Robust Scheduling Practices in the U.S. Airline Industry: Costs, Returns, and Inefficiencies.

Forthcoming in Management Science

36 Pages Posted: 16 Jan 2013 Last revised: 19 Nov 2015

See all articles by Scott Atkinson

Scott Atkinson

University of Georgia

Kamalini Ramdas

London Business School - Department of Management Science and Operations

Jonathan W. Williams

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Date Written: October 2014

Abstract

Airlines use robust scheduling to mitigate the impact of unforeseeable disruptions on profits. We examine how effectively three common practices – flexibility to swap aircraft, flexibility to reassign gates, and scheduled aircraft downtime – accomplish this goal. We first estimate a multiple-input multiple-outcome production frontier, which defines the attainable set of outcomes from given inputs. We then recover unobserved input costs, and calculate how expenditure on inputs affects outcomes and revenues. We find that the per-dollar return from expenditure on gates, or more effective management of existing gate capacity, is three times larger than the per-dollar returns from other inputs. Next, we use the estimated tradeoffs faced by carriers along the frontier to measure the value to carriers of reducing delays. Finally, we calculate the improvement in carriers’ outcomes and profits if their operational inefficiencies are eliminated. On average, we estimate that operational inefficiencies cost carriers about $1.7 billion in revenue annually.

Keywords: Airline Performance, Robust Scheduling, Stochastic Production Frontiers, Directional Distance Functions

Suggested Citation

Atkinson, Scott and Ramdas, Kamalini and Williams, Jonathan W., Robust Scheduling Practices in the U.S. Airline Industry: Costs, Returns, and Inefficiencies. (October 2014). Forthcoming in Management Science. Available at SSRN: https://ssrn.com/abstract=2201648 or http://dx.doi.org/10.2139/ssrn.2201648

Scott Atkinson

University of Georgia ( email )

Athens, GA 30602-6254
United States

Kamalini Ramdas

London Business School - Department of Management Science and Operations ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Jonathan W. Williams (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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