Occupancy, oil prices, and stock returns: Evidence from the U.S. airline industry

Authors

Andre V. Mollick, The University of Texas Rio Grande ValleyFollow
Md Ruhul Amin, The University of Texas Rio Grande ValleyFollow

Document Type

Article

Publication Date

3-2021

Abstract

This paper examines whether occupancy of seats affects stock returns of airline companies and how this relationship is affected by WTI oil prices. Our approach combines revenues (occupancy) and costs (oil prices) for 33 U.S. airline companies from 1990 to 2019. Using travel capacity utilization data from U.S. carriers at monthly frequency and exploiting fixed-effects regression models, we document a positive relation between occupancy and stock returns, which is attenuated by oil prices. The role of oil becomes larger with asymmetries: the effects of oil prices are higher when moving up than down. Airline stocks always respond by more than the overall stock market.

Comments

Original published version available at https://doi.org/10.1016/j.jairtraman.2020.102015

Recommended Citation

Mollick, A. V. and Amin, M. R. (2021) ‘Occupancy, oil prices, and stock returns: Evidence from the U.S. airline industry’, Journal of Air Transport Management, 91, p. 102015. doi: 10.1016/j.jairtraman.2020.102015.

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Publication Title

Journal of Air Transport Management

DOI

10.1016/j.jairtraman.2020.102015