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Real indirect costs of work accidents: Results from our new model

1990; Elsevier BV; Volume: 12; Issue: 1-3 Linguagem: Inglês

10.1016/0376-6349(90)90073-5

1878-1403

Bernard Brody, PaulC. Rohan, Yves Lðourneau, André Poirier,

Insurance and Financial Risk Management

Safety has always been paramount to the success of an airline's business model. Aircraft accidents can alter the public perception of the safety of a particular aircraft type and thereby threaten the airframe manufacturer's success. This chapter analyzes the effect of accidents and fatal accidents on aircraft manufacturers' competition. We provide an overview of the evolution of accidents and fatal accidents between 1946 and 2019 and their impact on aircraft manufacturers' consolidation. We show that, in the past, aircraft accidents have had only a small impact on aircraft orders in the long term. We discuss why airlines tend to hold on to either Airbus or Boeing airframes for future orders when renewing or expanding their fleets, highlighting three key reasons for this behavior: high switching costs, cockpit commonality, and negotiation leverage.We conclude that, while there is little evidence that aircraft accidents and fatal accidents have had an impact on aircraft manufacturers' competition in the past, this may change with the Boeing 737 MAX disasters in 2018 and 2019 which have created to a considerable passenger distrust toward this aircraft model and resulted in several order cancellations. This event could be a potential game-changer in the future competitive equilibrium between the two major airframe manufacturers Airbus and Boeing. We are yet to see whether the combined impact of the Boeing 737 MAX accidents and the COVID-19 pandemic on the international air transport will change the pre-COVID-19 equilibrium in the duopoly between Airbus and Boeing in the future.