Safe At Home? An Experiment in Domestic Airline Security
Operations Research
Manufacturing & Service Operations Management
The Impact of Airline Flight Schedules on Flight Delays
Manufacturing & Service Operations Management
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We investigate whether stock price movements can inform operations managers as to where they should focus improvement efforts. We examine how unexpected performance along several dimensions of service quality---on-time performance, long delays and cancellations, lost bags, and denied boardings---impacts contemporaneous stock returns. Prior research suggests that airlines buffer their flight schedules and engage in expensive employee incentive programs to increase the likelihood of on-time arrival. We find that only long delays are penalized by the market, and we identify a number of carrier-specific factors that alter the financial impact of long delays. We find that the penalty a carrier faces for long delays is significantly higher if it operates a high percentage of short-haul or connecting flights, or if its competitors incur fewer long delays in the same time period. Our findings suggest that developing ways to curtail long delays is a useful future research area.