Entry Behaviour and Financial Distress: An Empirical Analysis of the US Domestic Airline Industry

摘要

This paper tests the empirical link between a firm's financial conditions and its probability of entering new markets in the US airline industry. The analysis is conducted using airline data from the top 500 airport-pairs during the period between 1993 and 2003. The result shows that a legacy carrier is less likely to enter new airport-pairs when its leverage increases. On the other hand, there is little evidence of such link for a low-cost carrier.