The COVID-19 pandemic has posed a great challenge to the development of China's airline industry. Although the existing literature has analyzed the economic impact of the pandemic on the airline industry from different perspectives, it remains to be further studied given the operating characteristics of different types of airlines in China.
Using a new perspective of heterogeneous airline service models, this study collects high-frequency data on stock prices on six sample airline companies (including both full-service airlines and low-cost airlines) in China over 519 trading days, from August 1, 2019 to September 15, 2021, and identifies structural change points for each company's stock price using the Quandt-Andrews test. The outcome is used to construct an econometric model to quantify the economic impact of the pandemic on different airlines' stock prices under different structural changes.
All results have passed the Quandt-Andrews test. The impact coefficient of full-service airlines is negative, while that of low-cost airlines is positive. Most of them have passed the test at the significance level of 10%.
All Chinese airlines experienced significant sudden changes in stock prices due to the pandemic, but there are sectoral differences in the order of the sudden changes, with full-service airlines experiencing structural changes much earlier than low-cost airlines. In addition, the impact of the pandemic on stock prices varies across airline types, with a negative impact on full-service airlines and a significant positive effect on most low-cost airlines.