Stock Investors’ Confidence on Low-cost and Traditional Airlines in Asia during Financial Crisis of 2007–2009

This study investigates the stock investors’ confidence on low-cost carriers and traditional airlines in Asia during the financial crisis of 2007-2009. Air Asia and Singapore Airlines, which are the renowned airliners in each segment of the aviation industry, have been chosen as our sample companies for this study. Event study methodology and CAPM beta framework are utilized to disclose market participants’ perspective on both airlines during economic crisis. Our study shows Singapore Airlines appears to be a riskier stock compared to Air Asia during the financial crisis. In addition, the cumulative abnormal returns of Air Asia are higher than Singapore Airlines after an unpleasant economic event unfolded. In conclusion, investors have higher confidence on low-cost carriers during crisis period.