Advertisement

Journal of Economics and Finance

, Volume 30, Issue 3, pp 297–305 | Cite as

Accidents airline safety perceptions and consumer demand

  • Jay Squalli
  • Mohsen Saad
Article

Abstract

This paper assesses the impact of perceptions about the safety level of airlines on enplanement. Consumer perceptions are specified with a Poisson distribution that updates over time. Using two different empirical specifications via a pooled generalized least squares procedure with fixed effects; we find no statistical evidence of a correlation between the perceived level of safety and enplanement. However, under an alternative specification in which the severity levels of accidents are ranked, we find that safety perceptions about accidents with minor injuries have no statistically significant impact on enplanement, while perceptions about accidents with serious injuries and fatalities lead to cumulative decreases in enplanement.

Keywords

Safety Level Minor Injury Airline Industry Accident Severity Fatal Accident 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Barnett, A. and LoFaso, A. J. 1983. “After the Crash: The Passenger Response to the DC-10 Disaster.”Management Science 29: 1225–1236.CrossRefGoogle Scholar
  2. Barnett, A. 1998. “Flying? No Point in Trying to Beat the Odds.”Wall Street Journal, September 9, 1998.Google Scholar
  3. Borenstein, S. and Zimmerman, M. B. 1988. “Market Incentives for Safe Commercial Airline Operation.”American Economic Review 78: 913–935.Google Scholar
  4. Chalk, A. J. 1986. “Market Forces and Commercial Aircraft Safety.”Journal of Industrial Economics 36: 61–81.Google Scholar
  5. Cobb, R. W. and Primo, D. M. 2003.The Plane Truth: Airline Crashes, the Media, and transportation Policy. Brookings Institution Press.Google Scholar
  6. Hartmann, M. E. 2000. “An Examination of Airline Safety in a Structural Model of the Airline Industry.” Ph.D. Dissertation: University of Virgina.Google Scholar
  7. Noronha, G. and Singal, V. 2004. “Financial Health and Airline Safety.”Managerial and Decision Economics 25: 1–16.CrossRefGoogle Scholar
  8. Squalli, J. 2005. “Do Consumers Have Imperfect Recollection about Airline Safety?”Applied Economics Letters 12: 169–176.CrossRefGoogle Scholar

Copyright information

© Academy of Economics and Finance 2006

Authors and Affiliations

  • Jay Squalli
    • 1
  • Mohsen Saad
    • 2
  1. 1.Economic & Policy Research UnitZayed UniversityDubaiUAE
  2. 2.School of Business and ManagementAmerican University of SharjahSharjahUAE

Personalised recommendations