An Econometric Analysis on Factors Influencing Operational Expenses in Indian Airlines

Abstract

This paper aims to evaluate the impact of different factors on the operational costs of Indian Airlines using data from the Directorate General of Civil Aviation spanning a decade, from 2007–2008 to 2016–2017. The study examines five variables—average seats per kilometer, average payload, average stage length, average fuel price and airline ownership and their regression against expense/revenue passenger kilometers in order to understand their influence on total operational expenses. The results show that these selected variables significantly affect an airline's operational expenses with together explaining 80.9% of the model outcome. Therefore, managing and considering these variables could enhance airlines' cost efficiency leading to sustainability in a competitive market.