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1 – 10 of over 14000Abstract
Purpose
Considering the increasing significance of corporate social responsibility (CSR) in the corporate world and the mixed findings of the financial implication of CSR investment in the financial economics literature, the purpose of this study is to examine the relationship between (im)material CSR investment and firm performance and the moderating role of airline type and economic conditions based on the stakeholder theory and institutional pressure argument.
Design/methodology/approach
This study uses a two-way random-effects model by firm and year along with using clustering coefficient estimation by firm to control for the possibility of inflated standard errors because of autocorrelation across years within a given firm.
Findings
This study finds that both material and immaterial CSR initiatives do not directly influence firm performance, but airline type and economic conditions do moderate the relationship. In specific, the study found that airlines’ investments in material CSR initiatives show an indifferent effect on firm performance between low-cost and full-service carriers and also between non-recessionary and recessionary periods. On the other hand, investments in immaterial CSR initiatives present different impacts on firm performance between low-cost and full-service carriers and between non-recessionary and recessionary periods. In details, the effect is more negative for low-cost carriers and recessionary periods than full-service carriers and non-recessionary periods.
Originality/value
This is the first empirical investigation of materiality for the airline industry in relation to firm performance using the industry-specific Materiality Map developed by the Sustainability Accounting Standards Board. Further, this study incorporates two additional moderators (airline type and economic conditions) to enhance the understanding of the proposed relationships between (im)material CSR and firm performance.
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Belaynesh Teklay, Kevin E. Dow, Davood Askarany, Jeffrey Wong and Yun Shen
This paper examines the relationship between transportation quality, customer satisfaction and profitability. Specifically, this study examines the simultaneous and asynchronous…
Abstract
This paper examines the relationship between transportation quality, customer satisfaction and profitability. Specifically, this study examines the simultaneous and asynchronous effect of quality of transportation services on customer satisfaction and financial performance and then performs the same examination in relation to the effect of customer satisfaction on financial performance. The partial least squares approach to structural equation modelling is used to examine longitudinal data from 1995 to 2018 from the US airline industry. The findings suggest that low service quality in transportation has adverse effects on customer satisfaction and financial performance, while the impact of customer satisfaction on financial performance in the US Airline transportation industry is mixed. The authors found that the impact of customer satisfaction on financial performance is significant in full-service airlines but not in low-cost airlines. Surprisingly, the authors found no significant direct relationship between transportation quality and financial performance in the US airline industry.
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Mahour Mellat Parast and Elham (Ellie) H. Fini
This study aims to investigate the effect of productivity and quality on profitability in the US airline industry.
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.
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Pedram Fardnia, Thomas Kaspereit, Thomas Walker and Sizhe Xu
This paper investigates whether financial factors, which are presumed to influence an airline's maintenance, purchasing, and training policies, are associated with the air…
Abstract
Purpose
This paper investigates whether financial factors, which are presumed to influence an airline's maintenance, purchasing, and training policies, are associated with the air carrier's safety performance.
Design/methodology/approach
In this paper, we employ a series of univariate and multivariate tests (OLS and Poisson regressions) to examine whether an airline's financial well-being as well as a country's legal and economic environment affect the airline's accident rate. Our study is the first to employ an international sample that covers 110 airlines in 26 countries over the period 1990–2009.
Findings
We document an inverse relationship between the profitability of air carriers and their accident propensity. Other financial variables such as liquidity, asset utilization, and financial leverage also appear to affect an airline's safety record, although these findings do not reach significance in all models. Flight equipment maintenance and overhaul expenditures are negatively related to accident rates. In addition, our results show that country-level variables related to the legal and economic environment have a significant effect on airline safety. Specifically, airlines in countries with strong law enforcement, more stringent regulatory systems, and better economic performance have superior safety performance. A series of robustness tests confirms our results.
Originality/value
The unique contributions of the study are (1) that it is the first to explore the drivers of safety performance in a cross-country context and (2) that it introduces a novel index of capacity when computing accident rates. By using data from 110 airlines in 26 countries, the study does not only provide insights into the firm-level but also the country-level determinants of an airline’s safety performance. The results of this research should be of interest both to academics and to regulators who develop, oversee, and implement policies targeted at improving aviation safety on a national and supranational level.
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James Peoples, Muhammad Asraf Abdullah and NurulHuda Mohd Satar
Health risks associated with coronavirus disease 2019 (COVID-19) have severely affected the financial stability of airline companies globally. Recapturing financial stability…
Abstract
Health risks associated with coronavirus disease 2019 (COVID-19) have severely affected the financial stability of airline companies globally. Recapturing financial stability following this crisis depends heavily on these companies’ ability to attain efficient and productive operations. This study uses several empirical approaches to examine key factors contributing to carriers sustaining high productivity prior to, during and after a major recession. Findings suggest, regardless of economic conditions, that social distancing which requires airline companies in the Asia Pacific region to fly with a significant percentage of unfilled seats weakens the performance of those companies. Furthermore, efficient operations do not guarantee the avoidance of productivity declines, especially during a recession.
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Muhammad Asraf Abdullah and NurulHuda Mohd Satar
This chapter examines the influence of outsourcing on airlines’ performance from countries of the Asia Pacific region. Performance in the context of this study is drawn from…
Abstract
This chapter examines the influence of outsourcing on airlines’ performance from countries of the Asia Pacific region. Performance in the context of this study is drawn from productivity growth and technical efficiency scores that are calculated using the standard data envelopment analysis (DEA) approach. We utilize data from airlines over the period 2003–2011 and estimate the impact of outsourcing on productivity and technical efficiency using generalized method of moments (GMM) estimators. The findings from DEA reveal an improvement in the technical efficiency score of airlines from Asia Pacific. Nonetheless, productivity estimates indicate fluctuations in the productivity growth trend of airlines, attributable to global economic recession in 2007/2008. GMM estimation results, however, suggest negative impacts of outsourcing on technical efficiency and productivity of the airlines from Asia Pacific countries. We offer several explanations for these outsourcing findings. Heavy outsourcing of airlines activities particularly maintenance of aircraft may negatively affect aircraft utilization and ultimately erode the service level of airlines. The erosion of the service level of airlines would affect the demand for air travel in a downward manner, thereby lowering the technical efficiency and productivity of airlines. Also, relatively low labor costs enjoyed by airlines in the Asia Pacific region would suggest that having many airline activities in-house would save operating expenses attributable to labor costs.
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Mahour Mellat Parast and Adegoke Oke
In this paper, the authors draw from the concept of a “focused factory” to examine whether a focused strategy provides superior performance over a non-focused strategy in firms…
Abstract
Purpose
In this paper, the authors draw from the concept of a “focused factory” to examine whether a focused strategy provides superior performance over a non-focused strategy in firms experiencing service disruptions.
Design/methodology/approach
The authors test their hypotheses using panel data of the US domestic airline industry from 1998 to 2019.
Findings
Overall, the study findings show that a focused strategy provides superior financial performance over a non-focused strategy in both stable environments and unpredictable environments. The authors also find that the effect of service disruptions on profitability is less pronounced for firms following a focused strategy. This shows that focused firms need to grow over time to sustain profitability. Their post hoc analysis shows that for a non-focused strategy (but not for a focused strategy), firm size moderates the effect of service disruptions on profitability. This suggests that a firm pursuing a non-focused strategy can mitigate the negative effect of service disruptions by increasing its size.
Originality/value
This is the first study that examines the effectiveness of the focused strategy in mitigating service disruptions. The results provide further support for the effectiveness of the focused strategy in responding to service disruptions in service organizations.
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Jackie Fry, Ian Humphreys and Graham Francis
This paper aims to explore the use of best practice benchmarking in civil aviation.
Abstract
Purpose
This paper aims to explore the use of best practice benchmarking in civil aviation.
Design/methodology/approach
Evidence was gathered from two international questionnaire surveys of the top 200 airlines and the top 200 airports. Supplementary evidence included interviews with airline and airport managers.
Findings
The profile of responses was a good match to the samples. Benchmarking was identified as the most used performance improvement technique for both airlines and airports. Larger airlines were more likely to engage in benchmarking. Ease of usage and the cost relative to other performance improvement techniques were important factors in determining benchmarking uptake. Problems of data comparability and competitive sensitivity were raised. Airports had a greater tendency to concentrate on benchmarking with similar organisations and placed a relatively greater emphasis on its use for performance measurement over process improvement.
Research limitations/implications
Further research should include a sample of detailed case studies to investigate exactly how different airlines and airports are using benchmarking.
Practical implications
Performance measurement has become increasingly important in aviation as markets become more competitive and the number of asymmetric shocks seems to increase.
Originality/value
The surveys revealed a very high utilisation of benchmarking, although a range of activities were actually being undertaken under the banner of benchmarking. The high uptake of benchmarking is probably due, to the turbulent nature of civil aviation that has placed significant economic pressures on managers.
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This paper aims to describe the processes used to ensure that the comparisons made between airport and airline performance are as meaningful as possible, and to highlight a number…
Abstract
Purpose
This paper aims to describe the processes used to ensure that the comparisons made between airport and airline performance are as meaningful as possible, and to highlight a number of issues which need to be considered when making performance comparisons in aviation.
Design/methodology/approach
Evidence was gathered from an international data sample of airports and airlines. Operational and financial data was derived from published reports.
Findings
The research illustrates the scale of differences in airport performance levels, and it also highlights the considerable difference in performance levels between airports and airlines. It is clear that many factors can impact on an airport's ability to optimise its performance, and on its relative level of performance when compared to its peers.
Practical implications
The research highlights and demonstrates the need for a degree of understanding of contextual factors when comparing airport performance measures with each other and when comparing airline performance.
Originality/value
Insight into the process by which airport and airline performance measurements can be compared with each other.
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Paul D. Hooper and Andrew Greenall
This paper aims to present the findings of an investigation into environmental reporting practice in the airline sector.
Abstract
Purpose
This paper aims to present the findings of an investigation into environmental reporting practice in the airline sector.
Design/methodology/approach
Evidence was gathered from an international survey of 272 IATA Airlines. Responses accounted 65 per cent of the world's scheduled passenger traffic. Reports were assessed against a framework developed by UK's Association of Chartered and Certified Accountants.
Findings
The paper demonstrates that, despite an increase in the availability of quantitative data and some consistency in the use of key performance indicators, comparing social and environmental performance across the airline sector is fraught with difficulties. Variations in the exact definitions of the indicators used and the suite of functions embraced by the term “airline” are identified as fundamental obstacles to effective sector benchmarking.
Practical implications
Insight into an understanding of some of the pros and cons of comparisons between airline environmental performance data.
Originality/value
The research highlights the limitations of inter airline comparisons regarding environmental data and confirms the need for environmental and social impacts to be reported in a more standardised manner in order to facilitate meaningful dialogue with stakeholders in communities adjacent to airports.
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