Flight delay impact on airfare and flight frequency: A comprehensive assessment

• We examine the empirical causal relationship between delay and airfare and flight frequency in the U.S. air transportation system.
• Higher delay at origin, destination, and connecting airports leads to higher airfare.
• Higher delay has an upward effect on flight frequency.
• Delay effects on both fare and frequency are in general small.
• Counterfactual delay reduction scenarios could result in fare reduction benefits in billion dollars each year.

This paper presents a comprehensive empirical analysis of flight delay impact on airfare and flight frequency in the US air transportation system. We model airfare and flight frequency as functions of cost and demand characteristics, competition effects, and flight delays at origin, destination, and intermediate hub airports. Estimation results confirm that airlines tend to pass delay cost onto passengers through higher fare, whereas delay has an upward effect on flight frequency. We find that proportionate airport delay reduction across the system can result in annual fare reduction in the order of billion dollars.