Empirical Analysis of Fleet Commonality Strategy’s Impact on the Operating Performance of the Indian Aviation Sector

Abstract

Fleet commonality and standardization strategies are recognized in the global airline industry for their operational advantages and potential to ensure sustainability in a highly competitive environment. This study focuses on the Indian airline sector, aiming to verify the pivotal role of cost efficiency, revenue management, fleet size, and characteristics in determining airline profitability, as well as the influence of fleet size and standardization on operating costs. To achieve this, we developed an empirical model to evaluate both operating profitability and cost efficiency provided by fleet commonality. To measure fleet commonality, we employed a fleet standardization index, providing a quantitative assessment of the level of fleet commonality across different airlines. Utilizing real-time data collected extensively from the Directorate General of Civil Aviation (DGCA) in India, we conducted a detailed analysis involving eight prominent airlines for 10 years spanning from 2012 to 2022. Our regression models indicate a strong positive association between fleet commonality and operating performance, underscoring the significance of fleet standardization strategies in enhancing airline profitability. This study not only contributes empirical evidence to the existing literature but also provides valuable insights for airline managers seeking to understand the benefits of fleet commonality in the context of the Indian aviation industry. This research is anticipated to aid airline executives in making informed decisions about fleet management strategies to improve their operational and financial performance in an increasingly competitive market.