Financial Characteristics and Its Impact on Airline Safety in Taiwan

Abstract

A likely positive relationship has been observed between financial performance and safety in the airline industry from group comparison during 1994-1998 in this study. Both the overall concordant order ratio (OCOR) and the marginal order ratio (MOR) are employed in rating eight Taiwan scheduled passenger airlines over the 1994-1998 financial performance. Two interesting implications are found. Our result likely supports the theoretical model suggesting possible links between financial condition and product quality among groups. However, it is also found that the best and the worst financially performed airlines have fewer, even zero safety records.