REVENUE AND OPERATIONAL IMPACTS OF DEPEAKING FLIGHTS AT HUB AIRPORTS A ...

387 Pages·2012·15.15 MB·English

REVENUE AND OPERATIONAL IMPACTS OF DEPEAKING FLIGHTS AT
HUB AIRPORTS

A Dissertation
Presented to
The Academic Faculty

By

Donald Samuel Katz

In Partial Fulfillment
Of the Requirements for the Degree
Doctor of Philosophy in Civil Engineering

Georgia Institute of Technology

December, 2012
REVENUE AND OPERATIONAL IMPACTS OF DEPEAKING FLIGHTS AT
HUB AIRPORTS

Approved by:

Dr. Laurie A. Garrow, Advisor Dr. Jorge A. Laval
School of Civil and Environmental School of Civil and Environmental
Engineering Engineering
Georgia Institute of Technology Georgia Institute of Technology

Dr. Michael O. Rodgers Dr. Jeffrey P. Newman
School of Civil and Environmental School of Civil and Environmental
Engineering Engineering
Georgia Institute of Technology Georgia Institute of Technology

Dr. Matthew J. Higgins Date Approved: November 6, 2012
Ernest Scheller Jr. School of Business
Georgia Institute of Technology
ACKNOWLEDGEMENTS

I would like to show my gratitude to the professors at Georgia Tech who have helped me
along the way in preparing my thesis work. My advisor Dr. Laurie Garrow has helped
steer me in the right direction as I progressed through my project, aiding in getting me
feedback from inside and outside the department, and scoping my project based on my
interest. I would also like to thank Dr. Jorge Laval, Dr. Michael Rodgers, Dr. Jeffrey
Newman, and Dr. Matthew Higgins for serving on my committee and providing helpful
feedback to help make this project stronger.
I am grateful to my Airport Cooperative Research Program Graduate Award panel
members who graciously gave their time to review my work and meet to discuss my
progress. Dr. Irina Ioachim, Dr. Annalisa Weigel, and John Fischer provided excellent
feedback and helped the research move forward. Thank you also to Larry Goldstein for
administering the program, arranging the committee, and helping to organize meetings.
I would like to extend thanks to my fellow students in Dr. Garrow’s research
group who have provided aid along the way. I particularly would like to thank Brittany
Luken for teaching me to use SAS and aiding in the development of minimum and
maximum connection times. I would also like to thank Susan Hotle in aiding to develop
the count models to verify the regression models. Finally, a thank you to Gregory
Macfarlane who has kindly allowed me to bounce ideas off of him and who I have sought
the advice of throughout the project.
I would most certainly like to thank my father, mother, and sister for listening to
me during the highs and lows of developing and performing my research work. I am glad
to have the strong foundation you have given me. Thank you also to Felix and Janet
Dessel for encouraging me as I worked, and for providing detailed edits on the text.
I lastly would like to thank my wife Amy, who has supported and encouraged me
through every step of performing my research and writing my dissertation. Your love,
patience, and encouragement have made the completion of my degree a better experience.
This dissertation was aided by the support of the National Science Foundation. I
am forever grateful to have received the honor of earning a Graduate Research
Fellowship, which has allowed me the freely explore a topic of my choice.

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TABLE OF CONTENTS

ACKNOWLEDGEMENTS ............................................................................................... iii
LIST OF TABLES ........................................................................................................... viii
LIST OF FIGURES ......................................................................................................... xiii
LIST OF ABBREVIATIONS ........................................................................................ xviii
SUMMARY ..................................................................................................................... xix
CHAPTER 1 INTRODUCTION ........................................................................................ 1
1.1 Overview .............................................................................................................. 1
1.2 Context ...................................................................................................................... 2
1.3 Research Problem ..................................................................................................... 4
1.4 Research Question .................................................................................................... 7
1.5 Purpose Statement ..................................................................................................... 7
1.6 Contributions............................................................................................................. 9
1.7 Note on Naming Conventions ................................................................................. 10
CHAPTER 2 LITERATURE REVIEW ........................................................................... 11
2.1 Introduction ............................................................................................................. 11
2.2 Rise of Banked Schedules ....................................................................................... 12
2.2.1 Development of Hub-and-Spoke System .......................................................... 12
2.2.2 Banked Schedules at the New Hubs ................................................................. 17
2.2.3 Adding to Banked Schedules ............................................................................ 19
2.2.4 Looking for Another Option ............................................................................. 21
2.3 The Switch to Depeaked Schedules ........................................................................ 22
2.3.1 Depeaking’s Need - Problems with Banked Schedules .................................... 23
2.3.2 Why Not Depeak? ............................................................................................. 26
2.3.3 Difference from Low Cost Carrier Scheduling ................................................. 27
2.3.4 Climate for Depeaking ...................................................................................... 29
2.3.5 Choosing to Depeak a Specific Airport ............................................................ 30
2.4 Uncertainty in Effects of Depeaking ....................................................................... 32
2.4.1 Hubbing and Price ............................................................................................. 32
2.4.2 Peaking and Price .............................................................................................. 33
2.5 History of Airline Depeaking.................................................................................. 34
2.5.1 Major Airline Events of the Early 2000s .......................................................... 35
2.5.2 Airline Depeaking Timeline.............................................................................. 36
2.5.3 American Airlines’ Depeaking ......................................................................... 38
2.6 Competition’s Reaction to Depeaking .................................................................... 40
2.7 Hubbing in Other Sectors........................................................................................ 42
2.8 Affiliate Airlines ..................................................................................................... 44
2.8.1 Affiliate Airline Basics and Benefits ................................................................ 45
2.8.2 Types of Affiliate Airline Contracts ................................................................. 46
2.9 The Hub Airport and Its Revenue ........................................................................... 48
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2.9.1 Issues with Being a Hub ................................................................................... 49
2.9.2 Commercial Revenue ........................................................................................ 51
2.9.3 Commercial Revenue for Hub Airports ............................................................ 52
2.9.4 Positive Purchasing Environment ..................................................................... 55
CHAPTER 3 METHODOLOGY ..................................................................................... 58
3.1 Introduction ............................................................................................................. 58
3.2 Study Structure........................................................................................................ 58
3.2.1 Project Motivation and Goal ............................................................................. 59
3.2.2 Research Questions ........................................................................................... 60
3.3 Datasets ................................................................................................................... 61
3.3.1 Supply Data ....................................................................................................... 61
3.3.2 Demand Data .................................................................................................... 62
3.3.3 Supplemental Datasets ...................................................................................... 64
3.4 Preparing the Datasets............................................................................................. 67
3.4.1 Time Zones ....................................................................................................... 68
3.4.2 Cleaning the On-Time Performance Database.................................................. 69
3.4.3 Adding Affiliate Airlines to Schedule .............................................................. 77
3.4.4 Adding Seating Capacity .................................................................................. 85
3.4.5 Cleaning the DB1B Database ........................................................................... 86
3.4.6 Prorating Fares .................................................................................................. 90
3.4.7 Choosing Time Periods for Case Studies’ Datasets .......................................... 93
3.5 Analysis Methodology ............................................................................................ 96
3.5.1 Choosing Cases ................................................................................................. 98
3.5.2 Schedule Reproduction and Measurements .................................................... 109
3.5.3 Measurement of Schedule Banks .................................................................... 111
3.5.4 Creating Connection Opportunities ................................................................ 124
3.5.5 Supply Analysis .............................................................................................. 126
3.5.6 Demand Analysis ............................................................................................ 129
3.5.7 Operations Analysis ........................................................................................ 134
3.5.8 Competition ..................................................................................................... 137
3.5.9 Multivariate Relationships .............................................................................. 143
3.5.10 Assessing Depeaking and Effects ................................................................. 146
3.5.11 Dwell Time and Airport Revenue ................................................................. 150
CHAPTER 4 RESULTS ................................................................................................. 153
4.1 Introduction ........................................................................................................... 153
4.2 American Airlines at Chicago O’Hare (ORD)...................................................... 153
4.2.1 Data Periods Used and Input Parameters ........................................................ 154
4.2.2 Supply Results ................................................................................................ 156
4.2.3 Demand Results .............................................................................................. 166
4.2.4 On-Time Results ............................................................................................. 167
4.2.5 Dual-Hub: United Airlines’ Response ............................................................ 171
4.2.6 Predicting Changes in Supply ......................................................................... 176
4.2.7 Assessing Depeaking and Effects ................................................................... 179
4.2.8 Summary ......................................................................................................... 184
4.3 American Airlines at Dallas/Fort Worth (DFW) .................................................. 185
4.3.1 Data Periods Used and Input Parameters ........................................................ 185
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4.3.2 Supply Results ................................................................................................ 187
4.3.3 Demand Results .............................................................................................. 197
4.3.4 On-Time Results ............................................................................................. 198
4.3.5 Dual-Hub: Delta Air Lines’ Response ............................................................ 200
4.3.6 Predicting Changes in Supply ......................................................................... 205
4.3.7 Assessing Depeaking and Effects ................................................................... 207
4.3.8 Summary ......................................................................................................... 213
4.4 Delta Air Lines at Atlanta (ATL).......................................................................... 213
4.4.1 Data Periods Used and Input Parameters ........................................................ 215
4.4.2 Supply Results ................................................................................................ 216
4.4.3 Demand Results .............................................................................................. 227
4.4.4 On-Time Results ............................................................................................. 228
4.4.5 Dual-Hub: AirTran’s Response ...................................................................... 230
4.4.6 Predicting Changes in Supply ......................................................................... 234
4.4.7 Assessing Depeaking and Effects ................................................................... 237
4.4.8 Summary ......................................................................................................... 242
4.5 US Airways at Philadelphia (PHL) ....................................................................... 243
4.5.1 Data Periods Used and Input Parameters ........................................................ 244
4.5.2 Supply Results ................................................................................................ 245
4.5.3 Demand Results .............................................................................................. 254
4.5.4 On-Time Results ............................................................................................. 255
4.5.5 Predicting Changes in Supply ......................................................................... 257
4.5.6 Assessing Depeaking and Effects ................................................................... 260
4.5.7 Repeaking ....................................................................................................... 266
4.5.8 Summary ......................................................................................................... 267
4.6 United Airlines at Los Angeles (LAX) ................................................................. 268
4.6.1 Data Periods Used and Input Parameters ........................................................ 269
4.6.2 Supply Results ................................................................................................ 271
4.6.3 Demand Results .............................................................................................. 281
4.6.4 On-Time Results ............................................................................................. 282
4.6.5 Predicting Changes in Supply ......................................................................... 284
4.6.6 Assessing Depeaking and Effects ................................................................... 287
4.6.7 Summary ......................................................................................................... 293
4.7 United Airlines at San Francisco (SFO) ............................................................... 293
4.7.1 Data Periods Used and Input Parameters ........................................................ 294
4.7.2 Supply Results ................................................................................................ 296
4.7.3 Demand Results .............................................................................................. 307
4.7.4 On-Time Results ............................................................................................. 308
4.7.5 Predicting Changes in Supply ......................................................................... 310
4.7.6 Assessing Depeaking and Effects ................................................................... 311
4.7.7 Summary ......................................................................................................... 316
4.8 Passenger Dwell Time and Revenue..................................................................... 317
4.8.1 Significant Factors Affecting Purchasing ....................................................... 317
4.8.2 Spending in Terminals and Income ................................................................ 321
4.9 Case Comparison .................................................................................................. 322
4.9.1 Supply Changes .............................................................................................. 324
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4.9.2 Demand Changes ............................................................................................ 325
4.9.3 Operations Changes ........................................................................................ 326
4.10 Current Status of Cases ....................................................................................... 326
CHAPTER 5 CONCLUSION......................................................................................... 328
5.1 Introduction ........................................................................................................... 328
5.2 Key Findings and Conclusions ............................................................................. 328
5.2.1 Airline-pertinent Conclusions ......................................................................... 329
5.2.2 Airport-pertinent Conclusions ........................................................................ 334
5.2.3 Synthesis of Conclusions ................................................................................ 337
5.3 Recommendations ................................................................................................. 338
5.4 Contributions......................................................................................................... 341
5.5 Study Limitations .................................................................................................. 342
5.5.1 Not a Full Schedule ......................................................................................... 343
5.5.2 No Passenger Connection Times .................................................................... 344
5.6 Extensions for Future Work .................................................................................. 345
APPENDIX A AIRLINE CODES .................................................................................. 348
APPENDIX B AIRPORT CODES ................................................................................. 349
APPENDIX C AFFILIATE AIRLINES IN EACH CASE STUDY .............................. 354
REFERENCES ............................................................................................................... 363

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LIST OF TABLES

Table 2.1 Depeak or Don’t Depeak? Factors for Consideration ..................................... 32
Table 3.1 Cleaning Process to Remove Errors from On-Time Database ........................ 73
Table 3.2 Reporting Airlines to the On-Time Database in 2002 and 2003 ..................... 78
Table 3.3 Decision Process for Affiliate Matching ......................................................... 83
Table 3.4 Depeaking Occurrences for Selection of Case Studies ................................... 99
Table 3.5 Final Case Study List of Verified Depeaked Airports................................... 109
Table 3.6 Checks Performed to Identify Peaks Within a Daily Schedule ..................... 114
Table 3.7 Checks Performed to Add to the Peaks Within A Daily Schedule ............... 117
Table 3.8 Iterated Step to Build Up the Remainder of the Banks ................................. 119
Table 3.9 Dual-Hubbing Cases ...................................................................................... 141
Table 3.10 List of Variables Used in Developing Supply Prediction Model .................. 144
Table 4.1 Summary of Supply Changes for American at ORD .................................... 156
Table 4.2 Supply Measures Over Time for American’s Peaked Schedule at ORD ...... 165
Table 4.3 Supply Measures Over Time for American’s Depeaked Schedule at ORD .. 165
Table 4.4 Summary of Demand and Revenue Changes for American at ORD ............ 166
Table 4.5 Summary of Operational Changes for American at ORD ............................. 168
Table 4.6 Summary of Operational Changes for United at ORD .................................. 170
Table 4.7 Summary of Supply Changes for United at ORD ......................................... 173
Table 4.8 Regression Model Results for Change in Flights at ORD ............................. 176
Table 4.9 Supply Year-Over-Year Changes for American at ORD .............................. 180
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Table 4.10 RASM Year-Over-Year Changes for American at ORD .............................. 182
Table 4.11 Operations Year-Over-Year Changes for American at ORD ........................ 183
Table 4.12 Summary of Supply Changes for American at DFW .................................... 187
Table 4.13 Supply Measures Over Time for American’s Peaked Schedule at DFW ...... 196
Table 4.14 Supply Measures Over Time for American’s Depeaked Schedule at DFW . 196
Table 4.15 Summary of Demand and Revenue Changes for American at DFW ............ 197
Table 4.16 Summary of Operational Changes for American at DFW ............................ 199
Table 4.17 Summary of Supply Changes for Delta at DFW ........................................... 202
Table 4.18 Regression Model Results for Change in Flights at DFW ............................ 205
Table 4.19 Supply Year-Over-Year Changes for American at DFW.............................. 209
Table 4.20 RASM Year-Over-Year Changes for American at DFW.............................. 211
Table 4.21 Operations Year-Over-Year Changes for American at DFW ....................... 212
Table 4.22 Summary of Supply Changes for Delta at ATL ............................................ 217
Table 4.23 Supply Measures Over Time for Delta’s Peaked Schedule at ATL .............. 226
Table 4.24 Supply Measures Over Time for Delta’s Depeaked Schedule at ATL ......... 226
Table 4.25 Summary of Demand and Revenue Changes for Delta at ATL .................... 227
Table 4.26 Summary of Operational Changes for Delta at ATL..................................... 229
Table 4.27 Summary of Supply Changes for AirTran at ATL ........................................ 231
Table 4.28 Regression Model Results for Change in Flights at ATL ............................. 234
Table 4.29 Supply Year-Over-Year Changes for Delta at ATL ...................................... 238
Table 4.30 RASM Year-Over-Year Changes for Delta at ATL ...................................... 240
Table 4.31 Operations Year-Over-Year Changes for Delta at ATL................................ 241
Table 4.32 Summary of Supply Changes for US Airways at PHL ................................. 246
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Table 4.33 Supply Measures Over Time for US Airways’ Peaked Schedule at PHL ..... 253
Table 4.34 Supply Measures Over Time for US Airways’ Depeaked Schedule at PHL 253
Table 4.35 Summary of Demand and Revenue Changes for US Airways at PHL ......... 254
Table 4.36 Summary of Operational Changes for US Airways at PHL .......................... 256
Table 4.37 Regression Model Results for Change in Flights at PHL ............................. 258
Table 4.38 Supply Year-Over-Year Changes for US Airways at PHL ........................... 262
Table 4.39 RASM Year-Over-Year Changes for US Airways at PHL ........................... 264
Table 4.40 Operations Year-Over-Year Changes for US Airways at PHL ..................... 265
Table 4.41 Peaked and Repeaked US Airways Supply Measures at PHL ...................... 267
Table 4.42 Summary of Supply Changes for United at LAX ......................................... 271
Table 4.43 Supply Measures Over Time for United’s Peaked Schedule at LAX ........... 280
Table 4.44 Supply Measures Over Time for United’s Depeaked Schedule at LAX ....... 280
Table 4.45 Summary of Demand and Revenue Changes for United at LAX ................. 281
Table 4.46 Summary of Operational Changes for United at LAX .................................. 283
Table 4.47 Regression Model Results for Change in Flights at LAX ............................. 285
Table 4.48 Supply Year-Over-Year Changes for United at LAX ................................... 289
Table 4.49 RASM Year-Over-Year Changes for United at LAX ................................... 291
Table 4.50 Operations Year-Over-Year Changes for United at LAX ............................. 292
Table 4.51 Summary of Supply Changes for United at SFO .......................................... 297
Table 4.52 Supply Measures Over Time for United’s Peaked Schedule at SFO ............ 306
Table 4.53 Supply Measures Over Time for United’s Depeaked Schedule at SFO ........ 306
Table 4.54 Summary of Demand and Revenue Changes for United at SFO .................. 307
Table 4.55 Summary of Operational Changes for United at SFO ................................... 309
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