leung, Lawrence

Abstract

This paper develops an oligopoly model to investigate the effect of an air cargo alliance on competition in passenger markets. We consider a model in which the partners, while continuing to offer their respective passenger services, jointly offer a new integrated cargo service by utilizing their passenger aircraft and routes. We find that such an alliance will likely increase the partners' own outputs, while simultaneously decreasing its rivals' outputs, in not only the cargo market but also the secondary passenger market. Furthermore, the alliance is likely to reduce passenger prices and increase total surplus.

Suggested Citation

  • Zhang, Anming & Hui, Yer Van & Leung, Lawrence, 2004. "Air cargo alliances and competition in passenger markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(2), pages 83-100, March.
    • Handle: RePEc:eee:transe:v:40:y:2004:i:2:p:83-100
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    Citations

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    Cited by:

    1. Garg, Chandra Prakash, 2016. "A robust hybrid decision model for evaluation and selection of the strategic alliance partner in the airline industry," Journal of Air Transport Management, Elsevier, vol. 52(C), pages 55-66.
    2. Deng, Yu & Zhang, Yahua & Wang, Kun, 2022. "An analysis of the Chinese scheduled freighter network during the first year of the COVID-19 pandemic," Journal of Transport Geography, Elsevier, vol. 99(C).
    3. Zheng, Shiyuan & Wang, Kun & Jiang, Changmin, 2024. "Converting passenger aircraft into cargo planes under volatile market demand," Transportation Research Part A: Policy and Practice, Elsevier, vol. 181(C).
    4. Chao, Ching-Cheng & Kao, Ko-Ting, 2015. "Selection of strategic cargo alliance by airlines," Journal of Air Transport Management, Elsevier, vol. 43(C), pages 29-36.
    5. Wang, Fan & Zhuo, Xiaopo & Niu, Baozhuang, 2017. "Strategic entry to regional air cargo market under joint competition of demand and promised delivery time," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 317-336.
    6. Ren, Xiaohang & Zeng, Gudian & Dong, Kangyin & Wang, Kun, 2023. "How does high-speed rail affect tourism development? The case of the Sichuan-Chongqing Economic Circle," Transportation Research Part A: Policy and Practice, Elsevier, vol. 169(C).
    7. Yuen, Andrew & Zhang, Anming & Hui, Yer Van & Leung, Lawrence C. & Fung, Michael, 2017. "Is developing air cargo airports in the hinterland the way of the future?," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 15-25.
    8. Chun, So Yeon & Kleywegt, Anton J & Shapiro, Alexander, 2011. "Revenue management in resource exchange seller alliances," MPRA Paper 34657, University Library of Munich, Germany.
    9. Wu, You & Lange, Anne & Mantin, Benny, 2022. "Who benefits from air service agreements? The case of international air cargo operations," Transportation Research Part B: Methodological, Elsevier, vol. 163(C), pages 281-303.
    10. Moussawi-Haidar, Lama, 2014. "Optimal solution for a cargo revenue management problem with allotment and spot arrivals," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 72(C), pages 173-191.
    11. Ma, Mingyou & Zhang, Fangni & Liu, Wei & Dixit, Vinayak, 2022. "A game theoretical analysis of metro-integrated city logistics systems," Transportation Research Part B: Methodological, Elsevier, vol. 156(C), pages 14-27.
    12. Hong, Seock-Jin & Randall, Wesley & Han, Keunsoo & Malhan, Amit Sundeep, 2018. "Estimation viability of dedicated freighter aircraft of combination carriers: A data envelopment and principal component analysis," International Journal of Production Economics, Elsevier, vol. 202(C), pages 12-20.
    13. Baozhuang Niu & Zhipeng Dai & Lei Chen, 2022. "Information leakage in a cross-border logistics supply chain considering demand uncertainty and signal inference," Annals of Operations Research, Springer, vol. 309(2), pages 785-816, February.
    14. Cai, Dong-ling & Xiao, Yi-bin & Jiang, Changmin, 2021. "Competition between high-speed rail and airlines: Considering both passenger and cargo," Transport Policy, Elsevier, vol. 110(C), pages 379-393.
    15. Niu, Baozhuang & Dai, Zhipeng & Zhuo, Xiaopo, 2019. "Co-opetition effect of promised-delivery-time sensitive demand on air cargo carriers’ big data investment and demand signal sharing decisions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 123(C), pages 29-44.
    16. Lori Houghtalen & Özlem Ergun & Joel Sokol, 2011. "Designing Mechanisms for the Management of Carrier Alliances," Transportation Science, INFORMS, vol. 45(4), pages 465-482, November.
    17. Zhu, Shengda & Bell, Michael G.H. & Schulz, Veronica & Stokoe, Michael, 2023. "Co-modality in city logistics: Sounds good, but how?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 168(C).

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