Aviation infrastructure performance and airline cost: a statistical cost estimation approach
AbstractThe relationship between the performance of the US National Airspace System (NAS) and airline costs is examined by estimating airline cost functions that include NAS performance metrics as arguments, using quarterly data for 10 US domestic airlines. Performance metrics that vary by airline and quarter are developed by applying principal component analysis to seven underlying variables, including average delay, delay variance, and the proportion of flights that is cancelled. This analysis reveals that variation in the seven variables can be adequately captured by three or fewer factors, which we term NAS performance factors. If three factors are used, they can be interpretted as "delay", "variability", and "disruption", the latter two of which are merged into a single "irregularity" factor in the two-factor model. Cost function estimation results confirm the anticipated link between NAS performance and airline cost. In the cost models with two and three performance factors, the irregularity and disruption factors are found to have the strongest cost impacts. These results challenge the prevailing assumption that delay reduction is the most important benefit from NAS enhancements. Using the estimated cost models, we predict airline cost savings from substantially improved NAS performance in the range $1-4 billion annually.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Transportation Research Part E: Logistics and Transportation Review.
Volume (Year): 37 (2001)
Issue (Month): 1 (March)
Contact details of provider:
Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Zou, Bo & Elke, Matthew & Hansen, Mark & Kafle, Nabin, 2014. "Evaluating air carrier fuel efficiency in the US airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 306-330.
- André De Palma & Fay Dunkerley & Stef Proost, 2005.
"Asymmetric Duopoly in Space - what policies work?,"
ERSA conference papers
ersa05p494, European Regional Science Association.
- Dunkerley Fay & Andre de Palma & Proost Stef, 2005. "Asymmetric Duopoly in Space - what policies work?," Energy, Transport and Environment Working Papers Series ete0509, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
- Fay Dunkerley & André de Palma & Stef Proost, 2006. "Asymmetric duopoly in space - what policies work?," Center for Economic Studies - Discussion papers ces0610, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Zou, Bo & Hansen, Mark, 2012. "Impact of operational performance on air carrier cost structure: Evidence from US airlines," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 1032-1048.
- Zou, Bo & Hansen, Mark, 2012. "Flight delays, capacity investment and social welfare under air transport supply-demand equilibrium," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 965-980.
- Goh, Mark & Yong, Jongsay, 2006. "Impacts of code-share alliances on airline cost structure: A truncated third-order translog estimation," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 835-866, July.
- Romero-Hernandez, Manuel & Salgado, Hugo, 2005. "Economies of Density, Network Size and Spatial Scope in the European Airline Industry," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt9609m6hs, Institute of Transportation Studies, UC Berkeley.
- Ryerson, Megan S., 2010. "Optimal Intercity Transportation Services with Heterogeneous Demand and Variable Fuel Price," University of California Transportation Center, Working Papers qt8696z26t, University of California Transportation Center.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.