Competition on the Basis of Safety?

Safety is arguably the most important “quality” attribute of commercial aviation, yet it rarely figures into overt inter-firm rivalry. This chapter lays out the underlying economic models of safety provision and the demand for safety by passengers, and concludes that profit maximizing firms should seek to diversify their safety offering. However, crucial failures in market processes remove the desirability to diversify and lead to minimal product differentiation among mainstream airlines. That said, the chapter concludes by pointing to two examples of competitive markets where there are actual or imagined differences in safety between the rival airlines.