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Airline passenger fatality and the demand for air travel

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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.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840701371822

Affiliations: Department of Economics, National University of Singapore, Singapore 117570

Publication date: August 1, 2007

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