NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Do Airline Bankruptcies Reduce Air Service?

Severin Borenstein, Nancy L. Rose

NBER Working Paper No. 9636
Issued in April 2003
NBER Program(s):   IO

The airline industry's current financial crisis has raised concerns over the ramifications of airline bankruptcies for air service and the economy. Such bankruptcies, however, nearly always occur when demand is weak, and, thus, when even healthy airlines are inclined to reduce flights. Moreover, from a consumer and policy perspective, the real concern is total air service offered, not the number of flights offered by a particular airline. We study all major U.S. airline bankruptcies since 1984 in order to estimate the effect of bankruptcy on air service, controlling for demand fluctuations and recognizing that competing airlines may increase service in response to a reduction in flights by a bankrupt airline. We do not find substantial effects of bankruptcy on flights offered or destinations served at large and small airports, but do find an impact at medium sized airports. We estimate, however, that service changes due to bankruptcy are not large in comparison to typical quarter-to-quarter fluctuations in service that occur at airports in the absence of carrier bankruptcies.

download in pdf format
   (344 K)

email paper

This paper is available as PDF (344 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9636

Published: Borenstein, Severin and Nancy Rose. “The Impact of Bankruptcy on Airline Service Levels." American Economic Review Papers and Proceedings 93, 2 (May 2003): 415-419.

Users who downloaded this paper also downloaded these:
Borenstein and Rose w13452 How Airline Markets Work...Or Do They? Regulatory Reform in the Airline Industry
Rupp, Holmes, and DeSimone w9744 Airline Schedule Recovery after Airport Closures: Empirical Evidence Since September 11th
Phillips and Sertsios w17233 How Do Firm Financial Conditions Affect Product Quality and Pricing?
Berry and Barwick w14503 Tracing the Woes: An Empirical Analysis of the Airline Industry
Borenstein and Rose w5047 Do Airlines in Chapter 11 Harm Their Rivals? Bankruptcy and Pricing Behavior in U.S. Airline Markets
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us