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Determinants of Profitability and Recovery from System-Wide Shocks: The Case of the Airline Industry

Author(s): Benny Mantin | Jen-Hung Edward Wang

Journal: Journal of Airline and Airport Management
ISSN 2014-4865

Volume: 2;
Issue: 1;
Start page: 1;
Date: 2012;
Original page

Keywords: empicial analysis | 9/11 | profitability | quality | operations strategy | airlines

This paper examines the determinants of profitability in the U.S. domestic airline industry, segmented into: operations strategy, productivity, and service measures, using quarterly data between 1995 and 2007. The analysis is performed separately on data prior and post 9/11 attack, revealing, among others, that after 9/11 the profitability of full-service carriers is improving faster than that of focused carriers, and that passengers are more forgivable to service glitches after 9/11 or possibly are associating lack of service with the intensified security measures imposed after 9/11. Focusing the analysis on determinants of consumers’ complaints we find further support for these arguments.
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