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Airline passenger fatality and the demand for air travel

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  • Haoming Liu
  • Jinli Zeng

Abstract

After the 11 September tragedy, 20% of the scheduled US airline flights were cancelled and the passenger load factor was down to 56% from 66.6% a year ago. Was the high death toll or the nature of the attack itself responsible for this dramatic decline? Using the US data, we find that the demand for air travel did fall in years of relatively high fatality rate, but the demand is not sensitive to whether the high fatality rate is due to any terrorist activities. Our estimation results suggest that even after controlling for the sharp increase in the fatality rate because of the 11 September tragedy, a considerable proportion of the decline in demand for air travel that year is still unexplained. This evidence could suggest that there has been a fundamental shift in consumers' perception of air travel safety in the aftermath of the tragedy.

Suggested Citation

  • Haoming Liu & Jinli Zeng, 2007. "Airline passenger fatality and the demand for air travel," Applied Economics, Taylor & Francis Journals, vol. 39(14), pages 1773-1781.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:14:p:1773-1781
    DOI: 10.1080/00036840701371822
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    References listed on IDEAS

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    1. Gautam Gowrisankaran, 2002. "Competition and regulation in the airline industry," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jan18.
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    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, vol. 32(2), pages 329-355, October.
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    2. Shu He & Huaxia Rui & Andrew B. Whinston, 2018. "Social Media Strategies in Product-Harm Crises," Information Systems Research, INFORMS, vol. 29(2), pages 362-380, June.
    3. Hu, Yi & Xiao, Jin & Deng, Ying & Xiao, Yi & Wang, Shouyang, 2015. "Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 95-100.
    4. Akyildirim, Erdinc & Corbet, Shaen & O'Connell, John F. & Sensoy, Ahmet, 2021. "The influence of aviation disasters on engine manufacturers: An analysis of financial and reputational contagion risks," International Review of Financial Analysis, Elsevier, vol. 74(C).
    5. Carlos P. Barros & Joao R. Faria & Luis A. Gil-Alana, 2009. "Persistence on airline accidents," Faculty Working Papers 08/09, School of Economics and Business Administration, University of Navarra.

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