Corporate Failure, Supply Shocks and Government Bailouts: A Case Study of Aloha Airlines

Akihiko Kawaura

No 201103, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper investigates the bankruptcy of Aloha Airlines and its exit from Hawaii’s interisland passenger market in order to examine whether government intervention is warranted based on the presumed benefits to the general public. A regression analysis of interisland traffic volume does not identify any substantial decline in interisland passengers immediately following Aloha’s closure. A government’s decision to bailout a firm should incorporate information on market structure, as the presence of excess capacity can alleviate damage to consumers.

Keywords: bankruptcy; exit; excess capacity; bailout; airline (search for similar items in EconPapers)
JEL-codes: L13 L52 L93 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2011-03-11
New Economics Papers: this item is included in nep-bec and nep-ind
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http://www.economics.hawaii.edu/research/workingpapers/WP_11-3.pdf First version, 2011 (application/pdf)

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