Econometrics of Airports

Adding to my list of "Things the Market tends to Screw-Up because people don't make rational choices".

Airport Delays
Take airports like Atlanta, Washington-Dulles, and Newark, which are dominated by a single carrier. If the tragedy of the commons theory bore out, then these airports would be less tardy, because a dominant carrier has an incentive to take into account the delays that it causes by crowding the runways. That's why the solution that economists always offer for the tragedy of the commons is to give one entity an exclusive property right. Yet Atlanta, Dulles, and Newark are among the top 10 tardiest airports in the country. In a study of more than 65 million flights over 12 years, economists Christopher Mayer at Columbia Business School and Todd Sinai at Wharton business school recently found only a small correlation between the dominance of a single carrier at an airport and the length of flight delays.

Mayer and Sinai's study also identified the real culprit: the deliberate overscheduling of flights at peak periods by major airlines trying to increase the amount of connecting traffic at their hub airports. Major airlines like United, Delta, and American use a hub-and-spoke model as a way to offer consumers more flight choices and to save money by centralizing operations. Most of the traffic they send through a hub is on the way to somewhere else. (Low-cost carriers, on the other hand, typically carry passengers from one point to another without offering many connections.) Overscheduling at the hubs can't explain all delays—weather and maintenance problems also contribute. But nationally, about 75 percent of flights go in or out of hub airports, making overscheduling the most important factor.