The effect of productivity and quality on profitability in US airline industry

Mahour Mellat Parast (Department of Economics, Finance, and Decision Sciences, School of Business Administration, University of North Carolina, Pembroke, North Carolina, USA)
Elham (Ellie) H. Fini (Department of Civil Engineering, North Carolina A&T State University, Greensboro, North Carolina, USA)

Managing Service Quality: An International Journal

ISSN: 0960-4529

Publication date: 7 September 2010

Abstract

Purpose

This study aims to investigate the effect of productivity and quality on profitability in the US airline industry.

Design/methodology/approach

Airlines operations and performance data were used to determine the effect of productivity and quality on profitability. Correlation and multivariate regression analysis have been used for data analysis.

Findings

The results show that labor productivity is the most significant predictor of profitability. On‐time performance has no relationship with profitability. The findings suggest that labor productivity, gas price, average annual maintenance cost and employee salary are significant predictors of profitability. The relationship between labor productivity and employee salary with profitability is positive, while gas price and average annual maintenance cost have a negative relationship with profitability.

Research limitations/implications

The research could be more detailed by taking into account measures of airline safety. Additional measures for service quality could be considered.

Practical implications

Operational performance (labor productivity) is the main source of profitability in the US airline industry followed by customer satisfaction and service quality.

Originality/value

The study captures the performance of the airline industry based on longitudinal data from 1989 to 2008. Previous studies have used either quarterly or monthly observations. Second, the study examines the significance of productivity and quality on profitability. Previous studies have provided little insight regarding the effect of productivity and quality on profitability.

Keywords

Citation

Mellat Parast, M. and Fini, E. (2010), "The effect of productivity and quality on profitability in US airline industry", Managing Service Quality: An International Journal, Vol. 20 No. 5, pp. 458-474. https://doi.org/10.1108/09604521011073740

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.