How the global airline industry behaved to restrictions on air travel to India? An event study analysis

Figures & data

Table 1. Average revenue and net earnings of the airline industry.

Period	Hong Kong (n = 5)	UK (n = 4)	Canada (n = 4)	Australia (n = 4)	Thailand (n = 2)	US (n = 11)	India (n = 3)	Global (N = 33)
Q1	13.61	1.86	1.13	0.86	7.02	53.98	37.56	24.36
	(−3.75)	(−0.64)	(−0.27)	(−0.37)	(−0.51)	(−0.48)	(−5.63)	(−1.42)
Q2	10.82	0.31	0.29	0.86	0.60	0.63	4.51	2.47
	(−3.38)	(−0.7)	(−0.44)	(−0.37)	(−2.06)	(−1.02)	(−11.52)	(−2.21)
Q3	14.45	0.74	0.35	0.47	1.65	1.18	12.93	4.05
	(−1.28)	(−0.62)	(−0.17)	(−0.12)	(−1.71)	(−1.07)	(−4.37)	(−1.16)
Q4	14.89	0.53	0.38	0.47	3.30	1.50	22.27	5.15
	(−3.26)	(−0.54)	(−0.28)	(−0.12)	(−0.76)	(−0.63)	(−2.29)	(−1.07)
2020	53.77	3.43	2.15	2.66	12.56	57.29	77.26	36.03
	(−11.68)	(−2.5)	(−1.16)	(−0.99)	(−5.02)	(−3.2)	(−23.82)	(−5.87)

Notes: The figures in parenthesis indicate the average net earnings for the airline industry in that particular nation. 'n' indicates the number of airline companies included in the sample for that nation. All values are in billion US Dollars.

Source: Author’s calculations.

Figure 1. Trends in airline industry during the pre-pandemic period.

Table 2. Details of the sample.

Sl. No.	Airline Company	Code name
Nation: Hong Kong; Event Date: 18-04-2021; Benchmark index: Hang Seng
1	China Eastern Airlines Corp. Ltd.	chinaeaste ∼ d
2	China Southern Airlines Co. Ltd.	chinasouth ∼ d
3	Air China Ltd.	airchinaltd
4	China Aircraft Leasing Group Holdings Ltd.	chinaaircr ∼ g
5	Cathay Pacific Airways Ltd.	cathaypaci ∼ d
Nation: United Kingdom; Event Date: 19-04-2021; Benchmark index: FTSE100
6	Ryanair Holdings	ryanairhol ∼ s
7	International Consolidated Airlines S.A.	internatio ∼ e
8	Wizz Air Holdings	wizzairhol ∼ s
9	Easyjet PLC	easyjetplc
Nation: Canada; Event Date: 22-04-2021; Benchmark index: TSX Composite
10	Air Canada	aircanada
11	Chorus Aviation	chorusavia ∼ n
12	Exchange Income Corporation	exchangein ∼ n
13	Cargojet Inc	cargojetinc
Nation: Australia; Event Date: 27-04-2021; Benchmark index: ASX200
14	Air New Zealand Ltd.	airnewzeal ∼ d
15	Qantas Airways Ltd.	qantasairw ∼ d
16	Alliance Aviation Services Ltd.	allianceav ∼ d
17	Regional Express Holdings Ltd.	regionalex ∼ d
Nation: Thailand; Event Date: 25-04-2021; Benchmark index: SET
18	Asia Aviation	asiaaviation
19	Bangkok Airways	bangkokair ∼ s
Nation: United States; Event Date: 20-04-2021; Benchmark index: NASDAQ
20	American Airlines Group Inc.	americanai ∼ c
21	Allegiant Travel Company	allegiantt ∼ y
22	Alaska Air Group Inc.	alaskaairg ∼ c
23	Delta Air Lines Inc.	deltaairli ∼ c
24	Hawaiian Holdings Inc.	hawaiianho ∼ c
25	JetBlue Airways Corporation	jetblueair ∼ n
26	Southwest Airlines Company	southwesta ∼ y
27	Mesa Air Group Inc.	mesaairgro ∼ c
28	Spirit Airlines Inc.	spiritairl ∼ c
29	SkyWest Inc.	skywestinc
30	United Airlines Holdings Inc.	unitedairl ∼ c
Nation: India; Event Date: 22-04-2021; Benchmark index: NIFTY
31	Interglobe Aviation Ltd.	interglobe ∼ d
32	Spicejet Ltd.	spicejetltd
33	Jet Airways Ltd.	jetairways ∼ d
34	Global Vectra Helicorp Ltd.	globalvect ∼ d

Notes: China Eastern, China Southern, Air China are listed on the Shanghai stock market, but we use Hong Kong Stock Exchange's Hang Seng Index as the benchmark index instead of Shanghai because there were no new restrictions from China; hence, we consider those from Hong Kong.

Source: Author’s calculations.

Figure 2. Event timeline.

Source: Drawn by authors

Table 3. Summary statistics of the daily log returns during the estimation and event window period.

Variables	Obs	Mean	Std. Dev.	Minimum	Maximum	W	p-value
chinaeaste ∼ d	221	0.12%	2.33%	−5.67%	7.63%	0.98	0.01
chinasouth ∼ d	221	0.23%	2.92%	−7.70%	13.72%	0.97	0.00
airchinaltd	221	0.13%	2.52%	−8.53%	12.86%	0.95	0.00
chinaaircr ∼ g	221	0.01%	1.73%	−10.17%	7.35%	0.89	0.00
cathaypaci ∼ d	221	0.00%	2.67%	−10.22%	13.15%	0.94	0.00
ryanairhol ∼ s	221	0.17%	2.88%	−6.82%	12.76%	0.98	0.01
internatio ∼ e	221	−0.08%	5.09%	−36.84%	22.70%	0.88	0.00
wizzairhol ∼ s	221	0.20%	2.72%	−9.41%	14.32%	0.97	0.00
easyjetplc	221	0.14%	4.18%	−9.94%	30.43%	0.90	0.00
aircanada	221	0.15%	3.52%	−10.60%	25.18%	0.89	0.00
chorusavia ∼ n	221	0.12%	3.90%	−6.62%	29.40%	0.82	0.00
exchangein ∼ n	221	0.21%	2.16%	−7.53%	10.21%	0.96	0.00
cargojetinc	221	0.11%	2.62%	−14.28%	14.52%	0.91	0.00
airnewzeal ∼ d	221	0.05%	2.28%	−8.77%	7.91%	0.97	0.00
qantasairw ∼ d	221	0.05%	2.26%	−9.51%	8.00%	0.99	0.04
allianceav ∼ d	221	0.16%	2.19%	−5.14%	9.02%	0.96	0.00
regionalex ∼ d	221	0.12%	3.20%	−6.64%	16.15%	0.89	0.00
asiaaviation	221	0.10%	3.31%	−11.03%	16.22%	0.93	0.00
bangkokair ∼ s	221	0.10%	2.61%	−12.56%	12.60%	0.96	0.00
americanai ∼ c	221	0.11%	4.11%	−16.86%	15.20%	0.96	0.00
allegiantt ∼ y	221	0.31%	3.17%	−13.09%	12.63%	0.96	0.00
alaskaairg ∼ c	221	0.23%	3.24%	−15.31%	18.23%	0.94	0.00
deltaairli ∼ c	221	0.17%	3.22%	−15.12%	15.72%	0.94	0.00
hawaiianho ∼ c	221	0.16%	4.76%	−17.61%	41.10%	0.81	0.00
jetblueair ∼ n	221	0.21%	3.65%	−12.82%	19.64%	0.95	0.00
southwesta ∼ y	221	0.23%	2.73%	−12.34%	9.26%	0.97	0.00
mesaairgro ∼ c	221	0.49%	4.88%	−21.21%	25.39%	0.93	0.00
spiritairl ∼ c	221	0.29%	4.24%	−19.13%	18.62%	0.96	0.00
skywestinc	221	0.15%	3.82%	−19.34%	15.70%	0.96	0.00
unitedairl ∼ c	221	0.13%	4.10%	−17.57%	17.52%	0.95	0.00
interglobe ∼ d	221	0.17%	2.65%	−9.13%	11.53%	0.97	0.00
spicejetltd	221	0.06%	2.93%	−10.52%	11.47%	0.93	0.00
jetairways ∼ d	221	0.51%	4.03%	−5.13%	4.88%	0.82	0.00
globalvect ∼ d	221	−0.12%	2.99%	−9.13%	11.23%	0.98	0.00

Notes: Variables indicate the code names for the sample firms, which can be decoded from the details of the sample provided in Appendix-A. 'Obs' is the number of firms in the analysis. W is the Shapiro–Wilk test statistics, and the p-value is the probability of the null hypothesis being accepted. A p-value below 0.05 means rejection of the null hypothesis that the data is normal.

Source: Author’s calculations.

Table 4. Average and cumulative average abnormal returns and the corresponding t-values during the event window for the entire sample (N = 34).

Days	AAR	tAAR	tCorrado	CAAR	tCAAR
t-5	−0.67%	−1.244	−1.417	−0.67%	−0.508
t-4	−0.62%	−1.165*	−0.605	−1.29%	−1.077
t-3	−0.92%	−1.721*	−2.188**	−2.21%	−2.065**
t-2	−0.85%	−1.579	−1.648*	−3.06%	−3.296***
t-1	−0.20%	−0.381	0.409	−3.26%	−4.306***
t	−1.63%	−3.044***	−2.315**	−4.89%	−9.134***
t + 1	0.48%	0.904	1.414	−4.41%	−5.819***
t + 2	−1.00%	−1.868*	−2.126**	−5.41%	−5.830***
t + 3	1.19%	2.212**	2.656***	−4.23%	−3.943***
t + 4	−0.05%	−0.097	0.056	−4.28%	−3.570***
t + 5	0.23%	0.426	1.126	−4.05%	−3.085***

Notes: t_AAR and t_CAAR indicate the t-values for the average and cumulative average abnormal returns as per (Brown & Warner, 1980, 1985) t-test. T_Corrado indicate Corrado-test values as simplified by (Ataullah et al., 2011). ^*, ^**, and ^*** indicate significant values at 10%, 5% and 1%, respectively.

Source: Author’s calculations.

Figure 3. Trend of AARs and CAARs during the event window for the entire sample.

Source: Drawn by the authors based on the results of the event study analysis

Table 5. Country-wise shorter window cumulative average abnormal returns and the corresponding t-values.

Window	Hong Kong	UK	Canada	Australia	Thailand	US	India
[-5,-1]	−2.45%	−2.44%	−4.94%	−1.71%	3.99%	−4.31%	−6.96%
	(−1.10)	(−0.65)	(−1.48)	(−1.55)	(0.83)	(−1.66*)	(−1.96*)
[-3,-1]	−1.28%	0.46%	−2.55%	−1.04%	0.77%	−4.18%	−2.14%
	(−0.74)	(0.16)	(−0.99)	(−1.22)	(0.21)	(−2.08**)	(−0.78)
[0,0]	0.60%	0.10%	2.66%	−0.08%	−1.76%	−4.37%	−4.40%
	(0.60)	(0.06)	(1.77*)	(−0.16)	(−0.82)	(−3.77***)	(−2.77***)
[+1,+3]	−2.02%	−0.07%	2.58%	−0.61%	−2.76%	2.87%	−0.22%
	(−1.16)	(−0.02)	(0.99)	(−0.71)	(−0.74)	(1.43)	(−0.08)
[+1,+5]	−2.35%	1.19%	−0.23%	−1.38%	−4.54%	2.75%	5.24%
	(−1.05)	(0.31)	(−0.07)	(−1.25)	(−0.94)	(1.06)	(1.47)

Notes: [-5,-1] and [-3,-1] indicate the pre-event windows of five and three days. [0,0] indicates the event window. [+1,+3] and [+1,+5] indicate the post-event windows of three and five days. Figures in parenthesis indicate the t-values. ^*, ^**, and ^*** indicate significant values at 10%, 5% and 1%, respectively.

Source: Author’s calculations.

Table 6. Shorter window cumulative average abnormal returns and the corresponding t-values for the entire sample.

Window	CAAR	tCAAR	tCorr(modified)
[-5,-1]	−3.26%	−2.723***	−15.543***
[-3,-1]	−1.97%	−2.125**	−12.519***
[0,0]	−1.63%	−3.044***	1.850*
[+1,+3]	0.67%	0.720	5.646***
[+1,+5]	0.84%	0.705	7.025***

Notes: [-5,-1], [-3,-1], [0,0], [+1,+3] and [+1,+5] are as defined previously. t_CAAR indicate the t-values for the cumulative average abnormal returns for the entire sample as per (Brown & Warner, 1980, 1985) t-test. t_{Corr)modified)} indicate Corrado-test values as modified by (Ataullah et al., 2011). *, **, and *** indicate significant values at 10%, 5% and 1%, respectively.

Source: Author’s calculations.

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Data availability statement

The data used in this study has been made available at Mendeley Data at Pandey and Kumari (2021).