Journal of Economic Perspectives: Vol. 6 No. 2 (Spring 1992)

Rose, Nancy L. 1992. "Fear of Flying? Economic Analysis of Airline Safety." Journal of Economic Perspectives, 6(2): 75-94.

DOI: 10.1257/jep.6.2.75

The safety of the commercial airline industry has attracted considerable attention in the wake of airline deregulation, amid growing concerns that the historical superiority of U.S. jet carriers' safety records may have been linked to economic regulation of the industry by the Civil Aeronautics Board. These worries have energized economic research on a broad range of questions relating to airline safety. I describe our progress in answering four questions: First, has airline safety declined since deregulation? Second, how has airline deregulation affected the safety of travelers overall, (taking into account indirect channels through which airline deregulation may have changed travel risks, including the substitution of commuter airlines for jet service and the replacement of highway driving by air travel)? Third, what accounts for differences in safety performance across carriers? Fourth, what are the market penalties for airline accidents? (If consumers and insurance companies penalize airlines with worse safety records, carriers may be disinclined to reduce safety investment, even if regulatory changes would permit them to do so.)

Rose, Nancy L. (MIT)

L93: Air Transportation
L51: Economics of Regulation