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The connectivity provided by full-service network carriers under the umbrella of airline alliances is increasingly challenged by the services of Middle Eastern airlines via their own hubs, and the rise of new passenger strategies like self-connectivity. While these two developments can potentially benefit consumers with more services and lower fares, the rise of Middle East carriers has been met with opposition by EU and US airlines that call for increased protectionism. In addition, only a few airports in the world actively support self-connections. In this context, this study aims to investigate (1) the markets in which Middle East carriers exert a stronger dominance in terms of the number of passenger connections, (2) whether EU, US, or Asian hubs provide a competitive quality of connectivity in terms of travel time, and (3) whether a significant potential for self-connections is hidden at major airports worldwide. To that end, several datasets of passenger bookings (MIDT), airline schedules, and minimum connecting times between 2012 and 2015 are combined in a connections-building methodology that delivers six market-specific airport connectivity indicators for our benchmarking exercise. Our findings show that although European and some Asian hubs have lost traffic in global markets, they remain competitive from a quality perspective. US hubs have maintained their market share and competitive position. Finally, we identify the airports and airlines with the highest potential to provide self-connecting travel options, which can become an attractive new source of revenue for the parties involved.

The provision of air transport services in small and regional airports is a major concern worldwide as regional aviation is challenged with inadequate revenues. This chapter aims to identify the driving factors for sustaining regional airlines and airports. Nine factors are identified through literature review and expert opinion. Fuzzy-total interpretive structural modeling is used to develop a hierarchical relationship among the factors. Truncated population of the region, national subsidies, and airport infrastructure development have been found to be the strongest drivers for promoting regional airports. This hierarchical model provides a logical structure to the factors.

Many governments around the world have strategically privatized their ports. The privatized ports try to maximize profits by setting higher charges for port services and attracting transship cargos. This paper shows that such privatization of ports can be complemented by adjusting the number of ports. Specifically, the purpose of this paper is to derive the optimal number of ports in cases in which ports serve transship and domestic cargos.

This paper constructs a theoretical model in which ports compete with each other for transship and domestic cargos. In the first stage, the government determines the number of ports. In the second stage, the ports compete with each other in quantity to maximize profits. The authors have derived the optimal number of ports that maximizes national welfare.

The optimal number of ports is expressed as a function of the slope of the demand curve, the slope of the supply curve, and the share of domestic demand relative to total demand for port services. It is shown that the optimal number of ports tends to increase as the share of domestic cargo increases. The optimal number of ports, n*, is given as n*=1/(1−θ), where θ denotes the share of domestic demand in total demand for port services, when the unit cost of port services is constant.

The analysis in the present paper is confined to the case of unilateral intervention by the government of the domestic country. Analyzing interaction among governments via competition policy would offer valuable policy implications.

The results of the current research offer important implications for Korean port policy in the context of maritime industrial changes, in particular, China’s New Silk Road initiative. In particular, the findings of this study suggest that Korea’s investment in ports should be concentrated on ports with competitive advantages.

Relatively scant attention has been paid to the possibility, or need, of strategic privatization being complemented by governmental competition policy. Filling this knowledge gap, the authors have shown that the government can mitigate the negative effects of privatization on domestic consumer surplus by introducing competition in the supply of port services.

The next generation of mobility is arising, and various challenging mobilities have entered the limelight. One of the most exciting of these is urban air mobility (UAM), and one of its challenges is constructing effective and efficient UAM service network. This study took a quantitative approach to the problem in an effort to support and facilitate the UAM service industry.

This study derived a multi-objective and multi-period (MOMP) location optimization model to support strategic UAM service network design. The model, based on its long-term service plan, determines where and when to open UAM airports. In addition, this study applied a modified e-constraint algorithm to derive managerial decisions on the Pareto relationship in consideration of multiple objectives and multiple periods.

Each Pareto solution represents a different UAM service network configuration. Thus, the model can analyze the trade-offs between Pareto decisions for the UAM service network. A case study of UAM service network design in South Korea demonstrates the validity of the proposed mathematical model and algorithm.

The design of a UAM service network should consider various aspects. Its construction and operation would require significant investments of time, capital and people, which would redound to society over a significant span of time. The results of this study provide quantitative guidelines for derivation and analysis of various UAM service network configurations in consideration of multiple objectives and multiple periods.

This paper proposes MOMP optimization, which approach is suitable to the fundamental characteristics of expanding UAM service networks and their design. It is expected that the present study will make significant contributions to the efforts of those deriving and analyzing future UAM service networks.

This chapter reviews the effects of air transport liberalization, and investigates the roles played by airport-airline vertical arrangements in liberalizing markets. Our investigation concludes that liberalization has led to substantial economic and traffic growth. Such positive outcomes are mainly due to increased competition and efficiency gains in the airline industry, and positive externalities to the overall economy. Liberalization allows airlines to optimize their networks, and thus may introduce substantial demand and financial uncertainty to airports. Vertical arrangements between airlines and airports may offer a wide range of benefits to the parties involved, yet such arrangements could also lead to airline entry barriers which reduce the effects of liberalization. Three approaches have been developed to model the effects of liberalization in complex market conditions, which include the analytical, econometric and computational network methods. These approaches should be selectively utilized in policy studies on liberalization.

This chapter reviews the key results obtained in previous studies of airline mergers. It is found that the effect of mergers on airfares is dependent on the network configurations of merging airlines. Fare increases are frequently observed on overlapped routes. However, if the networks of two merging airlines are complementary, the expanded network after the merger leads to cost savings, increase in travel options, and improvement in service quality. Therefore, in a deregulated market, with few entry barriers, relaxing merger regulations is likely to improve welfare. However, most welfare evaluations do not incorporate quality changes or dynamic competition effects. Empirical investigations are primarily ex post analysis of mergers that have already passed antitrust reviews. The relationship between market concentration and welfare might be nonlinear and market specific. Therefore, airline mergers and alliances should be reviewed case by case. Methodological improvements are needed in future studies to control for the effects of complicating factors inherent in ex post evaluations.

The Korean Government wishes to transform the nation into a Northeast Asian business hub. Following economic crisis, there are attempts to move the economy towards a new market‐oriented paradigm of economic growth based on foreign direct investment (FDI) and market friendly transparent corporate governance, replacing the old model of the developmental state, involving intimate and opaque business‐government relations, which has dominated Korean policy for at least three decades. This paper presents findings from 37 interviews conducted with senior executives of foreign companies and various chambers of commerce in Korea. The paper offers new insights into the critical and often invisible issues which need to be confronted and successfully resolved for the transformation of Korea. In providing a critical analysis, the paper examines alternative interpretations of the hub concept, key advantages offered by Korea, the main barriers to becoming a hub, competition from other locations and draws lessons for government policy makers.

European air transport policy, emerged through the confluence of case law and legislation, in four broad areas: liberalization, safety and security, greening, and the external policy. Following the implementation of the single market for air transport, policy shifted to liberalizing and regulating associated services and in recent years to greening, the external aviation policy, and safety and security. Inclusion of air transport in the Environmental Trading Scheme of the European Union exemplifies the European Commission’s proactive stand on bringing the industry in line with emission reduction trajectories of other industries. However, the bid to include flights to third countries in the trading scheme pushed the EU into a controversial position, causing the Commission to halt implementation and to give ICAO time to seek a global multilateral agreement. The chapter also discusses how the nationality clauses in air services agreements breached the Treaty of Rome, and a court ruling to that effect enabled the EC to extend EU liberalization policies beyond the European Union, resulting in the Common Aviation Area with EU fringe countries and the Open Aviation Area with the USA. Another important area of progress was aviation safety, where the EU region is unsurpassed in the world, yet the Commission has pushed the boundary even further, by establishing the European Safety Agency to oversee the European Aviation Safety Management System. Another important area of regulatory development was aviation security, a major focus after the woeful events in 2001, but increasingly under industry scrutiny on costs and effectiveness. The chapter concludes by arguing that in the coming decade, the EU will strive to strengthen its position as a global countervailing power, symbolized in air transport by a leadership position in environmental policy and international market liberalization, exemplified in the EU’s external aviation policy.