 How much do consumers really value air travel on-time performance, and to what extent are airlines motivated to improve their on-time performance?Philip Gayle () and Jules Yimga Economics of Transportation, 2018, vol. 14, issue C, 31-41 Abstract: This paper estimates the value consumers place on air travel on-time performance (OTP), and the extent to which airlines are motivated to improve their OTP. We find robust evidence that consumers value OTP and are willing to pay to avoid delays. Airlines can invest to improve OTP, but would independently choose to do so only if on-time performance improvement leads to increases in profitability. Using a methodology that does not require having actual cost data to draw inference on cost changes associated with improvement in OTP, we analyze airlines' optimal OTP-improvement investment choice. The modeling framework allows us to provide estimates of OTP-related marginal investment costs per minute of improvement necessary to achieve specific percent reductions in arrival delay minutes from the current levels of arrival delay minutes observed in the data. Keywords: Airline on-time performance; Commercial aviation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:14:y:2018:i:c:p:31-41 DOI: 10.1016/j.ecotra.2018.01.003 Access Statistics for this article Economics of Transportation is currently edited by Mogens Fosgerau and Erik Verhoef More articles in Economics of Transportation from Elsevier |
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