TY  - JOUR
AU  - Borenstein,Severin
AU  - Rose,Nancy L.
TI  - Do Airline Bankruptcies Reduce Air Service?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9636
PY  - 2003
Y2  - April 2003
UR  - http://www.nber.org/papers/w9636
L1  - http://www.nber.org/papers/w9636.pdf
N1  - Author contact info:
Severin Borenstein
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-3689
E-Mail: borenste@haas.berkeley.edu

Nancy L. Rose
National Bureau of Economic Research
1050 Massachusetts Avenue
Cambridge, MA  02138
Tel: 617-613-1246
E-Mail: nrose@mit.edu
AB  - 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.
ER  -