Legal actions in Brazilian air transport: A machine learning and multinomial logistic regression analysis

Abstract

In Brazil, one of the most harmful costs for airlines is the number of lawsuits filed against them. It is a problem that can affect its operations, reduce the entry of new competitors and create legal uncertainty in the country. This work seeks to highlight the factors which most contribute to the rise of judicial indemnities, discuss the most relevant issues and identify the best techniques to predict the indemnified values. The objective is to provide subsidies for airlines to mitigate the number of legal actions by using machine learning models. This research contributes by discussing one of the most relevant subjects in Brazilian air transport and comparing the machine learning models’ performance. The study is based on lawsuits between 2016 and 2021 using the companies’ data. The performance of Naive Bayes, Random Forest, Support Vector Machines, and Multinomial Logistic Regression models are evaluated through the accuracy, area under the ROC curve, and confusion matrix. The results showed better predictive power for Random Forest and Logistic Regression. The latter showed that flight delays, cancellations, and airline faults have a negative effect on indemnities. The above-average compensation is a tendency in some states, being the moral damage awarded to customers the main cause of higher compensation.