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Since 2000, the value of aircraft assets imported to – and exported from – the Irish economy has increased significantly. In each case, these figures represent a marked rise over a 17-year period. This gives rise to some simple questions: what are the dynamics that give rise to a small, open economy's demand for aircraft assets on this scale? Indeed, is it merely a reflection of our island location or is there something more at play? And can we comment on the role of the air cargo industry in this demand? Ireland's growing aircraft leasing industry is internationally orientated with Ireland emerging as an important hub for this industry. A recent industry estimate noted that nine of the world's 10 largest aircraft leasing companies are located in Ireland with the number of aircraft managed in Ireland at 3,500 (or 50%) of the entire global fleet of leased aircraft. This, in part, is an important contributor to this demand for aircraft assets. The objective of this research is to examine the flow of imports and exports of aircrafts to, and through, Ireland using Eurostat's International Trade in Goods Statistics (ITGS) dataset. The authors also use the International Trade in Services series in the Balance of Payments in order to consider the value, and relative scale, of the services provided by air freight operators in order to provide some context to the role of the air cargo sector.

This chapter focuses on the application of segment reporting under IFRS 8 in the context of the airline industry. It analyses the airlines’ disclosures related to segment reporting considering 11 aspects of segment reporting in the regional and global context. Observations reveal that reporting of segmental disclosures in the airline industry is diverse at different levels. In this regard, the following conclusions were drawn: (1) the nature of segments reported by the airlines is diverse due to methods adopted in preparation of operating segments; (2) factors such as internal reporting system, and nature of business used to identify the airline’s reportable segments were stated by most airlines; (3) types of products and services from which each reportable segment derives its revenues were stated by all airlines; (4) proportion of total revenues represented by separately reportable segments exceeds 75% of the revenue rule of IFRS 8; (5) most segmental performance measures are non-IFRS and diverse; (6) a limited number of airlines use dual reporting currency in segment reporting; (7) most airlines reported segment assets and liabilities for each reportable segment; (8) most airlines reported between 6 and 10 income and expense items in segment reporting; (9) segmental cash flow information is reported by one airline; (10) in terms of entity-wide disclosures, most airlines reported their revenue from major products and services in the revenue disclosures, most airlines reported their revenues on a geographical basis but few airlines reported their non-current assets on a geographical basis; and (11) more than half of the airlines did not declare the identity of the Chief Operating Decision Maker.

This chapter focuses on the international aspects of auditing in the context of the airline industry for the year 2018. This chapter finds that International Standards on Auditing have been widely adopted in the global context. This chapter also analyses several observations related to the composition of audit firms (Big 4 vs. non-Big 4), types of audit opinions, emphasis of matter, other matters, material uncertainty related to going-concern, and types of auditors (single or joint auditor). This chapter covers the frequency of the four elements of describing key audit matters (KAM) in the audit reports in the global and auditor context as well as the KAMs observed in the airline industry and classifies them as industry-specific KAMs and entity-specific KAMs. In addition, this chapter analyses the requirements of the expanded audit report of the UK which includes the declaration of materiality threshold and scope of the audit in connection with the materiality and KAMs considering UK and non-UK airlines.

Mergers and acquisitions in the transportation sector are typically explained as attempts to capture economies of scale and scope through shared infrastructure and related cost-saving measures. In the airline industry, the past 15 years have seen an increasing number of international mergers and acquisitions that would have been blocked under prior regulatory regimes. This activity suggests that there are indeed gains from increasing airline size.

Such gains may be largely financial in nature. One benefit to a merged airline could be greater market power over particular routes and hubs after merger, as well as improved contract structure and bargaining power in operations, although greater de-regulation and more competition internationally makes these arguments less compelling. In many cases, gains may be unique to specific airlines or operational situations. Thus, the issue addressed in this chapter is whether, in general, increasing the size or scope of airline operations enables them to function more efficiently and whether this effect is sustained across all sizes of airline. More pointedly, the chapter examines whether there exist measurable efficiency gains that can help explain the variety of mergers and acquisitions in the industry.

This chapter focuses on the IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases in the airline industry considering the case of Air France – KLM (AF-KLM). This airline timely adopted IFRS 15 and early adopted IFRS 16 for the year 2018 and restated its 2017 financial statements using the full retrospective method so that the 2018 financial statements of the airline provide comparative financial information during the transition phase from IAS 18 to IFRS 15 as well as from IAS 17 to IFRS 16. In the first part of the chapter, liquidity, solvency, and profitability ratios along with cash flow ratios were used to analyze the cumulative effect of IFRS 15 and IFRS 16 using 2017 and restated 2017 financial statements. In this context, results indicate that the liquidity ratios decreased, and the solvency ratios increased in general. In addition, the cumulative effect of IFRS 15 and IFRS 16 created an upward change in general on profitability ratios based on the several performance parameters that should be considered during the transition from IAS 18 to IFRS 15 and from IAS 17 to IFRS 16. Overall, IFRS 15 has minor effect and IFRS 16 has major effect on the financial statements of AF-KLM. In the second part of the chapter, the compliance level of the mandatory disclosures requirements of the airline was examined from the lessee standpoint and the research pointed out that the airline fully complied with these disclosures at its first adoption of IFRS 16 and provided some voluntary disclosures as well.

The use of corporate aircraft has increased as businesses place more value on ease of mobility. The bonus depreciation incentives of 2002 and 2003 provided growth opportunities for the general aviation market by allowing accelerated depreciation deductions for the purchase of new corporate aircraft. These incentives allowed more than twice the traditional MACRS allowance for depreciation for the first year of operation of an asset, but the present value of the tax savings after the full depreciable life of the corporate aircraft only generated a 3.25 percent reduction in the after-tax-cost. This study documents that the bonus depreciation incentives did not generate significant growth in the general aviation aircraft market via increased production of aircraft. These incentives may have simply slowed the recession that might have taken place in this industry otherwise. However, the incentives in this study did play a significant role in determining which type of aircraft to purchase, piston or turbine.

This chapter deals with the patterns of International Financial Reporting Standards’ accounting policy choices that have been analyzed by several authors in a country-specific context. Instead of a country-specific context, this chapter adopts a sector-specific approach in terms of the airline industry in a regional and global context in order to observe the patterns of cosmetic and non-cosmetic policy options. Cosmetic policy options are related to the presentation of financial information which is not expected to impact the comparability of financial information versus non-cosmetic policy options are considered to be policy options that are related to measurement and, therefore, if there is more than one allowable accounting treatment, the comparability of financial information weakens. In the context of the airline industry, this chapter considers the patterns of policy choices related to IAS 1 Presentation of Financial Statements, IAS 2 Inventory, IAS 7 Statement of Cash Flows, IAS 16 Property, Plant and Equipment, IAS 38 Intangible Assets, and IAS 40 Investment Property, within the framework of frequently observed policy options as well as taking depreciation methods and expected useful life into consideration in terms of industry-specific policy options in order to observe whether there is uniformity rather than diversity in the airline industry for presentation and measurement.

This study on the airline industry covers the period from 1990 to 2006 and finds that “complaints” is a leading indicator of future financial performance as measured by return on sales (ROS) one-quarter ahead. Results also indicate that this effect persists into longer-term future performance (i.e., the average of one-quarter and two-quarter-ahead) as measured by return on assets (ROA) and ROS. Findings also indicate that service recovery effort in reducing mishandled baggage, is associated with higher future financial performance as measured by one-quarter-ahead ROA. Similarly, service recovery efforts, in reducing mishandled baggage and complaints, are found to be associated with both short-term and longer-term future financial performance as measured by ROA or ROS. Nevertheless, this relationship diminishes when flights have a higher “load factor” (or higher enplanements). Literature on service operations states that although service failure (such as flight cancellations, delays, misconnections, mishandled baggage, or over boarding) can negatively affect customer repurchase intentions, employees' ability to diagnose and respond to problems at the critical moment can overcome negative effects of a service failure. This suggests that management should consider having trained frontline employees and flight attendants provide comfort, assurance, empathy, support, and assistance to customers following service failures. This should help to enhance repurchase behavior and brand loyalty thereby improving future financial performance.