Abstract
There are many factors which could influence the sustainability of airlines. The main purpose of this study is to introduce a framework for a financial sustainability index and model it based on structural equation modeling (SEM) with maximum likelihood and Bayesian predictors. The introduced framework includes economic performance, operational performance, cost performance, and financial performance. Based on both Bayesian SEM (Bayesian-SEM) and Classical SEM (Classical-SEM), it was found that economic performance with both operational performance and cost performance are significantly related to the financial performance index. The four mathematical indices employed are root mean square error, coefficient of determination, mean absolute error, and mean absolute percentage error to compare the efficiency of Bayesian-SEM and Classical-SEM in predicting the airline financial performance. The outputs confirmed that the framework with Bayesian prediction delivered a good fit with the data, although the framework predicted with a Classical-SEM approach did not prepare a well-fitting model. The reasons for this discrepancy between Classical and Bayesian predictions, as well as the potential advantages and caveats with the application of Bayesian approach in airline sustainability studies, are debated.
Highlights
IntroductionMeasuring, predicting, and estimating the sustainability indices of airline industries has always been of great value to airline directors and researchers
Measuring, predicting, and estimating the sustainability indices of airline industries has always been of great value to airline directors and researchers. Some researchers in their sustainability modelling focused on financial indicators [1,2,3], some only dealt with operational indicators [4,5,6,7], while few of them concentrated estimating modelling on both financial and operational performance [8] indices
The main purpose of the present study was to demonstrate the values of the Classical-structural equation modeling (SEM) and Bayesian-SEM techniques in a new airline sustainability framework with the financial performance index for the Asia-Pacific airline industry
Summary
Measuring, predicting, and estimating the sustainability indices of airline industries has always been of great value to airline directors and researchers. In this regard, some researchers in their sustainability modelling focused on financial indicators [1,2,3], some only dealt with operational indicators [4,5,6,7], while few of them concentrated estimating modelling on both financial and operational performance [8] indices. Some sustainability modelling has been focused on the cost indicators In these types of the studies, generally, researchers consider a cost indicator as a function of operational indicators with [9,10] or without [7,11] another cost indicator. The concerned indices stand for one of the most essential communicational means applicable to senior
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