The Case of South Korean Airlines-Within-Airlines Model: Helping Full-Service Carriers Challenge Low-Cost Carriers
Round 1
Reviewer 1 Report
Please provider theoretical foundation indetail.
Why Korean airline company is essnetial? What is the unique points of them?
Please elaborate the research question.
What could become the theortical contribution of this research?
Literature review for performance and AWA need to be elaborated more.
Author Response
Response to Reviewer 1 Comments
Point 1: Please provide a theoretical foundation in detail.
Response 1 : LCC-FSC competition is well explained by economic theory as it suggests that price factor highly impact the passenger demand (LCC are low priced while FSCs are high pried). The decision makers understand this concept and that is why in response to the LCCs in the market, many FSCs introduced AWAs. Our results verify this theoretical concept as AWAs have been successful in cae of South Korea to tackle up with LCCS.
Point 2: Why Korean airline company is essnetial? What is the unique points of them?
Response 2: Thank you for highlighting this point. Authors have already included and referred the paper that Korean market is unique in a sense that first it has all the participants of a competitive market. Please refer to first paragraph after figure 1. Highlighted in yellow.
Point 3: Please elaborate the research question.
Response 3: Elaborated in the end of the second last paragraph of the introduction.
Point 4: What could become the theoretical contribution of this research?
Response 4: The theoretical contribution of the paper is multifold; (i) The AWAs perform better in expanding markets. (End of second last paragraph of introduction part)
(ii) The AWAs have helped FSCs to tackle the presence of LCCs, particularly in South Korean aviation market. (Figure 1)
(iii) Literature shows that some AWAs have been successful and some have failed, our results show that the failure might be due to launch of AWAs in saturated markets.
Point 5: Literature review for performance and AWA need to be elaborated more.
Response 5: With the best of our knowledge we have included all available literature on the performance of AWAs, however we have included more literature on hybridization of LCC-FSC market which ultimately will impact the AWAs.
Author Response File: 
Author Response.docx
Reviewer 2 Report
This study investigates competition dynamics between LCCs and AWAs considering a case study of South Korea. The topic is interesting and worthy of investigation. However, I think the exposition could be significantly improved, as well as the paper’s positioning in the literature and he discussion of practical insights from the study. Therefore, my suggestion is for a severe major revision needed to address the following points:
- The author should better explain the use of LV model to investigate competition dynamics in an air transport context. The discussion about discrete choice modeling is not sufficient and not 100% correct (line 64): “To answer these questions raised, the challenge is to measure competition. Competition is evaluated largely by discrete choice models [10]. However, discrete choice models involve plenty of surveys”. Indeed, DCM can be implemented using aggregate data—instead of surveys (see e.g., Coldren et al. (2003) Hsiao & Hansen (2011) and Birolini et al. (2021)). The choice of using a LV model to investigate competition dynamics as well as pros and cons of the two approaches (LV vs DCM) should be better discussed.
- The methodology section should be improved. A quick review of the LV model and its adaptation to air transportation is needed. Equation 1 and 2 should also be better discussed. What are IA and AI? I guess they are interaction terms, but why? I suggest the authors to expand the description of Table 2 in the text. Overall, I am not convinced that this model (LV) can capture all the complexities and interactions that characterize airline competition.
- How does the service level between ILCCs and AWAs differ? And how does the LV model correct for these factors? How can the LV model isolate competition between ILCCs and AWAs if other airlines compete in the market?
- Regarding the literature review, I think that the author should improve the review of relevant studies on airline business models. In particular, they neglect a mention to the recent and ongoing hybridization and cross contamination of airline business model (see, e.g., Klophaus et al. (2012) and Birolini et al. 2022 for a review), which is a major trend (re)shaping FSC vs LCC competition. Possibly, this could also have an impact on AWAs. I think this aspect should be addressed—or, at least, acknowledged in the paper—along with a better positioning of the paper in the broad literature on airline business models.
- Empirical results: What markets/routes have been considered? A map here could help. Plus, a table of descriptive statistics is needed to appraise differences among markets and their competitive settings. Figures 2-13 needs to be improved—both visually and in terms of discussion. What do time windows (x-axis) represent here? They don’t seem to be sequential.
References:
Coldren, G. M., Koppelman, F. S., Kasturirangan, K., & Mukherjee, A. (2003). Modeling aggregate air-travel itinerary shares: logit model development at a major US airline. Journal of Air Transport Management, 9(6), 361-369.
Birolini, S., Besana, E., Cattaneo, M., Redondi, R., & Sallan, J. M. (2022). An integrated connection planning and passenger allocation model for low-cost carriers. Journal of Air Transport Management, 99, 102160.
Klophaus, R., Conrady, R., & Fichert, F. (2012). Low cost carriers going hybrid: Evidence from Europe. Journal of Air Transport Management, 23, 54-58.
Birolini, S., Antunes, A. P., Cattaneo, M., Malighetti, P., & Paleari, S. (2021). Integrated flight scheduling and fleet assignment with improved supply-demand interactions. Transportation Research Part B: Methodological, 149, 162-180.
Hsiao, C. Y., & Hansen, M. (2011). A passenger demand model for air transportation in a hub-and-spoke network. Transportation Research Part E: Logistics and Transportation Review, 47(6), 1112-1125.
Author Response
Response to Reviewer 2 Comments
This study investigates competition dynamics between LCCs and AWAs considering a case study of South Korea. The topic is interesting and worthy of investigation. However, I think the exposition could be significantly improved, as well as the paper’s positioning in the literature and the discussion of practical insights from the study. Therefore, my suggestion is for a severe major revision needed to address the following points:
Point 1: The author should better explain the use of LV model to investigate competition dynamics in an air transport context. The discussion about discrete choice modeling is not sufficient and not 100% correct (line 64): “To answer these questions raised, the challenge is to measure competition. Competition is evaluated largely by discrete choice models [10]. However, discrete choice models involve plenty of surveys”.
Response 1: The incorrect information about DCM has been omitted. Thank you to the reviewer for identifying.
Point 2: Indeed, DCM can be implemented using aggregate data—instead of surveys (see e.g., Coldren et al. (2003) Hsiao & Hansen (2011) and Birolini et al. (2021)). The choice of using a LV model to investigate competition dynamics as well as pros and cons of the two approaches (LV vs DCM) should be better discussed.
Response 2: The mentioned research papers have been studied and cited in the paper and because these studies involve different additional variables and require additional data which is not available in case of South Korea. Explanation has been added to the paper.
Point 3: The methodology section should be improved. A quick review of the LV model and its adaptation to air transportation is needed.
Response 3: A quick introduction of the model has been added. Table 1 represents its adaptation to the aviation.
Point 4: Equations 1 and 2 should also be better discussed. What are IA and AI? I guess they are interaction terms, but why?
Response 4: IA and AI are same correction has been done and equations are explained.
Point 5: I suggest the authors to expand the description of Table 2 in the text. Overall, I am not convinced that this model (LV) can capture all the complexities and interactions that characterize airline competition.
Response 5: Table 2 (Table 3 now) was explained in the first paragraph of experiments and results, however, additional explanation has been added. Authors have already explained the limitation of the model in the paper and agree with the reviewer that LV model cannot capture all the complex dynamics of the aviation market, however, provide useful insights for the policy makers.
Point 6: How does the service level between ILCCs and AWAs differ? And how does the LV model correct for these factors? How can the LV model isolate competition between ILCCs and AWAs if other airlines compete in the market?
Response 6: There is not much difference in the service level as both ILCCs and AWAs follow the LCC model, however, there might be some difference in operations and resources of the airlines as AWAs usually share the resources of their parent FSCs and also are impacted by the operations of parent FSCs. It is already mentioned in the paper that South Korean AWAs do not completely separate their operations from their parent network carriers and authors suggest that AWAs can do this for better performance.
Point 7: Regarding the literature review, I think that the author should improve the review of relevant studies on airline business models. In particular, they neglect a mention to the recent and ongoing hybridization and cross-contamination of airline business model (see, e.g., Klophaus et al. (2012) and Birolini et al. 2022 for a review), which is a major trend (re)shaping FSC vs LCC competition. Possibly, this could also have an impact on AWAs. I think this aspect should be addressed—or, at least, acknowledged in the paper—along with a better positioning of the paper in the broad literature on airline business models.
Response 7: Authors are very thankful to the reviewer for sharing such an insightful work which was previously missed. Authors have acknowledged the great work in the literature part.
Point 8: Empirical results: What markets/routes have been considered? A map here could help. Plus, a table of descriptive statistics is needed to appraise differences among markets and their competitive settings. Figures 2-13 needs to be improved—both visually and in terms of discussion. What do time windows (x-axis) represent here? They don’t seem to be sequential.
Response 8: Market and data considered is already explained in the second last paragraph of the methodology section (highlighted in yellow).
A table (table 2) on descriptive has been added.
Window is explained in the last paragraph of the methodology section highlighted in green. The figure has been added for a better understanding of the window concept.
Figures 2-13 have been improved and 300 dpi figures have been included and discussion is added where needed.
Author Response File: Author Response.docx
Round 2
Reviewer 2 Report
I appreciate the efforts that the authors made to improve the manuscript. I think that the paper now looks much better and is almost fit for publication. As minor lasting points, I think that the discussion on discrete choice modeling can be further improved, as well as the writing.
Author Response
Point 1: I appreciate the efforts that the authors made to improve the manuscript. I think that the paper now looks much better and is almost fit for publication. As minor lasting points, I think that the discussion on discrete choice modeling can be further improved, as well as the writing.
Response: The authors are very much thankful to reviewers for all the valuable comments and for helping to improve the paper. The authors have added a few more lines regarding discrete choice models on page 2 (highlighted in yellow). Hope it has added value.
Author Response File: Author Response.docx
