Network Effects, Congestion Externalities, and Air Traffic Delays: Or Why Not All Delays Are Evil

TLDR

The study investigates how network benefits from hubbing and congestion externalities explain air traffic congestion. The authors analyze these two factors to assess their relative impact on congestion. Empirically, hubbing dominates congestion, with hub carriers bearing most additional travel time due to clustered flights, while non‑hub flights experience minimal delays, implying that an optimal congestion tax would have limited effect on hub airport flight patterns.

Abstract

We examine two factors that explain air traffic congestion: network benefits due to hubbing and congestion externalities. While both factors impact congestion, we find that the hubbing effect dominates empirically. Hub carriers incur most of the additional travel time from hubbing, primarily because they cluster their flights in short time spans to provide passengers as many potential connections as possible with a minimum of waiting time. Non-hub flights at the same hub airports operate with minimal additional travel time. These results suggest that an optimal congestion tax might have a relatively small impact on flight patterns at hub airports.