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Airline Financial Distress and Customer Satisfaction

Author

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  • Ribbink, Dina
  • Hofer, Christian
  • Dresner, Martin

Abstract

An investigation is conducted on the effect of financial distress on customer service levels in the U.S. airline industry. Using data from the first quarter of 1998 to the third quarter of 2006, we employ a seemingly unrelated regressions (SUR) model to analyze the impact of financial distress on three measures of customer service. We find that higher financial distress is associated with better on-time performance of airlines and fewer lost bags. The relationship of airline financial distress to the number of bumped customers, however, is insignificant.

Suggested Citation

  • Ribbink, Dina & Hofer, Christian & Dresner, Martin, 2009. "Airline Financial Distress and Customer Satisfaction," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 48(1).
    • Handle: RePEc:ags:ndjtrf:206987
    DOI: 10.22004/ag.econ.206987
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    References listed on IDEAS

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    1. Ittner, CD & Larcker, DF, 1998. "Are nonfinancial measures leading indicators of financial performance? An analysis of customer satisfaction," Journal of Accounting Research, Wiley Blackwell, vol. 36, pages 1-35.
    2. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    3. Suzuki, Yoshinori, 2000. "The relationship between on-time performance and airline market share: a new approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 36(2), pages 139-154, June.
    4. Michael Mazzeo, 2003. "Competition and Service Quality in the U.S. Airline Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(4), pages 275-296, June.
    5. Gritta, Richard D. & Chow, Garland & Freed, Edward, 2003. "Business, Financial, and Total Risk in Air Transport: A Comparison to Other Industry Groups Prior to September 11, 2001," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 42(4).
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