The Market Response to the Sioux City DC‐10 Crash

Arnold Barnett, John Menighetti and Matthew Prete

Risk Analysis, 1992, vol. 12, issue 1, 45-52

Abstract: The 1989 DC‐10 crash at Sioux City, Iowa presented a rare instance in which a potential threat to safety was both (i) intensely publicized over a short period and (ii) also amenable to the unobtrusive measurement of the market reaction it evoked. As such, it allowed a useful case study of the extent and duration of behavior change caused by a frightening event. Using reservations data from travel agencies in five states, this paper estimates the short‐term effects of the Sioux City crash on passenger willingness to fly the DC‐10. The data suggest that, in the first few weeks after the crash, more than one third of travelers who would normally have booked DC‐10 flights chose instead to fly other aircraft. Within 2 months of the disaster, however, DC‐10 bookings rebounded to within 10% of the level that would have been expected had the Sioux City crash not occurred. At no time, apparently, did the airlines that operate DC‐10s use their “yield‐management” computer pricing systems unofficially to lower DC‐10 fares relative to those on other types of plane.

Date: 1992
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