Nicole Adler | The Hebrew University of Jerusalem (original) (raw)

Papers on Aviation by Nicole Adler

This paper presents a framework to analyze global alliances and mergers in the airline industry ... more This paper presents a framework to analyze global alliances and mergers in the airline industry
under competition. The
framework can help airlines identify partners and network structures, and help governments
predict changes in social wel- fare before accepting or rejecting proposed mergers or alliances.
The research combines profit-maximizing objectives to cost-based network design formulations
within a game theoretic framework. The resulting analysis enables merging air- lines to choose
appropriate international hubs for their integrated network based on their own and their
competitors’ costs and revenues in the form of best response functions. The results of an
illustrative example suggest that some mergers may be more successful than others and optimal
international gateway choices change according to the number of competitors remaining in the
market. Furthermore, although the pressure on airlines would suggest a strong preference for
mergers or alliances, perhaps surprisingly, the solution outcomes whereby all airlines merge or ally are not equilibria in the overall game.

This paper disaggregates aircraft operating costs into various cost categories and provides back... more This paper disaggregates aircraft operating costs into various cost categories and provides
background for an engineer-
ing approach used to compute a generalized aircraft trip cost function. Engineering cost values for
specific airplane designs
were generated for a broad spread of operating distances, enabling a direct analysis of the
operating cost function and
avoiding the problems associated with financial reporting practices. The resulting data points were
used to calibrate a cost
function for aircraft trip expenses as they vary in seating capacity and distance. This formula and
the parameter values are
then compared to econometric results, based on historical data. Results are intended to be used to
adjust reported costs so
that conclusions about industry structure based on cost regressions correctly account for
differences in stage lengths and
capacities. A Cobb–Douglas cost function is also computed, providing elasticity parameters for both
economies of density,
through seat capacity, and distance as they would be determined from clean airline-neutral data.
The results are particu-
larly useful for route network design because they establish a simple planar connection between
frequency, capacity and
costs. Although the econometric cost functions are no less accurate, it is generally much less convenient for subsequent
analysis.

The aim of this paper is to present a model structure that analyses the hub-spoke network design ... more The aim of this paper is to present a model structure that analyses the hub-spoke network design issue within a competitive framework. Under deregulation, airlines have developed hub-and-spoke networks enabling them to increase frequency by aggregating demand and to prevent
entry into the marketplace by reducing airfares. Whilst liberalization in the United States and Europe was undertaken in order to increase competition, the results in this direction are unclear. This research evaluates airline profits based on a micro-economic theory of its behavior under deregulation and its use of hub-and-spoke networks. Through a two-stage Nash best-response game, we search for equilibria in the air-transportation industry. The game is applied to Western Europe where profitable hubs and monopolistic equilibria are clearly identifiable and duopolistic equilibria are potentially possible given sufficient demand.

This paper develops, evaluates and ultimately aids in the choosing of an optimal, single allocat... more This paper develops, evaluates and ultimately aids in the choosing of an optimal, single
allocation, hub-
and-spoke network for an airline working in a deregulated market. An integer linear program
evaluates potential hub network combinations, whose profits are then determined using a non-linear
mathematical program. International gateway airports and regional hubs, profit, frequency and
aircraft size are the decision variables. An adapted, conjugate-gradient projection algorithm is
developed and the models are
subsequently applied to Western Europe.

Under deregulation, airlines developed hub-and-spoke (HS) networks enabling them to aggregate de... more Under deregulation, airlines developed hub-and-spoke (HS) networks enabling them to aggregate
demand, increase
frequency, reduce airfares and prevent entry into the marketplace. This research evaluates airline
profit based on micro- economic theory of behaviour under deregulation. Through a two-stage Nash
best-response game, equilibria in the air transportation industry is sought to evaluate the most
profitable HS network for an airline to survive in a deregulated environment. In the first stage of
the game, an integer linear program aids in generating potential networks. In the second stage, a
nonlinear mathematical program maximizes profits for each airline, based on the networks chosen by
all participants. The variables of the mathematical program include frequency, plane size and
airfares. In an illustrative
example, both monopoly and duopoly solutions are attainable as a function of demand.

This paper focuses on measuring and comparing productive efficiency and profitability amo... more This paper focuses on measuring and comparing productive efficiency and profitability among
airports owned and operated by
government departments, 100% government-owned corporations, independent airport authorities,
mixed enterprises with government majority ownership and mixed enterprises with private majority
ownership. The analysis is based on a cross-sectional, time-series dataset (2001–2003) for the
major Asia-Pacific, European and North American airports. There is strong evidence that airports
with government majority ownership and those owned by multi-level of government are significantly
less efficient than airports with a private majority ownership; there is no statistically
significant evidence to suggest that airports owned and operated by US government
branches, independent airport authorities in North America, or airports elsewhere
operated by 100% government corporations have lower operating efficiency than airports with
a private majority ownership; airports with a private majority ownership achieve
significantly higher operating profit margins than other airports; whereas airports with
government majority ownership or multi-level government ownership have the lowest operating
profit margin; and generally, airports with a private majority ownership derive a much
higher proportion of their total revenue from non-aviation services than any other category
of airports while offering significantly lower aeronautical charges than airports in other
ownership categories excluding US airports. The results suggest that private–public–partner- ship
with minority private sector participation and multi-level governments’ ownership should be
avoided, supporting the majority
private sector ownership and operation of airports.

Transportation Research Part A-policy and Practice, 2005

Journal of International Business Studies, 2007

Papers on DEA by Nicole Adler

This research further develops the combined use of principal component analysis (PCA) and data en... more This research further develops the combined use of principal component analysis (PCA) and data envelopment analysis (DEA). The aim is to reduce the lack of discriminatory power that occurs in DEA when there are an excessive number of inputs and outputs in relation to the number of decision-making units. Three separate PCA-DEA formulations are developed in the paper. The first formulation introduces assurance regions using PCA weights as objectively based constraints on groups of adapted data. The second and third formulations apply PCA to all inputs and separately to all outputs. Subsequently, all PCs are utilized, objective assurance region constraints are applied and discrimination is maximized without any loss of information. The third formulation searches for a single set of global weights with which to fully rank all observations. In summary, it is clear that the use of PCs can dramatically improve the strength of DEA models.

Within data envelopment analysis (DEA) is a sub-group of papers in which many researchers have s... more Within data envelopment analysis (DEA) is a sub-group of papers in which many researchers have
sought to im-
prove the differential capabilities of DEA and to fully rank both efficient, as well as inefficient,
decision-making units.
The ranking methods have been divided in this paper into six, somewhat overlapping, areas. The first
area involves the
evaluation of a cross-efficiency matrix, in which the units are self and peer evaluated. The second
idea, generally known
as the super-efficiency method, ranks through the exclusion of the unit being scored from the dual
linear program and
an analysis of the change in the Pareto Frontier. The third grouping is based on benchmarking, in
which a unit is highly
ranked if it is chosen as a useful target for many other units. The fourth group utilizes
multivariate statistical tech-
niques, which are generally applied after the DEA dichotomic classification. The fifth research area
ranks inefficient
units through proportional measures of inefficiency. The last approach requires the collection of
additional, preferential
information from relevant decision-makers and combines multiple-criteria decision methodologies
with the DEA ap-
proach. However, whilst each technique is useful in a specialist area, no one methodology can be
prescribed here as the
complete solution to the question of ranking.

Omega-international Journal of Management Science, 2008

The purpose of this chapter is to present data envelopment analysis (DEA) as a two-dimensional pl... more The purpose of this chapter is to present data envelopment analysis (DEA) as a two-dimensional plot that permits an easy, graphical explanation of the results. Due to the multiple dimensions of the problem, graphical presentation of DEA results has proven somewhat elusive up to now. Co-Plot, a variant of multidimensional scaling, places each decision-making unit in a two-dimensional space in which the location of each observation is determined by all variables simultaneously. The graphical display technique exhibits observations as points and variables (ratios) as arrows, relative to the same center-of-gravity. Observations are mapped such that similar decision-making units are closely located on the plot, signifying that they belong to a group possessing comparable characteristics and behavior. In this chapter, we will analyze 19 Finnish Forestry Boards using Co-Plot to examine the original data and then to present the results of various weight-constrained DEA models, including that of PCA-DEA.

Socio-economic Planning Sciences, 2010

European Journal of Operational Research, 2010

US experience shows that deregulation of the airline industry leads to the formation of hub-and-s... more US experience shows that deregulation of the airline industry leads to the formation of hub-and-spoke (HS) airline networks. Viewing potential HS networks as decision-making units, we use data envelopment analysis (DEA) to select the most efficient networks configurations from the many that are possible in the
deregulated European Union airline market. To overcome the difficulties that DEA encounters when there is an excessive number of inputs or outputs, we employ principal component analysis (PCA) to aggregate certain, clustered data, whilst ensuring very similar results to those achieved under the
original DEA model. The DEA-PCA formulation is then illustrated with real-world data gathered from the West European air transportation industry.

Papers by Nicole Adler

IMPRINT-EUROPE seminar, …, 2003

... Nicole Adler, School of Business Administration, Hebrew University of Jerusalem, Israel. e-ma... more ... Nicole Adler, School of Business Administration, Hebrew University of Jerusalem, Israel. e-mail: msnic@mscc.huji.ac.il Chris Nash Institute for Transport Studies, Leeds University, United Kingdom. e-mail: cnash@its.leeds.ac.uk Esko Niskanen ...

Operations Research

In “Identifying Merger Opportunities: The Case of Air Traffic Control,” N. Adler, O. Olesen, and ... more In “Identifying Merger Opportunities: The Case of Air Traffic Control,” N. Adler, O. Olesen, and N. Volta propose a model to identify an optimal horizontal merger configuration at the level of an industry or firm with multiple branches. Assuming that each firm operates within a catchment area or owns part of a network, we extend the model to consider feasible mergers that cover a contiguous area, should network effects be a consideration. An application to the European air traffic control system suggests that four contiguous air navigation service providers should replace the current 29 providers and the nine functional airspace blocks proposed in the Single European Skies initiative. The technological developments in air traffic management in which regulators on both sides of the Atlantic have invested heavily, namely SESAR and NextGen, are unlikely to be used without a concomitant reduction in operating costs through economies of scale. We find that the politically oriented soluti...

Competition and regulation (when lacking the former) outrank ownership

Air traffic is recognised to bring benefits to the local economy, in terms of both cargo and pass... more Air traffic is recognised to bring benefits to the local economy, in terms of both cargo and passenger mobility. European airports are implementing several measures to reduce aircraft noise, in line with the European Commission regulation and the International Civil Aviation Organisation’s proposal of the so-called balanced approach. Noise exposure estimates are gathered from the European Environment Agency, which collects information on European Union member states’ airports. Different strategies can be implemented to reduce the noise or mitigate its effects, including the appropriate design and production of aircraft and airport collaboration with authorities and neighbourhood associations. Reduction of noise at the source consists of the appropriate design and production of aircraft, focusing on the reduction of engine noise and addressing airframe noise aerodynamic construction which generates low drag. Milan Bergamo Airport has been actively involved in environmental programmes...

This paper presents a framework to analyze global alliances and mergers in the airline industry ... more This paper presents a framework to analyze global alliances and mergers in the airline industry
under competition. The
framework can help airlines identify partners and network structures, and help governments
predict changes in social wel- fare before accepting or rejecting proposed mergers or alliances.
The research combines profit-maximizing objectives to cost-based network design formulations
within a game theoretic framework. The resulting analysis enables merging air- lines to choose
appropriate international hubs for their integrated network based on their own and their
competitors’ costs and revenues in the form of best response functions. The results of an
illustrative example suggest that some mergers may be more successful than others and optimal
international gateway choices change according to the number of competitors remaining in the
market. Furthermore, although the pressure on airlines would suggest a strong preference for
mergers or alliances, perhaps surprisingly, the solution outcomes whereby all airlines merge or ally are not equilibria in the overall game.

This paper disaggregates aircraft operating costs into various cost categories and provides back... more This paper disaggregates aircraft operating costs into various cost categories and provides
background for an engineer-
ing approach used to compute a generalized aircraft trip cost function. Engineering cost values for
specific airplane designs
were generated for a broad spread of operating distances, enabling a direct analysis of the
operating cost function and
avoiding the problems associated with financial reporting practices. The resulting data points were
used to calibrate a cost
function for aircraft trip expenses as they vary in seating capacity and distance. This formula and
the parameter values are
then compared to econometric results, based on historical data. Results are intended to be used to
adjust reported costs so
that conclusions about industry structure based on cost regressions correctly account for
differences in stage lengths and
capacities. A Cobb–Douglas cost function is also computed, providing elasticity parameters for both
economies of density,
through seat capacity, and distance as they would be determined from clean airline-neutral data.
The results are particu-
larly useful for route network design because they establish a simple planar connection between
frequency, capacity and
costs. Although the econometric cost functions are no less accurate, it is generally much less convenient for subsequent
analysis.

The aim of this paper is to present a model structure that analyses the hub-spoke network design ... more The aim of this paper is to present a model structure that analyses the hub-spoke network design issue within a competitive framework. Under deregulation, airlines have developed hub-and-spoke networks enabling them to increase frequency by aggregating demand and to prevent
entry into the marketplace by reducing airfares. Whilst liberalization in the United States and Europe was undertaken in order to increase competition, the results in this direction are unclear. This research evaluates airline profits based on a micro-economic theory of its behavior under deregulation and its use of hub-and-spoke networks. Through a two-stage Nash best-response game, we search for equilibria in the air-transportation industry. The game is applied to Western Europe where profitable hubs and monopolistic equilibria are clearly identifiable and duopolistic equilibria are potentially possible given sufficient demand.

This paper develops, evaluates and ultimately aids in the choosing of an optimal, single allocat... more This paper develops, evaluates and ultimately aids in the choosing of an optimal, single
allocation, hub-
and-spoke network for an airline working in a deregulated market. An integer linear program
evaluates potential hub network combinations, whose profits are then determined using a non-linear
mathematical program. International gateway airports and regional hubs, profit, frequency and
aircraft size are the decision variables. An adapted, conjugate-gradient projection algorithm is
developed and the models are
subsequently applied to Western Europe.

Under deregulation, airlines developed hub-and-spoke (HS) networks enabling them to aggregate de... more Under deregulation, airlines developed hub-and-spoke (HS) networks enabling them to aggregate
demand, increase
frequency, reduce airfares and prevent entry into the marketplace. This research evaluates airline
profit based on micro- economic theory of behaviour under deregulation. Through a two-stage Nash
best-response game, equilibria in the air transportation industry is sought to evaluate the most
profitable HS network for an airline to survive in a deregulated environment. In the first stage of
the game, an integer linear program aids in generating potential networks. In the second stage, a
nonlinear mathematical program maximizes profits for each airline, based on the networks chosen by
all participants. The variables of the mathematical program include frequency, plane size and
airfares. In an illustrative
example, both monopoly and duopoly solutions are attainable as a function of demand.

This paper focuses on measuring and comparing productive efficiency and profitability amo... more This paper focuses on measuring and comparing productive efficiency and profitability among
airports owned and operated by
government departments, 100% government-owned corporations, independent airport authorities,
mixed enterprises with government majority ownership and mixed enterprises with private majority
ownership. The analysis is based on a cross-sectional, time-series dataset (2001–2003) for the
major Asia-Pacific, European and North American airports. There is strong evidence that airports
with government majority ownership and those owned by multi-level of government are significantly
less efficient than airports with a private majority ownership; there is no statistically
significant evidence to suggest that airports owned and operated by US government
branches, independent airport authorities in North America, or airports elsewhere
operated by 100% government corporations have lower operating efficiency than airports with
a private majority ownership; airports with a private majority ownership achieve
significantly higher operating profit margins than other airports; whereas airports with
government majority ownership or multi-level government ownership have the lowest operating
profit margin; and generally, airports with a private majority ownership derive a much
higher proportion of their total revenue from non-aviation services than any other category
of airports while offering significantly lower aeronautical charges than airports in other
ownership categories excluding US airports. The results suggest that private–public–partner- ship
with minority private sector participation and multi-level governments’ ownership should be
avoided, supporting the majority
private sector ownership and operation of airports.

Transportation Research Part A-policy and Practice, 2005

Journal of International Business Studies, 2007

This research further develops the combined use of principal component analysis (PCA) and data en... more This research further develops the combined use of principal component analysis (PCA) and data envelopment analysis (DEA). The aim is to reduce the lack of discriminatory power that occurs in DEA when there are an excessive number of inputs and outputs in relation to the number of decision-making units. Three separate PCA-DEA formulations are developed in the paper. The first formulation introduces assurance regions using PCA weights as objectively based constraints on groups of adapted data. The second and third formulations apply PCA to all inputs and separately to all outputs. Subsequently, all PCs are utilized, objective assurance region constraints are applied and discrimination is maximized without any loss of information. The third formulation searches for a single set of global weights with which to fully rank all observations. In summary, it is clear that the use of PCs can dramatically improve the strength of DEA models.

Within data envelopment analysis (DEA) is a sub-group of papers in which many researchers have s... more Within data envelopment analysis (DEA) is a sub-group of papers in which many researchers have
sought to im-
prove the differential capabilities of DEA and to fully rank both efficient, as well as inefficient,
decision-making units.
The ranking methods have been divided in this paper into six, somewhat overlapping, areas. The first
area involves the
evaluation of a cross-efficiency matrix, in which the units are self and peer evaluated. The second
idea, generally known
as the super-efficiency method, ranks through the exclusion of the unit being scored from the dual
linear program and
an analysis of the change in the Pareto Frontier. The third grouping is based on benchmarking, in
which a unit is highly
ranked if it is chosen as a useful target for many other units. The fourth group utilizes
multivariate statistical tech-
niques, which are generally applied after the DEA dichotomic classification. The fifth research area
ranks inefficient
units through proportional measures of inefficiency. The last approach requires the collection of
additional, preferential
information from relevant decision-makers and combines multiple-criteria decision methodologies
with the DEA ap-
proach. However, whilst each technique is useful in a specialist area, no one methodology can be
prescribed here as the
complete solution to the question of ranking.

Omega-international Journal of Management Science, 2008

The purpose of this chapter is to present data envelopment analysis (DEA) as a two-dimensional pl... more The purpose of this chapter is to present data envelopment analysis (DEA) as a two-dimensional plot that permits an easy, graphical explanation of the results. Due to the multiple dimensions of the problem, graphical presentation of DEA results has proven somewhat elusive up to now. Co-Plot, a variant of multidimensional scaling, places each decision-making unit in a two-dimensional space in which the location of each observation is determined by all variables simultaneously. The graphical display technique exhibits observations as points and variables (ratios) as arrows, relative to the same center-of-gravity. Observations are mapped such that similar decision-making units are closely located on the plot, signifying that they belong to a group possessing comparable characteristics and behavior. In this chapter, we will analyze 19 Finnish Forestry Boards using Co-Plot to examine the original data and then to present the results of various weight-constrained DEA models, including that of PCA-DEA.

Socio-economic Planning Sciences, 2010

European Journal of Operational Research, 2010

US experience shows that deregulation of the airline industry leads to the formation of hub-and-s... more US experience shows that deregulation of the airline industry leads to the formation of hub-and-spoke (HS) airline networks. Viewing potential HS networks as decision-making units, we use data envelopment analysis (DEA) to select the most efficient networks configurations from the many that are possible in the
deregulated European Union airline market. To overcome the difficulties that DEA encounters when there is an excessive number of inputs or outputs, we employ principal component analysis (PCA) to aggregate certain, clustered data, whilst ensuring very similar results to those achieved under the
original DEA model. The DEA-PCA formulation is then illustrated with real-world data gathered from the West European air transportation industry.

IMPRINT-EUROPE seminar, …, 2003

... Nicole Adler, School of Business Administration, Hebrew University of Jerusalem, Israel. e-ma... more ... Nicole Adler, School of Business Administration, Hebrew University of Jerusalem, Israel. e-mail: msnic@mscc.huji.ac.il Chris Nash Institute for Transport Studies, Leeds University, United Kingdom. e-mail: cnash@its.leeds.ac.uk Esko Niskanen ...

Operations Research

In “Identifying Merger Opportunities: The Case of Air Traffic Control,” N. Adler, O. Olesen, and ... more In “Identifying Merger Opportunities: The Case of Air Traffic Control,” N. Adler, O. Olesen, and N. Volta propose a model to identify an optimal horizontal merger configuration at the level of an industry or firm with multiple branches. Assuming that each firm operates within a catchment area or owns part of a network, we extend the model to consider feasible mergers that cover a contiguous area, should network effects be a consideration. An application to the European air traffic control system suggests that four contiguous air navigation service providers should replace the current 29 providers and the nine functional airspace blocks proposed in the Single European Skies initiative. The technological developments in air traffic management in which regulators on both sides of the Atlantic have invested heavily, namely SESAR and NextGen, are unlikely to be used without a concomitant reduction in operating costs through economies of scale. We find that the politically oriented soluti...

Competition and regulation (when lacking the former) outrank ownership

Air traffic is recognised to bring benefits to the local economy, in terms of both cargo and pass... more Air traffic is recognised to bring benefits to the local economy, in terms of both cargo and passenger mobility. European airports are implementing several measures to reduce aircraft noise, in line with the European Commission regulation and the International Civil Aviation Organisation’s proposal of the so-called balanced approach. Noise exposure estimates are gathered from the European Environment Agency, which collects information on European Union member states’ airports. Different strategies can be implemented to reduce the noise or mitigate its effects, including the appropriate design and production of aircraft and airport collaboration with authorities and neighbourhood associations. Reduction of noise at the source consists of the appropriate design and production of aircraft, focusing on the reduction of engine noise and addressing airframe noise aerodynamic construction which generates low drag. Milan Bergamo Airport has been actively involved in environmental programmes...

The Palgrave Handbook of Economic Performance Analysis, 2019

Within the field of data envelopment analysis is a sub-group of papers in which many researchers ... more Within the field of data envelopment analysis is a sub-group of papers in which many researchers have sought to improve the differential capabilities of DEA and to fully rank both efficient, as well as inefficient, decision-making units. We have divided the ranking concepts into seven general areas based on the following concepts: super-efficiency, benchmarking, cross-efficiency, common set of weights, multivariate statistics, multi-criteria decision-making and inefficiency dominance. After describing the approaches, we compare and contrast them using an illustration drawn from a set of universities. It is apparent that the approaches succeed in strengthening the results of the non-parametric data envelopment analysis models and frequently enable an almost complete ranking of decision-making units. However, the results may diverge substantially between the different models, suggesting that the choice of framework must be context dependent and chosen with great care.

European Journal of Operational Research, 2021

International Transport Forum Discussion Papers, 2017

Transportation Research Part A: Policy and Practice, 2020

Transportation Research Part A: Policy and Practice, 2018

Global Strategy Journal, 2019

Global Strategy Journal, 2015

In this study we argue that when undertaking location decisions multinational enterprises (MNEs) ... more In this study we argue that when undertaking location decisions multinational enterprises (MNEs) ought to incorporate their competitors' reactions to such decisions as well as consumer preferences for location, in addition to the more standard cost-benefit analyses. We view MNEs as networks of activities connected via product and knowledge flows and develop a game-theoretic, location-allocation mathematical model. A series of computational analyses leads to competitive outcomes and location choices, where even without an explicit modeling of inter-region differences, MNEs show strong tendency towards regionally focused location configurations. Importantly, such regionally focused location configurations can take the shape of regionally focused MNEs or of globally dispersed MNEs with a regional structure.

Transportation Research Part B: Methodological, 2016

Economics of Transportation, 2015

Transport Policy, 2015

ABSTRACT

Modeling Data Irregularities and Structural Complexities in Data Envelopment Analysis

ABSTRACT The purpose of this chapter is to present the combined use of principal component analys... more ABSTRACT The purpose of this chapter is to present the combined use of principal component analysis (PCA) and data envelopment analysis (DEA) with the stated aim of reducing the curse of dimensionality that occurs in DEA when there is an excessive number of inputs and outputs in relation to the number of decision-making units. Various PCA-DEA formulations are developed in the chapter utilizing the results of principal component analyses to develop objective, assurance region type constraints on the DEA weights. The first set of models applies PCA to grouped data representing similar themes, such as quality or environmental measures. The second set of models, if needed, applies PCA to all inputs and separately to all outputs, thus further strengthening the discrimination power of DEA. A case study of municipal solid waste managements in the Oulu district of Finland, which has been frequently analyzed in the literature, will illustrate the different models and the power of the PCA-DEA formulation. In summary, it is clear that the use of principal components can noticeably improve the strength of DEA models.