Which of the following is a criterion used in the process of airline risk selection?

• A. Capital
• B. Fuel efficiency
• C. Passenger volume
• D. Route distance

Answer: (A)

In airline risk selection, the most important factor is the carrier’s financial resilience, particularly its capitalization. A well-capitalized airline has a stronger ability to absorb losses, weather economic shocks, and continue operations after a claim, which lowers the insurer’s overall risk and helps ensure premium stability over time. Capital signals that the airline can fund ongoing maintenance, fleet needs, and safety investments, reducing the likelihood of insolvency and large, uninsured losses for the insurer.

Fuel efficiency, while relevant to operating costs and profitability—which in turn can influence risk—does not directly measure the carrier’s ability to bear risk or stay solvent. Passenger volume and route distance affect exposure and premium levels, but they describe how much risk the insurer might face rather than the carrier’s capacity to absorb that risk. Capital remains the best criterion because it directly relates to financial stability and the insurer’s potential for recovery after a loss.