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More low-cost carriers to impact big airlines on-time performance

by amit.uniyal 27. December 2013 04:21

It’s a widely acknowledged fact that whenever there’s an increase in competition among various airlines, the airfares go down significantly. However, something strange is happening in the U.S. aviation industry with the advent of low-cost carriers which is only growing by the day. The influx of low-cost carriers in a big way in the U.S. airspace is causing tremendous worries to the legacy carriers. A recent study conducted by Indiana University’s Kelley School of Business has come with interesting findings. The study said that something unexpected is happening with a large number of low-cost carriers entering the aviation market to pose a tough challenge to big airlines.

The study said that the way in which low-cost carriers have stepped up the competition it seems that the big airlines are now being adversely impacted with their on-time performance. The study dwelt at length the current impact after studying various low-cost carriers and taking up Southwest Airlines as a case study.

The study has been co-authored by Jeff Prince, Associate Professor of business economics at Kelley School of Business. Apart from Southwest Airlines, some 275 examples from 1993 to 2005 were taken into account. The study cited the market behavior when there were talks of Southwest Airlines entering the market and what happened with its final entry. According to the study, with the Southwest Airlines’ entry it was found out that the airline’s competitors had a tough time with a higher percentage of flights getting at least 15 minutes late. Prince said that the late flights rating had increased 3.2 percentage points. The study however did not attribute the specific reasons behind the delays.

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Tags: low cost carriers

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