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Identifying the drivers of profitable airline growth

Journal Article


Abstract


  • While regulatory changes in the global economic environment have facilitated airline capacity growth, profitability remains as a challenging issue for airlines globally. This study examines whether the airline business model has an impact on the tension between growth and profits and is the first to apply the dynamic system generalised method of moments model to this relationship. We find that full-service network carriers are faced with a trade-off between growth and operating profits, whereas low-cost carriers are able to simultaneously pursue growth-oriented strategies whilst improving profitability. We discuss the key differences in the business models that drive these results and expect that short-term effects of COVID-19 travel constraints will impact different airlines in distinct ways.

Publication Date


  • 2022

Citation


  • Maung, Y. S. Y., Douglas, I., & Tan, D. (2022). Identifying the drivers of profitable airline growth. Transport Policy, 115, 275-285. doi:10.1016/j.tranpol.2021.11.007

Scopus Eid


  • 2-s2.0-85119971023

Start Page


  • 275

End Page


  • 285

Volume


  • 115

Abstract


  • While regulatory changes in the global economic environment have facilitated airline capacity growth, profitability remains as a challenging issue for airlines globally. This study examines whether the airline business model has an impact on the tension between growth and profits and is the first to apply the dynamic system generalised method of moments model to this relationship. We find that full-service network carriers are faced with a trade-off between growth and operating profits, whereas low-cost carriers are able to simultaneously pursue growth-oriented strategies whilst improving profitability. We discuss the key differences in the business models that drive these results and expect that short-term effects of COVID-19 travel constraints will impact different airlines in distinct ways.

Publication Date


  • 2022

Citation


  • Maung, Y. S. Y., Douglas, I., & Tan, D. (2022). Identifying the drivers of profitable airline growth. Transport Policy, 115, 275-285. doi:10.1016/j.tranpol.2021.11.007

Scopus Eid


  • 2-s2.0-85119971023

Start Page


  • 275

End Page


  • 285

Volume


  • 115