AIR-21’s Impact on Air Traffic Delays: A multi-dimensional regression discontinuity approach

This study examines how the Wendell H. Ford Aviation Investment and Reform Act’s (AIR-21) attempts to increase competition and facilitate entry within highly concentrated markets have affected air-traffic delays and general congestion in the domestic airline market. I introduce a baseline theoretical model rooted in the idea that carriers internalize congestion proportional to their market share. This model predicts that delays will increase following carrier entry. I use Bureau of Transportation on-time performance data to determine whether delays and on time performance metrics have increased at airports covered by AIR-21. By leveraging the sharp concentration threshold at which AIR-21 coverage is applied, I utilize a multi-dimensional RD approach to test the effect of the legislation on congestion. I find that the policy's effects did not corroborate my theoretical model's predictions. Instead, delays at covered airports decreased relative to uncovered airports.  This provides valuable information on whether or not market concentration and competition at airport and route levels have any effect on air-traffic congestion.