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The Business Case for Preparedness
Demand Shock Can Impact Revenue on a Long Term Basis
May 24, 2008 12:30 AM
September 11th illustrated the capability of terrorism to impact an industry. The U.S. airline industry experienced both a negative transitory shock of over 30% and an ongoing negative demand shock amounting to roughly 7.4% of pre- September 11th demand.
Source: "Assessing the Impact of the September 11 Terrorist Attacks on U.S. Airline Demand", Harumi Ito and Darin Lee, Brown University, Department of Economics
Key Points:
* This paper assesses the impact of the September 11th terrorist attacks and its after-effects on U.S. airline demand. Using monthly time-series data from 1986-2003, we find that September 11th resulted in both a negative transitory shock of over 30% and an ongoing negative demand shock amounting to roughly 7.4% of pre-September 11th demand. This ongoing demand shock has yet to dissipate (as of November 2003) and cannot be explained by economic, seasonal, or other factors."
Link:
http://www.brown.edu/Departments/Economics/Papers/2003/2003-16_paper.pdf