Economic costs of air cargo flight delays related to late package deliveries

Abstract

We consider the cost of air cargo flight delay related to late package deliveries, which has received scant attention in previous research. We developed two models to estimate the costs of flight delay. First, we estimate a mixed-logit model to investigate the factors that influence late deliveries, with specific emphasis on flight on-time performance. Then we build a regression model to monetize the loss of late deliveries, using the hedonic approach to estimate the degradation in product value resulting from less reliable on-time package delivery. Estimates of flight delay costs for four representative US airports range from $8000 to $38,000 per flight-hour, with an average of about $20,000, which is roughly three times the direct operating cost per block-hour for air cargo flights estimated by GRA (2007), and also much higher than the unit flight delay cost related to passenger delay.