US Commercial airline performance after September 11, 2001: decomposing the effect of the terrorist attack from macroeconomic influences

The US airlines’ revenue passenger miles series are examined to objectively assess the effect of the September 11th terrorist attack on the performance of the industry controlling for the general economic conditions. A Vector Autoregression model (VAR) with revenue passenger mile and real gross domestic product series is utilized. The estimated effect of the attack supports the federal government's appropriation of $5 billion cash compensation to the airlines. Analysis at the individual air carrier level confirms that not all the US major and regional airlines were affected in the same manner. United, Northwest, US Airways, and Delta account for more than 63% of the aggregate decline in the US airline industry performance. Three air carriers: JetBlue, Aloha and Atlantic Southeast were able to significantly improve their performance immediately following the September 11th attack.