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Competition and Schedule Padding in the US Airline Industry

Author

Listed:
  • Yimga Jules

    (School of Business, Embry-Riddle Aeronautical University, 3700 Willow Creek Road, Prescott, AZ 86301, USA)

Abstract

Disclosure programs can help consumers with limited information about product quality make better purchase decisions. A quality disclosure mandate such as the On-Time Disclosure Rule in the U.S. that requires airlines to provide information on the quality of their products can be beneficial, but can also be counterproductive if it encourages airlines to act deceptively by “gaming” the system. If airlines care about public perceptions of their on-time record, they have an incentive to improve their on-time performance ranking by resorting to unscrupulous means such as padding their schedules beyond normal time required to absorb scheduling stochastic fluctuations. This study investigates the impact of competition on airline schedule padding. We construct a measure for schedule padding under different optimal flight time choices. Using different measures of market structure, we find that more competitive (concentrated) markets are subject to less (more) schedule padding.

Suggested Citation

  • Yimga Jules, 2021. "Competition and Schedule Padding in the US Airline Industry," Review of Network Economics, De Gruyter, vol. 20(1), pages 1-33, March.
    • Handle: RePEc:bpj:rneart:v:20:y:2021:i:1:p:1-33:n:1
    DOI: 10.1515/rne-2021-0016
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    Citations

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    Cited by:

    1. Lorko, Matej & Servátka, Maroš & Zhang, Le, 2023. "Hidden inefficiency: Strategic inflation of project schedules," Journal of Economic Behavior & Organization, Elsevier, vol. 206(C), pages 313-326.

    More about this item

    Keywords

    airlines; schedule padding; airline competition; on-time performance; airline product quality;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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