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Following deregulation, the airline industry has dramatically changed. In addition to numerous mergers and bankruptcies, the industry has also seen an influx of small, “low-cost” carriers who offer differentiated competition to the traditional legacy carriers. These low-cost carriers traditionally avoided the hub-and-spoke networks of legacy carriers, offering point-to-point service often on adjacent routes. However, events of the past 10–15 years, including the terrorist attacks of 9/11, rising fuel prices, and economic recessions, have led to a shift in the operations of these airlines. The legacy carriers have unbundled many of their services, most notably through baggage fees, seeking to improve efficiency. Low-cost carriers have expanded services into major airports and have shifted to more direct route level competition with the legacy carriers as they use their cost efficiency advantages to their advantage. In this chapter, we examine airport and route choice decision to serve by legacy and low-cost carriers over time. Our descriptive and econometric models point to convergence of operations in terms of the airports and routes that low-cost and legacy carriers serve, with the implication that the current competitive atmosphere improves efficiency as the distinctions between legacy and low-cost carriers have become less obvious.

The purpose of this paper is to examine the use of online video mini-lectures, intended to complement in-class teaching by allowing students to review the more technical aspects of the course.

Online video mini-lectures/tutorials, covering the technical components of the course, were introduced two-thirds of the way through a Principles of Microeconomics course. This methodology allows for the estimation of the impact of incorporating this technology on student performance. In addition, comparisons using results from previous terms, in which these videos were not available at any point during the course, allow for an examination of the overall impact of this technology on student performance in the last portion of the course.

The results point to online lectures improving student achievement, but that this improvement is mostly achieved by the lower achieving students, and exhibits significant diminishing returns to the number of times the videos are watched. As such, the videos are shown to help students who were struggling with the material, but that there is little value to exclusively watching the videos multiple times.

As technology impacts higher education, many wonder what role instructors will play. This study examines a unique implementation of technology within a traditional classroom, indicating that technology can serve as a complement to in-class teaching.

The past several years have seen dramatic increases in oil prices, which have adversely impacted airlines, with the average price of jet fuel increasing from $1.34 per gallon between 1995 and 2005 to $2.81 per gallon between 2006 and 2009. As a partial response to these increases in costs, many airlines have introduced fees for services that were previously provided to their customers free of charge. One such charge is a fee on checked baggage, which most airlines introduced in 2008. These charges have been successful in increasing airline revenues, so successful that many airlines have increased their fees multiple times over the past two years. Baggage fees have also enabled airlines to avoid dramatic increases in their airfares, which may result in significantly fewer customers, as these additional fees generate revenues, but since they are not collected when passengers book their tickets, the cost of air travel on these airlines appears lower than it actually is. The most notable exception to this pattern of charging baggage fees is Southwest Airlines, which has launched a “Bags Fly Free” advertising campaign in an attempt to differentiate their product from that of fee charging airlines. In this chapter, we use a spatial autoregressive model to analyze what impact the increase in fuel costs, and the introduction of baggage fees have had on ticket prices. Our results suggest that increases in jet fuel prices are passed along to travelers in the form of higher ticket prices but that baggage fees actually reduce ticket prices, as airlines may substitute baggage fee revenue for ticket revenue to become more competitive on their airfare. We also find that Southwest Airlines has increased their ticket prices on routes in which they compete with fee charging firms, leveraging their “Bags Fly Free” product differentiation to increase their revenues.

Health risks associated with coronavirus disease 2019 (COVID-19) have severely affected the financial stability of airline companies globally. Recapturing financial stability following this crisis depends heavily on these companies’ ability to attain efficient and productive operations. This study uses several empirical approaches to examine key factors contributing to carriers sustaining high productivity prior to, during and after a major recession. Findings suggest, regardless of economic conditions, that social distancing which requires airline companies in the Asia Pacific region to fly with a significant percentage of unfilled seats weakens the performance of those companies. Furthermore, efficient operations do not guarantee the avoidance of productivity declines, especially during a recession.

Research analyzing competition and individual carriers' financial condition's influence on pricing behavior in the airline industry are presented in the first part of the book. The initial chapter by Manuel Hernandez, Anirban Sengupta, and Steven Wiggins directly tests whether competition creates a challenge for legacy carriers practicing nonlinear pricing such that passengers are charged different prices for the same flight without cost justification. The authors use transactions level data, which has the advantage of allowing an empirical examination of the effect of Southwest and other LCCs on both the level and structure of fares of legacy carriers. The analysis is performed by defining a menu of airline fare types according to restrictive ticket characteristics to then evaluate the competitive effects of both Southwest and other LCCs, including adjacent and potential competition from Southwest, on the relative pricing behavior of major carriers. Findings suggest that competition from Southwest has an important effect on both the level and fare structure of legacy carriers. In particular, direct and potential competition from Southwest both lower the fare per mile and compress the fare structure by decreasing the premia of the highest fares, including first-class tickets, over the lowest fares. Adjacent competition from Southwest and direct competition from other LCCs only seem to significantly affect the fare level.