Revisiting the relationship between profitability and air carrier safety in the US airline industry

Studies have examined the link between financial performance and air carrier safety following deregulation, using accident rates as a measure of safety. These studies have relied on limited post-deregulation data. This paper re-examines these trends with extended post-deregulation data. We find that accident rates since 1978, when normalized over departures, have been increasing, raising concerns that the growth in the industry is dominating safety improvements. Further, this study highlights an inverse relationship between profitability and air carrier safety, especially for the smaller regional air carriers. These results raise important policy implications for the airline industry and the regulatory agencies.