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タイトルTit le

The Quality Compet it ion among Japanese Major Airlines after theRegulatory Change of 1985

著者Author(s) Murakami, Hideki

掲載誌・巻号・ページCitat ion

The Annals of the School of Business Administrat ion, KobeUniversity,40:61-74

刊行日Issue date 1996

資源タイプResource Type Departmental Bullet in Paper / 紀要論文

版区分Resource Version publisher

権利Rights

DOI

JaLCDOI 10.24546/81003678

URL http://www.lib.kobe-u.ac.jp/handle_kernel/81003678

PDF issue: 2020-08-20

The Quality Competition

among Japanese Major Airlines

after the Regulatory Change of 1985

Hideki Murakami *

Abstract

This paper analyses econometrically the mutual quality competition of

three major Japanese airlines (JAL, ANA, and JAS), after regulatory change of

1985. Using 31 cross section data of double and triple track markets for 4

years, the main section reveals that (a) through quality competition JAL has successfully increased its share of demand in the markets it was authorized to

enter, while ANA, the incumbent in those markets, has gradually lost its share

of demand, and (b) with respect to JAS, it has also been able to increase its

share of demand , but less successfully than JAL. The final section refers to

the character of the aviation policy of the government which may have caused

the different performance in the quality competition between these airlines, and

investigates why such a difference arose.

* Assistant Professor of School of Business Administration , Kobe University. The author is thankful to Professors Tae Oum (University of British Columbia),

Anming Zhang (University of Victoria), Yiming Zhang (University of New Brunswick),and Chin Anthony (National University of Singapore), who gave me

some helpful comments at the 7th World Conference on Transportation Research in Sydney. A part of the contents of this paper is repeated in Morrison et

al.(1995).

62 H. Murakami

I . Introduction

It was in 1972 that the Japanese government (Ministry of

Transport, the MoT) decided on the aviation policy, called the 45-47

system. The main idea of the 45-47 system was that JAL (Japan Air

Lines, owned by the government) was authorized to operate mainly in international and domestic trunk markets , ANA (All Nippon Airways,

privately owned) mainly in domestic trunk and the denser local markets, and JAS (Japan Air System, privately owned, which once was

called TDA) mainly in other domestic local markets. Under the 45-47 system, the MoT also tightly regulated all kinds of competition, such as

price competition, entry and exit, and quality competition. However, in 1985, influenced by the world-wide movement toward

deregulation, the MoT revised the 45-47 system. In particular, with respect to domestic policy changes, the MoT authorized JAL and JAS

to enter some dense domestic markets where ANA had already been

operating as the incumbent, so that 34 double and triple track markets were formed by the end of 1992'.

However, it is clear that the MoT continues to regulate the

competition mentioned above, even after the regulatory change. So until now there seems to have been no room for airlines to compete

with one another in domestic markets. However, it is interesting and

a little strange that the MoT declares that it intends to accelerate, at least, the growth of the spirit of competition through regulatory

change. So the MoT's purpose in its regulatory change looks obscure,

or from another viewpoint, looks complex. Before conducting a

theoretical and empirical analysis, it is necessary to explain the structures of this "strange" aviation policy, which is done in the

1. Trunk markets are those which connect Sapporo, Tokyo (Narita, Haneda), Osaka (Itami, Kansai International), Fukuoka, and Naha to one another. Among the

domestic markets (i.e., excluding the markets that serve Narita and Kansai International), there are nine trunk markets in 1995.

2. " double (triple) track" markets are the routes where two (three) airlines operates simultaneously. Before the regulatory change (i.e., under the 45-47 system), in

order for a monopoly market to be double track, more than 700,000 passengers per year were required, and for a double track market to be triple track, more than 1

,000,000passengers per year were required in principle (there were some exceptions). However, after the regulatory change, the MoT revised the criteria,

so that for , a monopoly (double track) market to be double (triple) track, the threshold was lowered to 400,000 (700,000) passengers per year. In accordance

with the constant increase in the number of passengers after the regulatory change, double and triple track markets have been formed more rapidly than

under the 45-47 system.

The Quality Competition among Japanese Major Airlines after the Regulatory Change of 1985 63

following section II . Taking into consideration the context of section

II , section III tries to construct the "mutual" quality competition

models. Section IV shows the empirical results of the models

constructed in section DI, where it is revealed that each airline mutually competes in the different manner under the circumstance it faces. The

final section refers to the aviation policy of the MoT that may have

caused the different type of quality competition between the three

airlines, and investigates why such difference arose.

II. The structures of quality competition

With respect even to the quality competition, Japanese airlines are

forbidden from competing directly in domestic markets. However, the MoT intended to let airlines compete with each other, especially after

the regulatory change. So it seems that what the MoT really intended

was to accelerate the development of the indirect or mutual quality competition among/between airlines. The simple concept of mutual

competition is shown in Figure 1.

mutually competeairline A

(1) "airline A" negotiates with the MoT, expecting the government to authorize it to operate in some profitable markets.

authorize ,

Government (MoT)

negotiaty

airline 13

(2) Considering the vested interests of both the airlines, the MoT authorizes "airline A" to enter profitable markets, and at the same time reassures "airline B" and then promises to give B another profitable market in the next stage of the negotiation.

Figure 1 The simple concept of mutual competition between two airlines

64 H. Murakami

The essence of Figure 1 is that airlines compete not directly with

each other but indirectly with the MoT intervening between them. So the MoT has to continue to prepare the "next stage" where it

reassures one airline by offering compensation for authorizing the

other to enter new markets, so long as airlines continue to take turns

applying for authorization to operate in profitable markets.

Strictly speaking, regarding the quality competition in the double

or triple track markets, what airlines aim for in the long run through the negotiation with the MoT is how and to what extent they can

increase their number of their own departures at the peak demand

hours in a day. However, there is a significant problem with this ; the

capacity limitation in the major airports (e.g., Haneda and Itami)

prevents airlines from increasing the number of departures. So, in order to increase the amount of their own supply, they need to expand

the aircraft size ; for example, they have introduced such wide-bodied aircraft as the B747 class, DC-10 class, or L-1011 class (in the case of

ANA) at the peak hours in a day. And they have also tried to change flexibly the type of aircraft according to the change in demand in a

day, month, and year.

Summing up the character of the quality competition, airlines compete with one another for the purpose of (a) increasing the number

of their own departures and (b) introducing wide-bodied aircraft (best

fitted for the demand), at the peak demand hours in a day and,

sometimes, on the peak demand days in a month, and in the peak demand months in a year.

M. The models of quality competition and the data

In constructing the models of quality competition inherent in the

Japanese domestic airline industry, this paper refers to the quality

competition model introduced in Douglas and Miller (1974b), which

modeled and tested the effect of the quality competition before

deregulation on the producer's surplus' . In the case of the quality

competition in the United States, airlines tried to attract passengers by increasing only their share of departures in a market. However, as is

mentioned above, unlike the US airline industry before deregulation,

3. See Douglas and Millerlif(1974b), pp.658-662 and Schmalensee (1977), pp.565-576.

The Quality Competition among Japanese Major Airlines after the Regulatory Change of 1985 65

Japanese airlines have to try not only to increase both the number of

departures but also to increase the number of seats per flight, in order

to win the quality competition.

Taking the character of this competition into account, this section

constructs models that are unique to Japanese airline industry.

Suppose that the total cost of an airline i (TC ) is simply dependent on

the number of passengers carried by i (PAX ) and the total output, i.e., available seat kilometers (ASK i )-

TCi==f (PAXi,ASKi)

To make the problem more simple, we suppose a linear relation between total cost and the independent variables, i.e.,

( 1 ) * PAXi+ q * ASKi

where p * PAXi represents the cost of serving the passengers, and

q* ASKi is the cost of operating aircraft. Next we suppose the following demand function.

( 2 ) PAXi= f (F,INC,POP,V,)

,where PAL is the demand carried by airline i, F is the regulated fare, INC is the average income of the passengers carried, POP is the

market size (population) of a market, and V i the service vector of

airline i. To simplify the model, the service vector here is defined as the total number of seats (the number of departures multiplied by the

average number of seats per flight) served by an airline i (S 1)4 . So

the profit function of firm i is as follows.

( 3 ) ri=F*PAXi—TC,=-F* PAXi—(p *PAXi+q * ASKi)

Then suppose airlines maximize their profit with regard to the

total number of seats (Si), the first order condition of equation (3)

goes as follows' :

07r

SiaPAXi — q * DIST= 0 ( 4 ) — (F p) 0iasi

4. For example, the more the total number of seats increases, the easier it is for passengers to make reservations. 5

. Note that available seat kilos are the product of the stage length and the total number of seats, soa ASK,= DIST. as

66 H. Murakami

,where DIST is the stage length of a market. And the regulated fare under airline i's profit maximization is described as :

*--qDIST ( 5 ) F

a PAX+p

a s.

On the other hand, if airline i charges the fares at the break-even level,

i.e., 0 , then we can rewrite equation (3) as:

( 6 ) F—= q * DIST +p PAX,

Si Then we can obtain the condition from equation (5) and (6) that airline

i earns profit under the regulated fare:

a PAX, PAX

0 S.

Next, we consider the share of passengers carried by an airline.

S,s,s. s,= s, (i = 1, 2,••• n)

E Sk E Sk E Sk k=1 k=1 k=1

where "n" is the number of airlines in a market. So, provided that the

load facter is equal among the airlines, the relation between the

number of passengers carried by airline i and the total demand in a

market is described as :

PAXi= s,* E PAX,, k=1

When airline i intends to maximize the number of its passengers

by adjusting its total number of seats, i.e., differentiating PAX i with

regard to Si, we can obtain :

a PAX.k=1PAXk as; ( 7 )*aE+ PAXk *

as;as; k=1 as.

aPAxk aE S.k=1k= 1 E PAXk I *

sh ask asp k=1 k=1 k=1

az 1 Sih=1sk

12 E S,as, S k=1k k=1

The Quality Competition among Japanese Major Airlines after the Regulatory Change of 1985 67

A

s. 1 aESA k=

E AaSkSi k=1

A aE PAXk

k=1 * A

aE sk

si 1

ESk k=1

az s k=1

asi*

E PAXk k=1

E Sk k= 1

a E P AXk k=1

a i a k=1

It- 1

To simplify equation (7), we describe kiisSk-S,lI a SPAXk-=-7-PAX, and ob-

viously=1, so equation (7) can be rewritten as : as;

a PAXiIS.+(iSi )*[PAX I aPAX1}()PAX ( 7 )' a s,sssa sa s

s, PAX la PAX If we describe—=---s a s X,and= SY in equation (7)', the

terms in parenthesis { } are :

X+ ( 1 —X) *Y

In the double or triple track markets, it is obvious that 0 <X<

0 PAX PAX 1 , and in addition, if profit exists for airline i, i.e., a s

i s, Y> 1 can be obtained.

In this case, the term {X+ (1—X) *Y} is always larger than

unity. With reference to Douglas and Miller (1974b), this suggests that an additional increase in airline i's share of the total number of seats

in a market leads to a greater increase in its share of passengers.

And if each airline recognizes this phenomenon, it is suggested that it

will continue to increase the total number of seats until the point of

zero rent " is reached, which will lead to the low load factor (i.e., the

waste of resources)6.

6. Being different from the definition in this paper, the quality competition in Douglas and Miller (1974b) is defined as the "frequency competition".

Panzar(1979) also refers to this type of quality competition. See Panzar(1979), pp.92-95.

68 H. Murakami

In the econometric model, this is described as the following log-

linear function :

1

PAX I=S ( 8 ) LnPAX= a+b* Ln +

where "a" is the constant, b X+ (1— X)* Y> 1 , and ft is the error term.

Now notice that the total number of seats is the product of the

number of the departures and the number of the seats per flight. And

remember that the Japanese airlines can adopt only two ways; one is

to gain the departure slots and/or the other is to expand the aircraft size at the peak demand hours in a day in order to win the quality

competition.

Then suppose airline i's passenger share function is :

{FRQi I 7 *r (9) si = a FRQ EQ

where FRQ, /FRQ is the share of departures at the peak demand hours, and EQ /EQ is the share of the average aircraft size at the

peak demand hours that may represent the attractiveness (or strength) of i's service quality. In this equation, Japanese airlines are supposed to make the best of (i.e., optimally allocate) their managerial resources

under the circumstances they face, in other words, they are supposed

optimally to choose to increase either their own share of departures or

their share of the average aircraft size at the peak demand hours, or to increase both of these. Following the context of this model, we

suggest that b= r + q5 , and if a profit exists for airline i , then b= r + cb> 1 . In this case, an airline can be regarded as being successful

in attracting passengers by making the best of its managerial

resources. And for example, if is larger than r and both of them

are statistically significant, we judge that the airline emphasizes the

strategy of upgrading or expanding its fleet at the peak demand hours.

This phenomenon is to be expected if the markets used as the samples

are seriously congested, and in particular may also be true of ANA

which has been the incumbent and is no longer able to increase the

number of its departures. Converting the equation (9) to the

econometric model, it can be rewritten as :

The Quality Competition among Japanese Major Airlines after the Regulatory Change of 1985 69

Ln a + 3961kADh +r +(LAD] Ln [ FAX PAX) = izFRQ + 10 +9iLAD]Ln FEQQ' +

k9E

where ADk is the year dummy variables (k =89, 90, 91, and 1992 is the benchmark).

The rest of this section introduces the data used in the following

analysis. The markets selected here were both domestic double and

triple track markets at the end of 1992 (see Table 1).

Table 1. The domestic double and triple track markets, and the number of

the firms in operation for the period '89-'92.

City Pair Route 92 91 90 89 Firms City Pair Route 92 91 90 89 Firms

1. Tokyo/Sapporo 3 3 3 3 17. Tokyo/Nagasaki 3 3 2 2

2. Tokyo/Osaka 3 3 3 3 18. Tokyo/Kumamoto 3 3 2 2

3. Tokyo/Fukuoka 3 3 3 3 19. Tokyo/Oita 2 2 2 2 ANA,JAS

4. Tokyo/Naha 3 3 3 3 20. Tokyo/Miyazaki 2 2 2 2 ANA,JAS

5. Osaka/Sapporo 3 3 2 2 21. Tokyo/Kagoshima 3 3 3 3

6. Osaka/Fukuoka 2 2 2 2 JAL,ANA 22. Osaka/Sendai 2 1 1 1 JAL,ANA

7. Osaka/Naha 2 2 2 2 JAL,ANA 23. Osaka/Matsuyama 2 2 1 1 JAL,ANA

8. Fukuoka/Sapporo 2 2 1 1 JAL,ANA 24. Osaka/Kochi 2 2 2 2 ANA&ANK,JAS

9. Fukuoka/Naha 2 2 2 2 JAL,ANA 25. Osaka/Kagoshima 3 2 2 2

10. Tokyo/Kushiro 2 2 2 2 ANA,JAS 26. Nagoya/Sapporo 2 2 2 2 JAL,ANA

11. Tokyo/Hakodate 2 2 2 2 JAL,ANA 27. Nagoya/Sendai 2 2 2 2 ANA,JAS

12. Tokyo/Akita 2 2 1 1 JAL,ANA 28. Nagoya/Fukuoka 2 2 2 2 JAL,ANA

13. Tokyo/Kanazawa 3 3 2 2 29. Nagoya/Nagasaki 2 2 2 2 ANA,JAS

14. Tokyo/Hiroshima 3 3 3 2 30. Nagoya/Kagoshima 2 1 1 1 JAL,ANA

15. Tokyo/Takamatsu 2 2 2 2 ANA,JAS 31. Nagoya/Naha 2 2 1 1 ANA,JAL&JTA

16. Tokyo/Matsuyama 2 2 2 2 JAL,ANA

Note: (1)The markets where ANA and ANK or JAL and JTA operates are not regarded as double track, because they are horizontally integrated.

(2)An airline which operates for less than 6 months in a year is not included in each annual datum.

(3)JAL,ANA,and JAS operate in all the triple track markets. (4)The following local markets are excluded because of their smaller market

size; Fukuoka/Kagoshima, Kagoshima/Amami, and Naha/Ishigaki

The data comprise thirty one cross section data for four years. The

remarkable character of the double and triple track markets is that (a)

70 H. Murakami

ANA is always the "first corner", except for the Fukuoka/Sapporo market in 1989 and 1990 and it has the large share especially in triple track markets except for trunk markets (see Table 2). (b) JAL is the "first corner" in the trunk markets

, i.e., No.1-9 in Table 1), and the "second corner" in the oth er local markets it was allowed to enter after the regulatory change, and (c) JAS is sometimes the "first" or the "second" corner in some local markets, but always the "third corner" in the trunk markets, and its ratio of the share of those markets is considerably smaller than that of the other two airlines (the average shares of JAL, ANA, and JAS is about 4.5 : 4.5 : 1, respectively, see Table 2).

Table 2. The major airlines' output share (% ) in each triple track market in 1992

City-pair-routes JAL ANA JAS City-pair-routes JAL ANA JAS

Taneda/Shin-Chitoseaneda/ItamiHaneda/Fukuoka

Haned a/Naha

Itami/Shin-Chitose

Haneda/Komatsu

46.3

57.1

41.2

64.8

48.1

22.7

45.9

41.2

45.3

33.9

47.1

74.0

7.8

1.7

13.5

1.3

4.8

3.3

Haneda/Hiroshima

Haneda/Nagasaki

Haneda/Kumamoto

Haneda/Kagoshima

Itami/Kagoshima

6.6

5.8

8.2

13.9

2.7

86.2

79.1

53.5

74.8

91.1

7.2

15.1

38.3

11.2

16.2

Note : calculated by the author. The data source is Koku Yuso Tokei Nempo 1992.

So the number of samples of each airline is not always 124; the

number of sample of JAL is 76, ANA 122, and JAS 68, respectively.

Each datum is not daily or monthly aggregated but annually. However

the effect of the competition to win the peak demand hours in a day is expected to appear even though we use annual data. The data sources

are Koku Yuso Tokei Nempo, 1989-1992, the handbook filing the annual

operational data of all the domestic markets, published by the MoT.

N. The empirical results

The empirical results of equation (9) are shown in Table 3 on the

next page. All the equations are estimated by OLS, and the ones in the

upper row of each airlines' equation are estimated without any year

The Quality Competition among Japanese Major Airlines after the Regulatory Change of 1985 71

Table 3. The regression results of equation (9)

a+ 1, r+ sk Ak adj. R2 SE

( 1) -1 .252 0.319 0.947 0.983 0.086

JAL (12.21a) (2.63b) (8.58a)

( 2 ) 1.053-0.200AD.

-1 .481+0.880AD.+0.563AD. D.282+0.427AD9, (8.61a)(3.51a) 0.987 0.080

(12.63a)(3.49a) (2.74a) (2.16b)(2.04b) -0.133AD.--0.427AD9,

(2.80a) (2.05b)

(1) -0 .435 -0 .018 1.112 0.974 0.054

ANA (5.85a) (0.28) (16.31a)

( 2 ) 1.189-0.306AD.

-0 .608+0.271AD. -0.063+0.247AD. (15.47a)(1.84) 0.987 0.080

(5.16a)(1.43) (0.89)(1.56) -0 .133AD.

(1.32)

( 1) -0 .778 0.410 0.751 0.983 0.103

JAS (7.60a) (5.62a) (12.24a)

( 2 ) -0.739 0.513-0.277AD. 0.646+0.284AD. 0.984 0.098

(7.95a) (6.50a)(2.73a) (9.19a)(2.66a)

Note : t-statistics are in parentheses ; the level of significance : a=1% , b=5% .

dummy variables. The estimation method of each equation in the lower

row is , to begin with, to introduce all the year dummy variables both

in the constant and in the coefficients and then, in order to improve the statistics, to remove such dummy variables as are not significant even

at the 20% level.

The result for JAL shows us that (a) JAL generally prefers to

choose the strategy of introducing wide-bodied aircraft at the peak

demand hours in a day, but the strategy it considers as important

changes a little in each year, and (b) it has been successful in increasing its share of passengers through negotiation with the MoT,

for b= r + 0>i .

The reason why result (a) is obtained is probably that it is the

incumbent in the trunk markets most of which are congested, so it can

only choose to introduce the larger type of aircraft in order to increase

its share of the passengers in these markets. However, it seems that

it was also able to choose the strategy of increasing its share of

departures when he was authorized to enter the local but dense

72 H. Murakami

markets, which are less congested than the trunk markets, for the

coefficient r is relatively larger in these years.

With regard to ANA which already occupied the peak demand hours of the trunk and dense local markets, it is natural that there is

no room for him to increase its frequency of departures. In order to

attract passengers or to meet the increase in demand, it can choose

only the strategy of introducing or upgrading the aircraft which are

suitable for the demand in the markets where it already operates. By

doing so, ANA has increased its share of market demand, but less successfully than the other two firms, for the value of 0 is closer to

unity.

The result for JAS is similar to that of JAL, but the value of the sum of the parameters, i.e., r + q is smaller than that of JAL.

Indeed JAS was authorized to enter some of the trunk markets, but it

has not been given the right to operate at the times when it wishes,

because of the lack of slots at Haneda or Itami airports. In addition, the size of the aircraft JAS operates is a little smaller than the other

two airlines. For these two reasons, JAS has not increased its share

of the passengers as successfully as JAL ; in other words, JAS has not benefited so much from the aviation policy of the MoT or the

regulatory change'.

Finally, judging by these results, it is clear that the types of the mutual quality competition of Japanese airlines are different from one

another. The results of the Chow test among the airlines are :

JAL/ANA : F =20.15> F (3,192:0.00 = 3 .88

JAL/JAS : F =6.66> F (3,138:0 01) = 3.93 ANA/JAS : F =8.29> F (3,184.0.0) =3.89

These three results show that the null hypotheses that each airline's

type of mutual quality competition is equal are rejected at the 1% level.

V . Concluding remarks

As is mentioned in Chapter II , Japanese Ministry of Transport

has adjusted the vested interests and flying rights of the airlines, and

summing up the empirical results in section IV, this has led to different

7. And corresponding to the change of the demand, i.e., to the boom or slump, JAS is sometimes made to suspend the operation in some trunk or dense local markets

(e.g., Itami/Fukuoka or Haneda/Hakodate).

The Quality Competition among Japanese Major Airlines after the Regulatory Change of 1985 73

performances in the mutual quality competition between the airlines. The airline that benefited most from aviation policy including the

regulatory change of 1985 is JAL, on the ground that it has been able

to increase its share of passengers through mutual quality competition

(i.e., through negotiation with the MoT). ANA, which was the incumbent in all the trunk and dense local markets, has gradually lost

its share of passengers. With regard to the empirical results of this

paper, the authorization of the entry of JAL and JAS to the new markets has not benefited ANA. However, to compensate for these losses, the MoT has given ANA several long haul domestic monopoly

markets, for example, between Sapporo (Shin-Chitose) and the western

part of Japan, and also several long haul international markets, to and from North America and Europe. So, if we think of the overall effects of the regulatory change on the performance of ANA, it may also have

benefited from the aviation policy of the MoT.

With regard to JAS, it is difficult to judge whether it has benefited

from the aviation policy including the regulatory change, because the MoT has not greatly changed its policy toward JAS even since the

regulatory change; it was allowed to enter some trunk markets, but it has not been very successful in increasing its share of passengers

through negotiation with the MoT. In addition, with regard even to

JAS's entry into international markets, by which the MoT meant to

compensate for its unsuccessful performance in domestic trunk markets, JAS has been authorized to enter only three markets that are

shorter than those of ANA (i.e., Narita/Honolulu, Narita/Seoul, and

Narita/Singapore). Further more, JAS still has many sparse markets

even though it transferred some of them to its subsidiary, Japan Air Commuter. Judging by the treatment of JAS after the regulatory

change, it can be said that the purpose of the regulatory change by the

MoT has been to alter the vested interests of JAL and ANA in

particular, but not of all three airlines. Finally, from the viewpoint of welfare analysis, the problem of

excess capacity (i.e. a low load factor) as a result of the quality

competition (mentioned in section III) will not arise, at least in the near future, unlike the US case before the deregulation of 1978, because of

the capacity limitation in the major airports. However, for example, if

we focus on the case of JAL, we have to pay attention to whether JAL cross-subsidizes the international competitive markets with the

74 H. Murakami

increased revenue earned in the domestic markets it was authorized to

enter. If this were true, the allocation of resources would be regarded

as being distorted. It is suggested that what the MoT should intend is not the alternation of the vested interests of the airlines in an ad-hoc

manner, but the prevention of the resources from being wasted.

Received August 29, 1995.

References

Douglas, G.W., and Miller , J.C., Economic Regulation of Domestic Air

Transport, Brookings Institution, 1974a.

Douglas, G.W., and Miller, 111, J.C., "Quality Competition, Industry Equilibrium,

and Efficiency in the Price-Constrained Airline Market", American Economic Review, Vol.64, No.4., 1974b.

Morrison, S. A., Yarrow, G., Lawton-Smith, H., Yamauchi, H., and Murakami, H., "International Comparison of Privatization and Deregulation among the

U.S.A., the U.K., and Japan Vol.1II — Airline and Trucking", Keizai Bunseki

No.143, Economic Planning Agency, 1995. Murakami, H., "The Effect of the 1985 Regulatory Change on Quality Competition

and Cost Structure in Japan's Airline Industry", Kobe University Discussion

Paper Series 9517 (submitted to 7th World Conference on Transportation

Research), 1995. Panzar, J.C.,"Equilibrium and Welfare in Unregulated Airline Markets, American

Economic Review, Vol.69, No.2, 1979.

Schmalensee,R.,"Comparative Static Properties of Regulated Airline Oligopolies",

Bell Journal of Economics, Autumn, 1977.