Just a Minute

Economic theories suggest that incentive programs can reduce congestion inefficiencies and lead to welfare gains in many markets where congestion is present. The presence and size of any welfare gains rely both on the distribution of user elasticities, as well as the extent to which a marginal user affects the outcome of other users. Quantifying the latter is an empirical challenge for many markets because of the potential endogeneity. In this paper, we present empirical evidence of the latter in the context of air traffic congestion at departing airports. We exploit the exogeneity of unscheduled flights relative to regularly scheduled commercial service as a quasi-experiment and test how an additional flight on the runway affects departure performance for scheduled flights. We find a sizable congestion effect from an unexpected flight on scheduled flights, and with a strong effect during peak hours and when the airport approaches its capacity. Simple simulation exercises suggest sizable time savings if airports and air traffic authorities incentivize or nudge unscheduled flights to change marginal minutes; or if negotiation and trade can be achieved across carriers