Aviation infrastructure performance and airline cost: A statistical cost estimation approach

Aviation infrastructure performance and airline cost: A statistical cost estimation approach

0.00 Avg rating0 Votes
Article ID: iaor20012830
Country: United Kingdom
Volume: 37E
Issue: 1
Start Page Number: 1
End Page Number: 23
Publication Date: Mar 2001
Journal: Transportation Research. Part E, Logistics and Transportation Review
Authors: , ,
Keywords: financial
Abstract:

The 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 interpreted 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.

Reviews

Required fields are marked *. Your email address will not be published.