Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Tech-news / News/  Internet growth to blame for longer flights: Study
BackBack

Internet growth to blame for longer flights: Study

Flight durations increased as more passengers made online bookings, changing the way airlines compete for customers

The study says that instead of competing for space at the top of travel agents’ computer screens by scheduling the shortest flights, airlines have adapted to an environment in which price is playing the dominant role in selling tickets. Photo: Pradeep Gaur/MintPremium
The study says that instead of competing for space at the top of travel agents’ computer screens by scheduling the shortest flights, airlines have adapted to an environment in which price is playing the dominant role in selling tickets. Photo: Pradeep Gaur/Mint

Mumbai: Can Internet growth, which has led to increased online ticket bookings, have a direct link with longer flights?

Two Tel Aviv University researchers believe so. They found that flight durations increased as more passengers made online bookings, changing the way airlines compete for customers.

In their study, scheduled for publication in The Review of Economics and Statistics, Itai Ater of Tel Aviv University’s Recanati Business School and Eugene Orlov of economic consulting firm Compass Lexecon say that instead of competing for space at the top of travel agents’ computer screens by scheduling the shortest flights, airlines have adapted to an environment in which price is playing the dominant role in selling tickets.

The researchers used flight data from 1997 through 2007 from the US Bureau of Transportation Statistics and geographical growth patterns in Internet access from the Computer Use and Ownership Supplement to the Consumer Population Survey (CPS). This was a period in which Internet access grew rapidly, from an average penetration level of 19.4% in US metropolitan areas in 1997 to an average penetration level of 76.3% in American cities in 2007. The change is also reflected in the share of airline tickets sold online, from 0.5% in 1997 to more than 50% in 2007.

Ater’s findings suggest that increased Internet commerce in the travel industry has adversely affected airline performance and dampened incentives to provide a higher-quality product, defined as shorter flight time.

“While I was studying at Stanford from 2003 to 2008, I was interested in understanding why the length of ‘red eye’ flights between San Francisco and New York had increased from five hours and twenty minutes to five hours and forty minutes," said Ater in a statement on 18 August. He added, “It became clear, after examining flight data, that planes were flying at higher altitudes to cut fuel costs—there is less friction at higher altitudes—and thus required more time to land. But the question remained: Why? Why were airlines cutting costs at the expense of time?"

Using the scheduled duration of flight time (the time between a scheduled departure and a scheduled arrival) as his main measure for performance, Ater found that the shift in airfare distribution channels from traditional travel agencies to online distribution channels explained a large fraction of the upward trend to longer flights.

The study also shows that the effect of Internet commerce on flight duration is pronounced for the fastest flights on a given route—flights that in the pre-Internet era appeared at the top of the screens of traditional travel agents.

“In the early 1990s, when travel agencies sold over 80% of airline tickets, flights typically appeared on the travel agent’s screen in ascending order according to their scheduled durations," said Ater. “Given that travel agents booked over 80% of flights from the first screen and that the majority of the tickets were sold from the first line of search results, airlines had strong incentives to maintain short scheduled flying times. This incentive changed as the Internet became the most common channel for purchasing airline tickets, and flight duration was no longer the main criterion to sort flights."

Ater said, extended flight duration is just one example of the way in which product quality has fallen since the advent of the Internet. He is continuing to research the effect of information and communication technologies on productivity and performance.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Leslie D'Monte
Leslie D'Monte specialises in technology and science writing. He is passionate about digital transformation and deeptech topics including artificial intelligence (AI), big data analytics, the Internet of Things (IoT), blockchain, crypto, metaverses, quantum computing, genetics, fintech, electric vehicles, solar power and autonomous vehicles. Leslie is a Massachusetts Institute of Technology (MIT) Knight Science Journalism Fellow (2010-11), author of 'AI Rising: India's Artificial Intelligence Growth Story', co-host of the 'AI Rising' podcast, and runs the 'Tech Talk' newsletter. In his other avatar, he curates tech events and moderates panels.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 19 Aug 2014, 01:41 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App