Financial condition, safety investment and accident propensity in the US airline industry: A structural analysis

Zuozheng Wang, Christian Hofer and Martin E. Dresner

Transportation Research Part E: Logistics and Transportation Review, 2013, vol. 49, issue 1, 24-32

Abstract: Previous research has used reduced-form models to determine the impact of financial condition and safety investment on airline accident risk and has found limited statistical evidence. We model safety investment as a mediating variable between the financial health of an airline and its accident propensity and simultaneously account for the reverse effects of accident propensity on safety investment. Compared with prior research, our structural model yields stronger results. Specifically, we find that safety investment reduces accident propensity, while the reverse effect is also significant. However, financial condition does not appear to affect safety investment or accident propensity.

Keywords: Airline accidents; Safety investment; Financial condition (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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DOI: 10.1016/j.tre.2012.07.001

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