This research explores the financial and economic determinants of air carrier safety performance. One of the most widely discussed and perhaps most controversial effect of airline deregulation has been the perceived decline in air safety. This project investigates the determinants of air carrier safety, with particular attention to the question of whether less profitable or financially insecure carriers provide less safety to their passengers. The first stage of the project develops a model of air carrier accident rates as a function of carriers' risk exposure, traffic and operating characteristics, and financial condition. This model is estimated on panel data for large U.S. jet carriers over the l957-l986 period. The second stage of the project explores the possibility of developing alternative safety indicators, including incidents, inspection results, and direct measures of safety inputs such as maintenance expenditures. The results should provide insights on the effect of economic deregulation on air carrier safety performance.
