The Impact of Non-Aeronautical Revenues on Delay Reduction Efforts

Delays are often considered an inherent part of airport operations, leading to significant costs in terms of lost productivity. Addressing these delays typically requires sacrificing desirable outputs in the short term. However, this approach may not be ideal for all airports, especially those that rely heavily on non-aeronautical revenues, where the opportunity cost of delays may be higher. Existing research indicates a connection between delays and non-aeronautical revenues, suggesting that increased delays can lead to higher non-aeronautical income. Using data from 59 U.S. airports spanning 2009 to 2018 and employing a two-stage directional distance function approach, we explore how non-aeronautical revenues influence delay reduction efforts. Our findings reveal that airports with substantial non-aeronautical revenue tend to put less effort into delay reduction. However, we identified an (overall) inverse U-shaped relationship between non-aeronautical revenues and delay reduction efforts. In other words, less emphasis on reducing delays initially boosts revenues, but beyond a certain point, further neglect leads to a decline in non-aeronautical revenues. Additionally, we examine how factors such as airport competition, airline concentration, legacy airline hub status, and airport size impact delay reduction efforts. Airports within 50 miles of competitors are more proactive in minimizing delays to maintain a competitive edge, while legacy and large hubs are less motivated to invest in delay reduction due to their market power. Notably, no significant relationship was found between airline competition and delay management efforts.