Determinants of Profitability and Recovery from Shocks: the case of the U.S. domestic Airline Industry
Wang, Jen-Hung Edward
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This paper examines the determinants of profitability using operations strategy, productivity, and service measures in the context of the U.S. domestic airline industry. Data on ten carriers was collected on a quarterly basis between 1995 and 2007. An analysis is performed separately on data prior and post 9/11 attack. It is found that operations strategy and productivity measures are significant both before and after the 9/11 attack, whereas service measures are only significant before 9/11. Some managerial implications are provided. Additionally, it is found that the profitability of full-service carriers is improving faster than low-cost carriers after 9/11.