Airlines, Delays, Social Optimum, Calibration

Marc Ivaldi, Emile Quinet, Miguel Urdanoz and Etienne Billette de Villemeur

No 842, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: The so-called buffer time or buffer delay allows airlines to control for excessive delays by introducing extra time in their schedule in addition to what is technically required. . We study the differences between unregulated markets - where airlines are free to fix their buffer times strategically - and a situation where a social planner would control for time schedules, and in particular the buffer time. To do so, we use a calibrated model of a network of three cities - one of them being a hub - served by a single airline. Welfare losses that follow from delays are relatively small as compared to the potential benefits that would follow from a decrease in ticket prices. The model thus advocates that, at least for the connections that are considered, fares rather than delays should be the focus of institutions aiming at enhancing passengers’ welfare.

Keywords: Airlines; Delays; Social Optimum; Calibration (search for similar items in EconPapers)
JEL-codes: L50 L93 R41 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:ide:wpaper:28860

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