This paper estimates the value consumers place on air travel on-time performance (OTP), and the extent to which airlines are motivated to improve their OTP. We find robust evidence that consumers value OTP and are willing to pay to avoid delays. Airlines can invest to improve OTP, but would independently choose to do so only if on-time performance improvement leads to increases in profitability. Using a methodology that does not require having actual cost data to draw inference on cost changes associated with improvement in OTP, we analyze airlines’ optimal OTP-improvement investment choice. The modeling framework allows us to provide estimates of OTP-related marginal investment costs per minute of improvement necessary to achieve specific percent reductions in arrival delay minutes from the current levels of arrival delay minutes observed in the data.
Perhaps, owing to the unavailability of delay data on passengers’ flight routing, a challenge in air travel demand estimation is the examination of consumer response to flight delay within an origin-destination framework. An interesting but unanswered question is: how does air travel delay at various airports along a given itinerary affect consumer choice behavior? Using a methodology that enables us to match airline on-time performance data to passenger itinerary and estimating a discrete choice demand model, this paper finds that increases in flight delay negatively impacts the likelihood of choosing a product and that welfare costs of delay to consumers may be substantial. These results are robust across different measures of on-time performance and irrespective of market hauls.
Using linear panel methods, this article tests whether the surge in microfinance lending during the boom years of 2004-2008 hurt loan repayment rates. Surprisingly, we find evidence that loan delinquency is inversely related to microfinance growth. This result is contrary to the long-standing view that fast microfinance expansion leads to increased loan delinquency. This suggests the existence of a larger pool of high quality borrowers that have not yet been tapped in new markets. This finding is robust across estimation methods and even after controlling for cross-sectional and temporal dependencies.
Although airline on-time performance has always received much attention, we are unaware of any empirical research that measures the on-time performance effects of domestic airline alliances. In this study, we empirically investigate the on-time performance effects of the largest domestic alliance—between Delta Air Lines, Northwest Airlines and Continental Airlines. We find evidence that codesharing improves alliance partners’ on-time performance and that the size of the codeshare effect on on-time performance depends on pre-alliance competition in a market, with the effect being larger in markets where the partners competed in prior to the alliance.
Most empirical studies in microfinance have disproportionately focused on its downstream effects—effects on the borrower—leaving the important question of how microfinance institutions are affected in the process, largely unanswered—upstream effects. This paper addresses this question by using panel data estimations to empirically investigate the causal effect of microfinance growth on microfinance institution loan portfolio quality. Surprisingly, we find evidence that portfolio quality improves with growth in outreach, which is contrary to the dominant view that higher growth leads to increased default risk. This result is robust across estimation methods and even after controlling for microfinance institutional characteristics and macroeconomic indicators.