Effects of fuel prices on air transportation performance at New York and San Francisco airports

Industry strategists, government regulators, and the media have focused on addressing concerns over the performance of the air transportation system with respect to delays. One of the strategies proposed has been to limit the scheduled operations at an airport to a priori feasible capacity limits. This approach has been criticized on the basis that it would reduce the number of markets served and increase airfares. This paper describes a comparison of the behavior of the air transportation system (e.g. markets, economics, and performance) during the recent run-up in fuel prices at slot-controlled New York airports and non-slot controlled San Francisco airports. The results indicate that slot controlled airports yielded improved performance (e.g. less delayed and cancelled flights) through reductions in frequency and de-peaking schedules. There was no significant change in markets service. However, there is a marked decrease in the number of markets served by two or more airlines. On the other hand, the non-slot controlled airports in the San Francisco region showed an increase in flight delays and cancellations during the same period. The number of markets served and airfares did not change. These results provide some justification for slot-controls at airports that need to manage network congestion. Even in the presence of fluctuations in passenger demand and economic shocks, passengers saw an improvement in service (i.e. a lessening of delays and cancellations) without any significant loss in markets served or frequency to those markets. The only significant reduction in frequency was to the Washington DC, Chicago and Boston markets where there was decrease in frequency and an up-gauging of aircraft (changing to an aircraft with more seats) to accommodate the passenger demand.