Systematic and Idiosyncratic Risks of the U.S. Airline Industry

Authors

Rafiqul Bhuyan
André Varella Mollick, The University of Texas Rio Grande ValleyFollow
Md Ruhul Amin

Document Type

Article

Publication Date

8-3-2022

Abstract

Understanding the risky nature of the airline industry has received attention in the tourism literature from separate angles. Although the systematic risk of the airline industry has been examined before, idiosyncratic risk has largely been ignored. This study fills this gap in the tourism literature by investigating the effect of passengers’ air travel on systematic and idiosyncratic risks of the U.S. airline industry. Using historical air travel data and utilizing both OLS and fixed-effect models, this paper documents negative relationships between the occupancy of airline seats and idiosyncratic risks for 21 U.S. airline companies. This negative effect of occupancy is more pronounced if air travel distances are shorter, companies have lower leverage ratios, and companies are smaller in size. Policy implications for both airline managers and investors are provided.

Comments

© 2022 by the authors.

Recommended Citation

Bhuyan, Rafiqul, André Varella Mollick, and Md Ruhul Amin. 2022. Systematic and Idiosyncratic Risks of the U.S. Airline Industry. Journal of Risk and Financial Management 15: 343. https:// doi.org/10.3390/jrfm15080343

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Publication Title

Journal of Risk and Financial Management

DOI

10.3390/jrfm15080343