Economics at your fingertips  

Are passengers compensated for incurring an airport layover? Estimating the value of layover time in the U.S. airline industry

Alexander Luttmann ()

Economics of Transportation, 2019, vol. 17, issue C, 1-13

Abstract: American, Delta, and United have organized their operations into extensive hub-and-spoke networks that typically require passengers originating and concluding travel in non-hub cities to board a connecting flight at a hub en route to the final destination. From the passenger perspective, layovers are detrimental since the addition to total travel time relative to a nonstop itinerary is a cost incurred by the passenger. An airline is able to reduce a passenger's layover time by narrowing the gap between flights at the connecting airport. However, narrowing this flight gap has the adverse effect of increasing airport congestion. Taking these perspectives into account, it is clear that layover time influences a prospective passenger's purchasing decision and an airline's flight scheduling decision. Using published fare and itinerary data from Google Flights, this paper provides insight into both decisions by providing empirical estimates on the value of layover time in the U.S. airline industry. This paper finds that passengers are compensated with a fare that is $42.74-$47.60 cheaper per hour of layover time. Of the three dominant legacy carriers, United passengers are found to be compensated at an even higher rate of $61.89 per hour.

Keywords: Airlines; Congestion; Hedonic regression; Hub-and-spoke; Layover time (search for similar items in EconPapers)
JEL-codes: L11 L93 R41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.ecotra.2018.11.002

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
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2021-09-10
Handle: RePEc:eee:ecotra:v:17:y:2019:i:c:p:1-13