Can Regulation Improve Service Quality? Evidence from European Air Passenger Rights

27 Pages Posted: 6 Dec 2018

See all articles by Hinnerk Gnutzmann

Hinnerk Gnutzmann

Leibniz Universität Hannover - Faculty of Economics and Management

Piotr Spiewanowski

Polish Academy of Sciences - Institute of Economics (INE PAN)

Date Written: September 2018

Abstract

Under EU Air Passenger Rights legislation (“EC261”), carriers must provide assistance and cash compensation to passengers in case of long delay. We study whether the regulation reduces flight delay. EC261 applies uniformly to flights departing from the EU, but covers only EU carriers on EU–bound flights. Exploiting this variation, we find that regulated flights are 5% more likely to arrive on time, and mean arrival delay is reduced by almost four minutes. The effect is strongest on routes with little competition, and for legacy carriers. Thus, consumer rights can improve quality when incentives from competition are weak.

Keywords: Flight delays, service quality, regulation, EC261/2004, consumer protection

JEL Classification: L51, L93, K23, D22, L15, D18

Suggested Citation

Gnutzmann, Hinnerk and Spiewanowski, Piotr, Can Regulation Improve Service Quality? Evidence from European Air Passenger Rights (September 2018). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2018/44, Available at SSRN: https://ssrn.com/abstract=3293825 or http://dx.doi.org/10.2139/ssrn.3293825

Hinnerk Gnutzmann (Contact Author)

Leibniz Universität Hannover - Faculty of Economics and Management ( email )

Koenigsworther Platz 1
Hannover, 30167
Germany

HOME PAGE: http://www.gnutzmann.info

Piotr Spiewanowski

Polish Academy of Sciences - Institute of Economics (INE PAN) ( email )

Palace of Culture and Science
Pl. Defilad 1
Warsaw, 00-901
Poland

HOME PAGE: http://www.piotrspiewanowski.info

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