Abstract
The airlines industry is facing significant financial risks which arises from the changes in current economic conditions that has impacted the vulnerability of stock returns as well as its financial performance. This research primarily aims to study the effects of fuel price fluctuations and macroeconomic variables to airlines performance from both internal (represented by RoA and RoE) and market perspective (represented by airlines stock return).
 Data was obtained from publicly listed airlines registered in the International Air Transport Association (IATA) with their business model classification: Low-Cost Carriers (LCC) and Full-Service Carriers (FSC). The analysis was carried out using multiple panel data regression model.
Highlights
Airline and jet fuel research have been a topic that is frequently discussed in recent years especially regarding price
Before we look at the impact on their stock, it will be useful to see the differences between full-service carrier (FSC) and low-cost carrier (LCC) in terms of operation
The initial idea of this study is to examine how fuel price and macroeconomic variables impact to the airlines stock price return and financial performance
Summary
Airline and jet fuel research have been a topic that is frequently discussed in recent years especially regarding price. Jet fuel cost proves to have an impact on an airline's capacity choice in the US. The fuel's impact in capacity choice will have an impact on the operational side, it determines what type of aircraft will be used, the aircraft’s load factor, and its frequency of flying (Sibdari, Mohammadian, & Pyke, 2018). The impact of fuel cost is inevitable for both full-service carrier (FSC) and low-cost carrier (LCC).The question regarding how the relationship would affect their stock is yet to be explored. Before we look at the impact on their stock, it will be useful to see the differences between FSC and LCC in terms of operation. Another study found that inflation is undeniably one of the most important macroeconomic variables considered to be linked to stock price and often influences stock price
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