GERMAN AIRPORT

GERMAN AVIATION

PERFORMANCE

BENCHMARKING

Internet: www.gap-projekt.de Contact: info@gap-projekt.de

Low Cost Carriers and Airline Punctuality in Europe

Branko Bubalo University of Hamburg GAP Research Project Berlin Alberto A. Gaggero University of Pavia
ATRS Conference at Bergamo University Bergamo, June 28th 2013
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Contents
1. 2. 3. 4. 5. Introduction and Literature Review Data Collection Model Description Results Conclusions

ATRS Bergamo 28.06.2013 Branko Bubalo

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Introduction and Literature Review

Airline and airport delay and punctuality is: One of the most important measures of service quality (e.g. % of flights less than 15 minutes late) Regulated in EU261/2004, which requires airlines to compensate passengers in cases of long-delays Reported in industry rankings of the most punctual airlines Rewarded in employee bonus programs, e.g. in ground handling (Forbes et al., 2011) Positively correlated with customer complaints (Forbes, 2008a). Important to passengers satisfaction. Passengers are more likely to switch the airline for the subsequent flights, if they have experienced delays (Suzuki, 2000) Directly influencing airline fares, because of higher operating costs (Ater and Orlov, 2012; Forbes, 2008b).
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Introduction and Literature Review

Airline delay (cont.): Imposes costs of delay for passengers, who miss a connection flight, a business meeting or a family celebration Causes wasted time, foregone earnings or, more generally, negative utility, annoyance and dissatisfaction Imposes (operating) costs of delay for airlines Worsen their and the airports on-time performance reputation Causes diversion of late flights Costs compensation money, for refunding, offering refreshments and accommodation or paying cash.

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Research Objective
We investigate, if a given airport market of carrier type, FullService versus Low-Cost Carriers (LCCs), may impact the ontime performance of the flights landing at the airport. We question whether a higher presence of LCCs may reduce the flight delay ("low-cost externality"). No-frills and faster aircraft turn-around policy pursued by LCCs should mitigate airport congestion and the knock-on effects (propagation) of flight delays Faster and more precise operations by LCCs at the airport free aircraft parking positions quickly and reduce the waiting period for landing slots of subsequent arriving flights. Positive externality since other airlines are more likely to land on time or to catch up with their own delay

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Contribution
Provide empirical evidence in favor of a "low-cost externality" for flight delay European picture of the issue, previous empirical works exclusively focus on U.S. airports where data is readily available (Ater, 2012; Forbes, 2008a and 2008b; Forbes and Lederman, 2010; Forbes et al., 2011; Mazzeo, 2003; Rupp, 2009) Fits into related literature on market concentration and firm performance.

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Data Collection
We programmed a search bot (webcrawler), which collects and stores flight schedule and weather information. The main websites flightstats.com and wunderground.com are leading information providers in the field Flightstats provides actual and scheduled departure or arrival times, thus delays (Contrary to e.g. OAG); Wunderground provides historic METARs (Airport standardized Weather reports) Algorithm in Pseudo code: For i = 1 to n Step 1
Step 1: Call website on airport i in the sample (n) Step 2: Sub loop For d=1 to 24 -> Change query to collect airport flight schedules by hour of day Step 3: Clean and structure raw data Step 4: Copy daily data into database

Loop.
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Dataset
102 European airports in around 80 cities Period: Daily schedules from April 2011 - December 2012 Sample size 3,486,376 observations: 23,402 flight codes, 3,300 routes, however we collected over 12 mio observations on around 15,000 different routes Airline is defined low-cost if it is a member of European Low Fares Airline Association (ELFAA) during the sampling period. ELFAA Members (2012) are Blue Air, EasyJet, Flybe, Jet2, Norwegian Air Shuttle, Ryanair, Sverigeflyg, Transavia.com, Vueling and Wizz Air. Schedules and Weather observations are matched in Universal time (UTC).

ATRS Bergamo 28.06.2013 Branko Bubalo

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Distribution of Delays
45% 40% 35% 30%

% of total flights

25% 20% 15% 10% 5% 0%

FSC

LCC

-105--91

-90--76

-75--61

-60--46

-45--31

-120--106

-30--16

15-29

30-44

45-59

60-74

75-89

0-14

105-119

120-134

135-149

150-164

Delays
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165-179

90-104

-15--1

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Model
Delaydat = Xdat + Zdat + da + t + dat
,

where f indices the flight code, d the airport of destination and t the day of observation. Delayd: Minutes of delay at the airport of destination Vector X: Variable of interest; LCC share at origin Vector Z: Set of Controls; LCC share at destination, Delay at origin, Airport congestion, dummy variables for weather condition, e.g. Foggy, Rainy, Snowy or Thundery. Route competition (number of airlines serving the route). da: Controls for unobservable and immeasurable effects dat: Error term
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Empirical Results (selection)

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Results and Main Takeaways

We find a stronger presence of LCCs at the airport has a positive and statistically significant effect in reducing the average delay of the flights landing at that airport. Around 47% of delays are caused by airline-related aircraft turnaround operations, whilst the remaining delays are due to other causes such as weather. Snow at origin causes 10.4 minutes delay, Thunderstorm at origin causes 6.1 minutes of delay, Thunderstorm at destination causes 9 minutes of delay, Fog at destination causes 5.8 minutes of delay.

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Further research
Step up in the crawling and in building a big database. Maybe observe all 200 airports included in the ATRS Benchmarking report for Level-of-Service indicators Limits are set by computer resources. The crawler could run on different machines, which collect subsamples. Outlook: Collecting Information on delays, weather and ticket fares.

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Thank you for your attention! Questions? Suggestions and Comments are welcome. Please see our paper published in the ATRS Proceedings. branko.bubalo@googlemail.com alberto.gaggero@unipv.it www.gap-projekt.de

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