Waiting time in two-sided platforms: The case of the airport industry

Abstract

This paper investigates the concept of manipulating waiting time in airports, an interesting but relatively unexplored example of the two-sided platform. In this context, “waiting time” refers to the time that users (i.e., airlines/passengers) must spend within/dealing with a platform (i.e., the airport) before accomplishing their goal (i.e., boarding). Even if users on one side dislike waiting time, many two-sided platforms have an incentive not to minimize it in certain situations in order to gain more revenues from users on the other side (i.e. in-terminal concessionaires), who may benefit from waiting time. I argue that passengers’ waiting time before being able to board their flights—that is, airside waiting time—tends to increase when management of the commercial side is outsourced. This effect will be reinforced when the commercial side, rather than the airside, is the more prominent source of revenue generation. Further, I find that concentration of concessionaires on the commercial side positively moderates the waiting time. Overall, this paper contributes to the emerging studies on nonpricing strategies in two-sided platforms.