where COMPLit* is the unobserved counterpart of observed
customer complaints variable and COMPLit measures the number of
customer complaints per 100,000 passengers received by the CAAC
against carrier i in quarter t. xit is a vector of independent variables
which include variables of baggage mishandling problems, percentage
of overall on-time performance of scheduled flights of
carriers, individual carrier characteristics, weather conditions and
seasonal dummies for the quarterly data. In addition, we also
consider a slightly different Tobit model which controls the fixed
effect of each individual carrier as the constant term, and a, is
replaced by ai, the fixed effect of carrier i, in equation (1). The independent
variables in the Tobit model are explained below.