Banking

Are The Bankrupt Skies The Friendliest?

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Executive Summary

The authors use data from the US airline industry to investigate whether firms that are under bankruptcy protection, as well as these firms' product market rivals, change the quality of the products they offer. They measure the quality of the services offered by a carrier using flight cancellations and delays, and the age of the aircraft used by the carrier. They find that delays and cancelations are less frequent during bankruptcy filings but return to their pre-bankruptcy levels once the bankrupt firm emerges from bankruptcy.

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