Airline Firms Research Articles

Airline industry equities under external uncertainty shocks

We gauge the impact of news and other relevant external uncertainties facing airline firms via an equity market lens. Using local projections, we establish that rising investors’ fear shocks have long-lasting negative effects on airline industry equity returns, while increasing geopolitical, climate policy, and fuel cost uncertainties have comparatively short-lived impacts. Our results are robust to several alternative model specifications, including a pre-pandemic subsample. Based on our findings, we provide a promising avenue for future research in airline financial management.

CONSEQUENCES OF COVID-19 ON AVIATION INDUSTRY: A MENACE TO GLOBAL AIRLINES

The aviation industry has been considered one of the major contributors to the economy of nations for several decades. As a sub-sector of the aviation industry, airlines are considered the fastest mode of transportation for passengers and cargo across the globe. Since its invention, airlines have served millions of people to move from one country to another as well as within the country. Despite natural calamities and global war affairs, the airline industry has achieved immense growth in recent decades. In addition to the progress of airlines, coronavirus disease 2019 (COVID-19) has become a major hindrance to providing services to people around the world. Due to the rapid spread of deadly diseases, several airline firms have halted their air travel services in many parts of the world. As lockdowns and travel restrictions were enforced, this article examines the crisis of the airline industry after the onset of the COVID-19 pandemic.

The Role of Sustainability Statements in Investor Relations: An Analysis of the Annual Reports of Airline Companies

Investors are one of the primary target audiences for corporate communication; they seek non-financial as well as financial information from the companies they invest in, and they consider the social and environmental sustainability of these companies in addition to their economic sustainability. Because of this, as a tool for investor relations, annual reports now routinely and regularly incorporate non-financial information. This study examined thirty annual reports from six public airline firms issued between 2018 and 2022. A total of 8115 expressions on social, economic, and environmental sustainability issues—divided into 125 themes—were coded and analyzed in Maxqda 2020. Among the conclusions was the fact that, in 2022, all of the examined companies devoted 9% of their pages to sustainability statements and included them as an individual topic in their reports. It was found that 64% of both the sustainability-related pages of the reports and the messages of the company managers included in the report consisted of social sustainability statements, with the theme of governance playing an important role in these explanations. Additionally, it was revealed that the topics of governance issues (22.6%), the natural environment (21.7%), and human resources development (15.5%) are the most frequently discussed social, environmental, and economic sustainability themes in corporate annual reports.

The Influence of Internet Technology on the Aviation Industry: Existing Tactics and Future Advancements

This paper focuses on the customer interface effects that Internet technologies are having on airline firms; the examination centres on many airline businesses that have been utilizing Internet technology for their own profit. It is demonstrated how airline operators are utilizing the Internet to provide their consumers cutting-edge transaction structures and exchange methods. Customers' expectations of what and how these businesses supply products and services are growing as the Internet becomes more widely used. In reality, the Internet has become critical to the strategic development of the airline corporations under consideration. The use of Internet technology at the user interface has made the limits and extent of the aviation sector less obvious. The availability of a diverse variety of products and services is driving industry convergence, which has significant consequences for business strategy formation. The use of the Internet at the consumer interface has become a critical driver in the development of the airline business. Further exploitation of the Internet will result in increased levels of complexity, which will raise customer expectations about what and how these firms supply products and services.

Macroeconomic Determinants of Financial Failure Risk in Airlines

The objective of this study is to identify the macroeconomic factors that influence the risk of financial failure in the aviation industry. Within the parameters of the study, a sample of 11irline firms operating between 2009 and 2019 was analyzed to determine the factors influencing the likelihood of financial failure. The cost of fuel, interest rates, inflation rates, and currency rates were utilized as macroeconomic variables that could have an impact on airline enterprises' ability to meet ends. Financial data and macroeconomic data of the airline companies in the sample were obtained from Thomson Reuters Eikon Datastream. The methodology of the study consists of 2 stages. In the first stage, Altman Z'' Score method is used. Then, panel data analysis method is preferred to reveal the relationship between financial failure and macroeconomic factors. According to the findings of the random effects panel data study, exchange rates and interest rates have a negative impact on financial failure. The results of the changes in interest and exchange rates suggest that governments and airlines should concentrate on policies that will strengthen the aviation sector’s financial viability. To manage these risks more effectively, financial managers must closely examine the effects of rising macroeconomic risk and the corresponding financial failure effects. Airline managers, private and institutional investors should monitor policy uncertainty, assuming that exchange rate uncertainty is a driving force in financial failure. In addition, airline companies should review their hedging strategies against exchange rate risk.

Hybrid evaluation approach for the overall impression development through the sustainability concepts and strategy of competition

AbstractThe purpose of this paper is to examine how the concepts of value cocreations may relate to airlines' overall impressions by using a mediation‐moderation examination. This study theorized the integrated concepts of first‐order and second‐order analysis of competition strategy and various means of innovation linkage. The proposed model also structured the moderating roles of empowering leadership in linking the process of innovation development. Multisource data were collected from 465 employees who work in airline firms. The results showed that decision participation, sustainability knowledge and innovation mediate the relationship between value cocreation and overall impression. Furthermore, the moderating role of empowering leadership strengthens the different relationships of innovation development. Managerial and theoretical implications are also proposed for future theoretical developments and empirical improvements.

Effect of Ground Handling Services on Arrival Baggage for Passenger Satisfaction

Numerous airline firms are fighting to raise the standard and reputation of their operations in response to the rising demand for air transportation services. The pre-flight and post-flight stages of an aircraft's operation require assistance from ground handling agents, affecting customer satisfaction with air transportation services. Passenger satisfaction is the expression of enjoyment or satisfied with the assistance received from the staff. This study's goal is to ascertain how much ground handling services offered by airlines during arrivals at General Ahmad Yani Semarang International Airport have an impact on passengers. This quantitative study aims to test the predetermined objectives on travelers from five airlines who employ PT. Kokapura's ground handling services. This study employed observation, questionnaires, and literature reviews as data collection methods. T-tests and the coefficient of determination are used to analyze the data (R2). With a calculated t-value of 21.182 > t-table 1.985, the study's findings demonstrate that the arrival baggage service offered by PT. Kokapura's ground handling significantly effects traveler satisfaction at General Ahmad Yani Semarang International Airport. The remaining 17.9 percent is influenced by other factors, with a correlation coefficient of 0.821 and an 82.1 percent coefficient of determination.

Firm value in the airline industry: perspectives on the impact of sustainability and Covid-19

To date, there has been limited research undertaken into firm value determinants in the air transport industry, one of the most essential sectors for global business. In view of this, in this study, we review and synthesise the literature that focuses on the value of firms in this sector and discuss conceptually and empirically the determinants influencing airlines’ stock values. Our main objective is to widen our understanding of the current state of research on the firm value of air transport companies. Using the systematic literature review (SLR) approach, we classify 173 papers published from 1984 to 2021. We find considerable changes in academic interest in the topic over the time period analysed, especially as a consequence of crisis-induced market crashes. In addition, we classify the main research themes relating to airlines’ market value, identify gaps, and introduce potential future research avenues in this area. Among the themes identified, the adjustment in the industry-level factors such as alliances, market structure and competition were the most common source of fluctuations in airlines’ stock value. However, we find shifting to sustainability initiatives and its consequence for stakeholders’ value as one of the most discussed topics in this context. The trend has gained attention since early 2020 due to the emergence of the Covid-19 pandemic as companies are looking for green and sustainable ways to protect the value in crisis time. Our findings assist transportation researchers and executives in addressing major value drivers of airline firms.

Strategic Alliances Practices on Performance of Local Airlines in Kenya

Freedom in the airline industry coupled with deregulation has created variation in fares in response to demand, created by the challenging and ever-changing competitive environment leading to the entry of many airlines in the industry. However, airlines have been met with many challenges to remain operational and competitive in the industry. Airlines have changed their dynamics of operation to counter network carriers in the industry by forming strategic alliances, which have become a powerful tool for these airlines, enhancing revenue, expanding networks, and rationalizing costs. The main purpose of this study was to assess strategic alliance practices on the performance of local airlines operating in Kenya. Specifically, the study sought to: Determine the effect of entry behavior practices, Competitive market practices, Bargaining power, and Transaction costs on the performance of local airlines The study was anchored on the following theories: Market power, Transaction cost, RBV of a firm, and The institutional theory The study used a descriptive research design and targeted all 59 Airline companies currently operating in Kenya. The study purposively targeted the heads of Strategy, Marketing, Product and Development, and Finance, yielding a total of 236 respondents. However, the study scientifically applied a 30% sampling technique of the target population to attain a representative sample size of seventy–one study respondents. Primary data were collected using a structured questionnaire through a 'drop and pick' method. A pilot study was conducted on six Airlines to test the reliability and validity of study tools. The collected data were analyzed both descriptively and inferentially using Statistical Package for Social Sciences (SPSS) computer software Version 24. The study results were presented in statistical frequency distribution tables. The study results revealed that entry behavior, competitive market, bargaining power, and transactional cost all had a statistical and significant positive effect on performance. Moreover, the study showed that strategic alliance practices jointly accounted for approximately 80.82% (R2 = 0.8082) variation in the performance of these local Airline firms in Kenya. The study hence recommended that the management of local Airlines improve on these strategic alliances to improve their performances.

Relationship Between Cost Leadership Strategies and Performance of Domestic Airline Firms in Kenya

The business strategy or combination of strategies adopted by a firm has to fit the firm’s resources and competencies in addition to being responsive to the environmental dynamisms to achieve the desired competitive advantage. The objective of the study was to investigate the relationship between cost leadership and organizational performance of domestic airlines in Kenya. The study employed a correlational research design. The study targeted all the 48 domestic airline firms licensed and operating within the Kenyan borders. The study setting was the three airports in Kenya including JKIA, Wilson Airport, and Moi International Airport Mombasa. From each of the airlines, the target was to engage utmost five individuals holding management positions within the airline management structure. Stratified random sampling technique was used to arrive at a representative sample where Slovin’s formula was used. Primary data was collected using structured questionnaires while secondary data was gathered by use of a document analysis guide. A response rate of 90.23% was realized. Most of the respondents (44.85%, N = 87) were from airline with 11 to 20 staff. In terms of flight types, 40.72% (N = 79) indicated they offer non-scheduled flights. On nature of services 51.55% (N = 100) of the respondents indicated they offer both passenger and cargo hauling flights. Majority held that revenue for the company has been on the rise (60.3%, N = 117) and customers served increased annually comparing 2018 and 2019 (44.3%, N = 86). Pearson correlation test showed a weak positive correlation between cost leadership strategy and revenue generated by the airlines (N = 194, p = 0.005, r = 0.199 at 95% CL) and same to volume of cargo hauled (N = 194, p = 0.000, r = 0.255 at 95% CL) for the period of 2018 and 2019. Regression analysis revealed that cost leadership strategy had a 4% and 6.5% influence on revenue and volume of cargo hauled respectively implying Cost leadership is associated with performance of domestic airline firms in Kenya. The study recommends a longitudinal study in diverse industries to ascertain the relationship more so in the post Covid -19 pandemic.

The nexus between oil and airline stock returns: Does time frequency matter?

This paper investigates the relationship between oil and airline stock returns under different time frequencies. First, we propose an Autoregressive moving average model with mixed frequency exogenous variable to analyse the different impacts of oil on airline stock returns on daily, weekly, and monthly basis. We consistently find a negative oil-airline stock return nexus on a daily basis, but a positive relationship on a weekly basis. While the former supports the economic-based channel, the latter is in line with the market inertia channel. Our findings help explain mixed results reported in the literature. Further, our time frequency connectedness analysis shows that the economic-based channel dominates the market inertia channel since the connectedness is more pronounced in the short-run compared to the medium- and long-run. Our block connectedness results highlight that business models of airline firms can play a significant role in affecting the connectedness, in which the low-cost airlines are more sensitive to the oil price changes. It is worth noting that there are distinguished drivers of the oil-airline stock return nexus in different time frequencies. The drivers also vary between the Global Financial Crisis and the COVID-19 pandemic. Our results are consistent under a battery of robustness checks and deliver important implications to investors, portfolio managers, and executives of airline firms.

Tourist destination competitiveness and ESG performance in the airline industry

The relevance of corporate environmental, social, and governance performance (ESG) has increased significantly during the last few years. The airline industry is susceptible to such environmental, social, and governance practices, which explains its selection for the analysis purposes in this study. This paper analyzes the influence of the Travel & Tourism Competitiveness Index and its constituent factors on environmental, social, and governance performance variables in a sample of leading airline companies worldwide with historical data available from 2013 to 2019. The study required analyzing panel data using a panel-corrected standard error model. The results suggest that airlines headquartered in countries with ideal conditions for operating businesses and outstanding information and communication technology readiness show excellent environmental, social, and governance performance. However, the findings also imply that airline companies headquartered in countries with heavy government influence on the airline industry sector measured by the government prioritization of the domestic travel and tourism sector have poor environmental, social, and governance performance. Similarly, the analysis provided evidence that countries well positioned to join national air service arrangements and subscribe to regional trade agreements have airline companies with excellent environmental, social, and governance performance metrics. The reported results can be priceless for policymakers designing national travel and tourism policies to enhance domestic airline firms’ environmental, social, and governance performance.

A Framework for Predicting Airfare Prices Using Machine Learning

Many academics have concentrated on applying machine learning to retrieve information from databases to enable researchers to perform better. A difficult issue in prediction models is the selection of practical strategies that yield satisfactory forecast accuracy. Traditional software testing techniques have been extended to testing machine learning systems; however, they are insufficient for the latter because of the diversity of problems that machine learning systems create. Hence, the proposed methodologies were used to predict flight prices. A variety of artificial intelligence algorithms are used to attain the required, such as Bayesian modeling techniques such as Stochastic Gradient Descent (SGD), Adaptive boosting (ADA), Decision Trees (DT), K-nearest neighbor (KNN), and Logistic Regression (LR), have been used to identify the parameters that allow for effective price estimation. These approaches were tested on a data set of an extensive Indian airline network. When it came to estimating flight prices, the results demonstrate that the Decision tree method is the best conceivable Algorithm for predicting the price of a flight in our particular situation with 89% accuracy. The SGD method had the lowest accuracy, which was 38 %, while the accuracies of the KNN, NB, ADA, and LR algorithms were 69 %, 45 %, and 43 %, respectively. This study's presented methodologies will allow airline firms to predict flight prices more accurately, enhance air travel, and eliminate delay dispersion. Index Terms— Machine learning, Prediction model, Airline price prediction, Software testing,

Airlines’ Sustainability Study Based on Search Engine Optimization Techniques and Technologies

Digital marketing, especially search engine optimization (SEO), is an integral part of websites today. Airlines in the COVID-19 era have to use every possible means to survive despite the adverse conditions for both entrepreneurship and travel. Many of them have allocated resources and money to develop SEO strategies by applying SEO techniques to their websites to gain more visitors and bookings. Thus, this research is focused on analyzing airlines’ website presence as regards the implemented SEO techniques and their effect on airlines’ website traffic. In the first phase of the research, we gathered web data from 243 airline firms during a one-year observation period (December 2020–December 2021) using our own-developed tool. Furthermore, we proceeded to create an exploratory model using fuzzy cognitive mapping. From the technical SEO point of view and the descriptive analysis, we conclude that the traffic on airlines’ websites and, consequently, their sustainability are inseparably linked to the corresponding SEO techniques and technologies used.

The Impact of the COVID-19 Pandemic on the Performance and Risk Profile of Airline Stocks

The COVID-19 outbreak dealt a severe blow to the global economy, especially to the airline industry, due to worldwide lockdown measures implemented by the authorities. This paper aims to investigate the impact of the COVID-19 pandemic on the airline stock performance of seven markets in Asia and three other markets in Australia, Germany and the United States. The data is collected from 42 airline firms from 2019 to 2020. The research outcomes indicate that: (a) COVID-19 only temporarily impacts stock returns; (b) Market values plunge immediately after the first confirmed case, and it still shows no evidence of returning to the price levels before the outbreak; (c) COVID-19 has a significant impact on stock volatility; (d) Most stocks do not illustrate any higher exposure to systematic risks.

Understanding Consumer Buying Intention of E-Commerce Airfares Based on Multivariate Demographic Segmentation: A Multigroup Structural Equation Modeling Approach

The internet offers enormous development opportunities for airline firms and a lot of information for consumers to pick the finest available options. This research aims to study the consumer buying intention of e-commerce airfares in an emerging economy based on the technology acceptance model. This article employed a sample of 3064 respondents at six airports in Thailand. It used cluster analysis (a multivariate analysis approach) to determine two main customer segments and then used a structural equation modeling (SEM) technique utilizing demographic segmentation as a moderator to explain the behaviors of those two segments. The findings demonstrated two customer segments: (1) the older with high and middle-income segment, and (2) the young with low-income segment. The empirical results revealed that price sensitivity and perceived ease of use substantially impacted behavioral intention to use e-commerce airfares in both segments. The users from segment (1) are more likely to look for the fun experience and entertainment value of using e-commerce airfares than those from segment (2). However, perceived usefulness is unlikely to be a vital factor in consumers’ purchasing decisions about using e-commerce airfares. It is recommended that airline companies and online travel agencies should consider perceived ease of use, price sensitivity, and hedonic motivation when implementing e-commerce airline websites for selling tickets.

The impact of authentic leadership on employee’s engagement at Tan Son Nhat Operation Center in the COVID-19 period: The mediating role of job satisfaction

Human resources is one of the important resources to promote the development of enterprises in the aviation sector in Vietnam. Therefore, airline firms are increasingly interested in job satisfaction and employee engagement. Aviation is a sector of special importance in economic development. Before the COVID-19 pandemic, the aviation sector developed strongly. However, when the COVID-19 pandemic broke out, the world economy suffered from enormous damage, with the first hardest-hit sector being air transport. Vietnam's aviation sector was also not an exception from the impact of the COVID-19 pandemic, according to a report by the Ministry of Planning and Investment, which said that in 2020 and the first 5 months of 2021, the revenue of aviation enterprises decreased by 61% compared to that of 2019. In Vietnam Airlines Annual report 2020, Vietnam Airline had more than 100 aircraft temporarily suspended from operation. Tan Son Nhat Operation Center was a unit of Vietnam Airline JSC with the role of a representative at Tan Son Nhat airport, which was also affected by many related impacts. In a difficult period, the role of leadership in general and authentic leadership in particular was very important in improving employee satisfaction and engagement. This research investigated and tested affecting authentic leadership on employee engagement at Tan Son Nhat Operation Center in the covid-19 period: the mediating role of job satisfaction. It uses both qualitative and quantitative research. The qualitative research was carried out through focus group discussions with 10 employees. The quantitative research was conducted with 155 employees at Tan Son Nhat Operation Center – Vietnam Airlines JSC through a survey questionnaire by the convenient sampling method. The research results analyzed by partial least square – structural equation modeling (PLS – SEM) indicated that: Components of authentic leadership (AL): self-awareness (SA), internalized moral perspective (IMP), balanced processing (BP), and relational transparency (RT) have a positive impact on employee’s engagement through the mediating role of job satisfaction.

Financial Supply Chain Management Practices and Operational Performance in the Low-Cost Airline Firms in Kenya

Globally, airlines face unique challenges which require measures to achieve competitive advantage. The paper’s aim was to ascertain the level of adoption of Financial Supply Chain Management (FSCM) practices among Kenya’s low-cost airline companies. A descriptive research approach was used in this paper. This approach allows researchers to obtain accurate and systemic primary data from several low-cost airline companies in a set period of time. The target population for the study was 33 low-cost airlines operating in Kenya. The researchers gathered information through primary and secondary sources. The paper indicates that organizational success is positively influenced by Financial supply chain management. This, therefore, requires the supply chain and finance executives to make significant investments in FSCM in order to improve organizational performance. The study recommends that low-cost airlines must maintain an optimum working capital, cash conversion period, capital expenditure policies, and P2P cycles as well as to conduct regular demand and supply analyses as FSCM strategies so as to enhance operational performance and increase business competitiveness in the aviation industry.

Debt Policy and Financial Performance of Commercial Airline Companies in Kenya

The air transportation sector is important for the development and economic progress of the country. It facilitates many segments of the economy such as tourism, manufacturing, horticulture and hotels. The airline industry contributes billions of shillings to the economy and provides employment to thousands of Kenyans. For example, in 2017 the airline industry in Kenya contributed Kshs. 300 billion to the economy. The airline sector supports 620,000 jobs directly and indirectly (International Air Transport Association (IATA), 2017).However, during the period 2013 -2019 the cumulative performance of the sector were losses of approximately Kshs. 30 billion. Researchers have attributed this poor performance to numerous factors key amongst them is the financing and financing costs. These challenges have led to the closure and/or collapse of a number of local airline companies. This research project investigated the effect of debt policy on the monetary performance of airline firms in Kenya. The main objective was achieved by using sub-objectives which were to establish the effect of debt limits, debt structuring, debt issuance, and debt risk management practices on the financial performance of commercial airline companies in Kenya. The study was anchored on the Modigliani and Miller Theory, Agency Cost Theory, and Pecking Order Theory. The descriptive research design was used to answer the research hypotheses. The target population for the study were all the forty-eight air line companies approved to operate in Kenya as at 31/12/2020 while the target respondents were the finance directors. Census sampling was used. The data was analysed using statistical packages for social sciences. The data analysis consisted of descriptive and inferential statistics. The results showed that the limits on debt had an inverse and insignificant effect statistically on the financial performance of commercial airline companies as deduced from a coefficient of -0.547 and critical level of 0.204. The study established that debt structuring had a positive and statistically insignificant effect on financial performance as suggested by the coefficient of 0.324 and significance level of 0.363. The study found that debt issuance and debt risk management policies had inverse and statistically significant effect on the financial performance of commercial airline companies in Kenya as implied by coefficients of -1.625 and -1.464 and p-values of 0.005 and 0.000 respectively. The study recommends that the management of the commercial airline firms review their debt policy so that it can be effective and yield positive effects on performance.

Big Data Contribution in Desktop and Mobile Devices Comparison, Regarding Airlines’ Digital Brand Name Effect

Rising demand for optimized digital marketing strategies has led firms in a hunt to harvest every possible aspect indicating users’ experience and preference. People visit, regularly through the day, numerous websites using both desktop and mobile devices. For businesses to acknowledge device’s usage rates is extremely important. Thus, this research is focused on analyzing each device’s usage and their effect on airline firms’ digital brand name. In the first phase of the research, we gathered web data from 10 airline firms during an observation period of 180 days. We then proceeded in developing an exploratory model using Fuzzy Cognitive Mapping, as well as a predictive and simulation model using Agent-Based Modeling. We inferred that various factors of airlines’ digital brand name are affected by both desktop and mobile usage, with mobile usage having a slightly bigger impact on most of them, with gradually rising values. Desktop device usage also appeared to be quite significant, especially in traffic coming from referral sources. The paper’s contribution has been to provide a handful of time-accurate insights for marketeers, regarding airlines’ digital marketing strategies.