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The Market Response to the Sioux City DC-10 Crash
Arnold Barnett1, John Menighetti1, Matthew Prete1
1Sloan School of Management, Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139.
Risk Analysis : an Official Publication of the Society for Risk Analysis
|November 15, 2017
Summary
The 1989 DC-10 crash significantly reduced passenger bookings for the aircraft. However, willingness to fly the DC-10 recovered within two months, demonstrating short-term behavioral impact.
Area of Science:
- Aviation safety
- Behavioral economics
- Transportation studies
Background:
- The 1989 Sioux City DC-10 crash was a highly publicized event with measurable market reactions.
- This incident provided a unique opportunity to study behavioral changes following a frightening event.
Purpose of the Study:
- To assess the short-term impact of the Sioux City crash on passenger willingness to fly the DC-10.
- To measure the duration of behavioral changes in air travel decisions after a safety-related incident.
Main Methods:
- Analysis of airline reservation data from travel agencies across five states.
- Estimation of the effect of the DC-10 crash on booking patterns.
Main Results:
- Over one-third of potential DC-10 bookings were diverted to other aircraft types in the weeks following the crash.
- DC-10 bookings returned to within 10% of expected levels within two months post-incident.
- No evidence of airlines using dynamic pricing to lower DC-10 fares was found.
Conclusions:
- The public's willingness to fly the DC-10 showed a significant but temporary decline after the 1989 crash.
- Market reactions to aviation safety events can be substantial but may not persist long-term.
- Airlines did not appear to manipulate pricing to counteract the negative impact on DC-10 bookings.
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