| With the rapid development of the aviation industry,the impact of airlines on the climate system is also becoming increasingly significant.Since 1990,greenhouse gas emissions from international aviation have increased 83 percent,and aviation emissions are directly related to fuel burn.Thus,the key for airlines to minimize their environmental impact is to use fuel more efficiently.At the same time,according to the survey,the annual fuel cost of airlines accounts for about one-third of the total operating costs of the company.With the instability of fuel prices,the cost of airline is constantly fluctuating since it is energy-dependent enterprise.Therefore,to some extent,controlling the fuel cost of airlines effectively determines their profit and operating performance.In order to improve the fuel efficiency,reduce the fuel costs,and maximize the profits of airlines,this thesis discusses the relationship between an airline’s fuel strategies and environmental policies such as fuel tax and the substitution between operational fuel efficiency improvement and fuel financial hedge.We establish a mathematical model with the airline’s traffic volume being the decision variable and the airline’s profit maximization being the objective function to study the decision-making issues of airline fuel strategies in different markets.In this thesis,we first compare the implications of no move,financial hedge and operational fuel efficiency improvement on airlines’ profit in the context of a monopoly airline,figure out the corresponding conditions for each of these possible strategies to be optimal,and analyze the impact of these possible strategies on airline risk.We find that financial hedge seems to be more efficient in reducing the volatility of airlines’ profits and risk exposure.While operational improvement is more likely to generate a higher expected profit level when its effectiveness is sufficiently high.Then,we extend our analysis to incorporate airline competition.We study the expected profit for different strategic combinations of airlines in the competitive market and the Nash equilibrium combination of the market under different conditions.At the same time,we compare the optimal strategies between the monopoly market and the competitive market.We find that competition will reduce the possibility that airlines adopt operational fuel efficiency improvement.Finally,we also study the impacts of external shocks(such as fuel taxes)on airline strategy choices.We conclude that a positive shock to the fuel price makes financial hedge less attractive and operational improvement more attractive. |
