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The Market Response to the Sioux City DC‐10 Crash

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  • Arnold Barnett
  • John Menighetti
  • Matthew Prete

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.

Suggested Citation

  • Arnold Barnett & John Menighetti & Matthew Prete, 1992. "The Market Response to the Sioux City DC‐10 Crash," Risk Analysis, John Wiley & Sons, vol. 12(1), pages 45-52, March.
    • Handle: RePEc:wly:riskan:v:12:y:1992:i:1:p:45-52
    DOI: 10.1111/j.1539-6924.1992.tb01306.x
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    1. Arnold Barnett & Anthony J. Lofaso, 1983. "After the Crash: The Passenger Response to the DC-10 Disaster," Management Science, INFORMS, vol. 29(11), pages 1225-1236, November.
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