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Fear of Flying? Economic Analysis of Airline Safety

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  • Nancy L. Rose

Abstract

The safety of the commercial airline industry has attracted considerable attention in the wake of airline deregulation, amid growing concerns that the historical superiority of U.S. jet carriers' safety records may have been linked to economic regulation of the industry by the Civil Aeronautics Board. These worries have energized economic research on a broad range of questions relating to airline safety. I describe our progress in answering four questions: First, has airline safety declined since deregulation? Second, how has airline deregulation affected the safety of travelers overall, (taking into account indirect channels through which airline deregulation may have changed travel risks, including the substitution of commuter airlines for jet service and the replacement of highway driving by air travel)? Third, what accounts for differences in safety performance across carriers? Fourth, what are the market penalties for airline accidents? (If consumers and insurance companies penalize airlines with worse safety records, carriers may be disinclined to reduce safety investment, even if regulatory changes would permit them to do so.)

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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 6 (1992)
Issue (Month): 2 (Spring)
Pages: 75-94

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Handle: RePEc:aea:jecper:v:6:y:1992:i:2:p:75-94

Note: DOI: 10.1257/jep.6.2.75
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  1. Chalk, Andrew, 1986. "Market Forces and Aircraft Safety: The Case of the DC-10," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 24(1), pages 43-60, January.
  2. Chalk, Andrew J, 1987. "Market Forces and Commercial Aircraft Safety," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 36(1), pages 61-81, September.
  3. Mitchell, Mark L & Maloney, Michael T, 1989. "Crisis in the Cockpit? The Role of Market Forces in Promoting Air Travel Safety," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 32(2), pages 329-55, October.
  4. D. Mark Kennet, 1993. "Did Deregulation Affect Aircraft Engine Maintenance? An Empirical Policy Analysis," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 542-558, Winter.
  5. Rose, Nancy L, 1990. "Profitability and Product Quality: Economic Determinants of Airline Safety Performance," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(5), pages 944-64, October.
  6. Golbe, Devra L, 1986. "Safety and Profits in the Airline Industry," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 34(3), pages 305-18, March.
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Cited by:
  1. Kaplanski, Guy & Levy, Haim, 2010. "Sentiment and stock prices: The case of aviation disasters," Journal of Financial Economics, Elsevier, Elsevier, vol. 95(2), pages 174-201, February.
  2. Andreas Papatheodorou & Nikos Platis, 2007. "Airline Deregulation, Competitive Environment and Safety," Rivista di Politica Economica, SIPI Spa, SIPI Spa, vol. 97(1), pages 221-242, January-F.
  3. Dionne, Georges & Gagne, Robert & Gagnon, Francois & Vanasse, Charles, 1997. "Debt, moral hazard and airline safety An empirical evidence," Journal of Econometrics, Elsevier, Elsevier, vol. 79(2), pages 379-402, August.
  4. Wang, Zuozheng & Hofer, Christian & Dresner, Martin E., 2013. "Financial condition, safety investment and accident propensity in the US airline industry: A structural analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, Elsevier, vol. 49(1), pages 24-32.
  5. repec:ise:isegwp:wp182008 is not listed on IDEAS
  6. Raghavan, Sunder & Rhoades, Dawna L., 2005. "Revisiting the relationship between profitability and air carrier safety in the US airline industry," Journal of Air Transport Management, Elsevier, Elsevier, vol. 11(4), pages 283-290.
  7. Button, Kenneth & Drexler, Jonathan, 2006. "Are measures of air-misses a useful guide to air transport safety policy?," Journal of Air Transport Management, Elsevier, Elsevier, vol. 12(4), pages 168-174.
  8. repec:ebl:ecbull:v:12:y:2007:i:6:p:1-7 is not listed on IDEAS
  9. Harumi Ito & Darin Lee, 2003. "Assessing the Impact of the September 11 Terrorist Attacks on U.S. Airline Demand," Working Papers 2003-16, Brown University, Department of Economics.
  10. Walker, Thomas John & Walker, Marcus Glenn & Thiengtham, Dolruedee Nuttanontra & Pukthuanthong, Kuntara, 2014. "The role of aviation laws and legal liability in aviation disasters: A financial market perspective," International Review of Law and Economics, Elsevier, Elsevier, vol. 37(C), pages 51-65.
  11. Chang, Yu-Hern & Yeh, Chung-Hsing, 2004. "A new airline safety index," Transportation Research Part B: Methodological, Elsevier, Elsevier, vol. 38(4), pages 369-383, May.
  12. Liou, James J.H. & Tzeng, Gwo-Hshiung & Chang, Han-Chun, 2007. "Airline safety measurement using a hybrid model," Journal of Air Transport Management, Elsevier, Elsevier, vol. 13(4), pages 243-249.

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