Can LCCs’ economic efficiency create negative externalities for air transport? An analysis of passenger waiting time

Abstract

Some features of the low-cost carrier (LCC) management model, such as quick turnaround times, the use of uncrowded airports and expediting check-in processes should have a favourable knock-on effect on their passengers’ waiting times at the airport. This article seeks to quantify these possible savings in the low-cost model compared to traditional companies using a database of 37 226 passengers and methodology based on statistical causal inference and the generalized ordered logit model. The results show that LCC passengers are less likely to experience delays of 2 hours or less, although the likelihood that they will have to endure long delays of over 3 hours increases by almost 7.5%. Compared to the greater efficiency of LCCs in the daily movement of passengers averting the most common delays of up to 2 hours, the intensive use of their airplanes results in their lesser ability to respond to unforeseen eventualities with no on-the-spot solution. The little cover that LCCs provide for delays is a strong incentive for their passengers to take out or extend their travel insurance, while airport F&B concessions can benefit from these longer waiting times.

Keywords:

• low-cost carriers
• generalized ordered logit
• passenger waiting time
• travel insurance

JEL Classification:

• L90
• L93
• C25

Funding

The authors would like to express their gratitude to AENA and the Spanish Ministry of Economy and Competitiveness [ECO2012-36973] for their support.