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Entry Behaviour and Financial Distress: An Empirical Analysis of the US Domestic Airline Industry

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  • Chia-Mei Liu

Abstract

This paper tests the empirical link between a firm's financial conditions and its probability of entering new markets in the US airline industry. The analysis is conducted using airline data from the top 500 airport-pairs during the period between 1993 and 2003. The result shows that a legacy carrier is less likely to enter new airport-pairs when its leverage increases. On the other hand, there is little evidence of such link for a low-cost carrier. © 2009 LSE and the University of Bath

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  • Chia-Mei Liu, 2009. "Entry Behaviour and Financial Distress: An Empirical Analysis of the US Domestic Airline Industry," Journal of Transport Economics and Policy, University of Bath, vol. 43(2), pages 237-256, May.
    • Handle: RePEc:tpe:jtecpo:v:43:y:2009:i:2:p:237-256
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    Cited by:

    1. Zou, Li & Yu, Chunyan, 2020. "The evolving market entry strategy: A comparative study of Southwest and JetBlue," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 682-695.
    2. Moon, Joonho & Lee, Won Seok & Dattilo, John, 2015. "Determinants of the payout decision in the airline industry," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 282-288.
    3. Hashem Salarzadeh Jenatabadi & Peyman Babashamsi & Datis Khajeheian & Nader Seyyed Amiri, 2016. "Airline Sustainability Modeling: A New Framework with Application of Bayesian Structural Equation Modeling," Sustainability, MDPI, vol. 8(11), pages 1-17, November.
    4. de Oliveira, Renan P. & Oliveira, Alessandro V.M., 2021. "Financial distress, survival network design strategies, and airline pricing: An event study of a merger between a bankrupt FSC and an LCC in Brazil," Journal of Air Transport Management, Elsevier, vol. 92(C).
    5. Homsombat, Winai & Lei, Zheng & Fu, Xiaowen, 2014. "Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 1-16.
    6. Lei He & Georgia Kosmopoulou, 2021. "Subcontracting Network Formation Among U.S. Airline Carriers," Journal of Industrial Economics, Wiley Blackwell, vol. 69(4), pages 817-853, December.
    7. Gaggero, Alberto A. & Piazza, Giovanni, 2021. "Multilayer networks and route entry into the airline industry: Evidence from the U.S. domestic market," Research in Transportation Economics, Elsevier, vol. 90(C).

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