Competition and Service Quality in the U.S. Airline Industry

The U.S. government, media, and flying public have expressed great concern in recent years over both airline market concentration and the occurrence of flight delays. This study explores potential connections between the two by examining whether the lack of competition on a particular route reduces the incentive of airlines to provide quality, resulting in worse on-time performance on that route. Analysis of data from the U.S. Bureau of Transportation Statistics in 2000 indicates that both the prevalence and duration of flight delays are significantly greater on routes where only one airline provides direct service. Additional competition is correlated with better on-time performance. Weather, congestion, and scheduling decisions also contribute significantly to explaining flight delays.