Working Paper: CEPR ID: DP10386
Authors: Etienne de Villemeur; Marc Ivaldi; Emile Quinet; Miguel Urdanoz
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: calibration; delays; social optimum
JEL Codes: L50; L93; R41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| buffer times (Y20) | delays (C41) |
| delays (C41) | passenger welfare (L93) |
| ticket prices (D49) | passenger welfare (L93) |
| delays (C41) | social costs (J32) |
| ticket prices (D49) | social costs (J32) |