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The Impact of Operational Performance on Profitability: An ARDL Approach on Turkish Airlines

Year 2021, Volume: 23 Issue: 4, 1441 - 1452, 29.12.2021
https://doi.org/10.32709/akusosbil.890517

Abstract

In this study, the effect of revenue passenger kilometer, passenger load factor and number of revenue passengers, which are among the commonly used operational performance indicators, on the return on equity was examined by ARDL model specifically for Turkish Airlines. The data set includes 40 observations on a quarterly basis between 2010 and 2019. The study suggests that the passenger load factor has a significant effect on the return on equity. It has been revealed that the revenue passenger kilometer has a low negative effect on the return on equity, and number of revenue passenger has a low positive effect on the return on equity. Empirical results show that when the increase in the number of revenue passenger is not supported by passenger load factor, in other words, because of the flights where the breakeven point is not exceeded in terms of cost, it is evaluated that revenue passenger kilometer and the number of revenue passenger do not affect the return on equity positively.

References

  • Ahn, S. C., Good, D. & Sickles, R. C. (1997). A dynamic frontier approach to assessing the relative efficiency of Asian and North American airline firms. Presented at the Taipei International Conference on Efficiency and Productivity Growth.
  • Alan, Y., & Lapré, M. A. (2017). Investigating operational predictors of future financial distress in the US airline industry. Production and Operations Management, 27(4), 734-755. doi: 10.1111/poms.12829
  • Apak, S. ve Demirel E. (2010). Finansal Yönetim, İstanbul: Papatya Yayınevi.
  • Austria, M. (2000). The state of competition and market structure of the Philippine air transport industry. Philipp. Inst. Dev. Stud. Discussion Paper No. 2000-12.
  • Baltagi, B. H., Griffin, J. M. & Rich, D. P. (1995). Airline deregulation: the cost pieces of the puzzle. International Economic Review, Vol. 36, 245-259. doi: 10.2307/2527435
  • Barros, C. P., & Couto, E. (2013). Productivity analysis of European airlines, 2000-2011. J. Air Transp. Manag. 31, 11-13. doi: 10.1016/j.jairtraman.2012.10.006
  • Behn, B. K., & Riley Jr. R. A. (1999). Using nonfinancial information to predict financial performance: The case of the US airline industry. Journal of Accounting, Auditing & Finance, 14(1), 29-56. doi: 10.1177/0148558X9901400102
  • Bhadra, D. (2009). Race to the bottom or swimming upstream: performance analysis of US airlines. Journal of Air Transport Management 15.5: 227-235. doi: 10.1016/j.jairtraman.2008.09.014
  • Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149-163. doi: 10.1111/j.2517-6161.1975.tb01532.x
  • Citrinot, L., & Bailey, M. (2006). Low-cost airlines-international. Travel & Tour. Analyst 19, 1-63.
  • Coelli, T., Perelman, S., & Romano, E. (1999). Accounting for environmental influences in stochastic frontier models: with application to international airlines. Journal of Productivity Analysis, Vol. 11, 251-273. doi: 10.1023/A:1007794121363
  • Cornwell, C., Schmidt, P., & Sickles, R. C. (1990). Production frontiers with cross-sectional and time-series variation in efficiency levels. Journal of Econometrics, Vol. 46 No: 1/2, 185-200. doi: 10.1016/0304-4076(90)90054-W
  • Curran, A. (2019). Turkish Airlines Now Fly To An Incredible 125 Countries, https://simpleflying.com/turkish-airlines-125-countries/ (Access date: 21.12.2020).
  • Dayı, F., & Sezgin Alp, Ö. (2020). Efficiency Estimating in Airline Companies: An Application on Asia-Pacific Companies. Journal of Accounting & Finance, (86), 185-204. doi: 10.25095/mufad.710361
  • Dayı, F., & Ulusoy, T. (2020). The Effect of Operating Ratios on Firm Value: An Application in European Airlines. International Journal of Eurasia Social Sciences, 11(40), 493-505. doi: 10.7827/TurkishStudies.14348
  • Dayı, F. (2019). Faaliyet Kaldıraç Derecesinin Satış Gelirleri Üzerindeki Etkisi: Havayolu Şirketlerinde Bir Uygulama. Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi, 21(3), 923-941. doi: 10.32709/akusosbil.499374
  • Delbari, S. A., Ng, S. I., Aziz, Y. A., & Ho, J. A. (2016). An investigation of key competitiveness indicators and drivers of full-service airlines using Delphi and AHP techniques. Journal of Air Transport Management, 52, 23-34. doi: 10.1016/j.jairtraman.2015.12.004
  • Engle R. F., & Granger C. W. J. (1987). Co-integration and error correction: representation, estimation and testing. Econometrica, 55, 251–276. doi: 10.2307/1913236
  • Francis, G., Humphreys, I., & Fry, J. (2005). The nature and prevalence of the use of performance measurement techniques by airlines. Journal of Air Transport Management, 11(4), 207-217. doi: 10.1016/j.jairtraman.2004.10.003
  • Good, D., Röller, L. H., & Sickles, R. C. (1995). Airline efficiency differences between Europe and the US: implications for the pace of EC integration and domestic regulation. European Journal of Operational Research, Vol. 80, 508-518. doi: 10.1016/0377-2217(94)00134-X
  • Gunn, C. A. (2002). Tourism Planning. Taylor and Francis, New York.
  • Horne V. J., & Wachowicz, J. M. (1995). Fundamentals of Financial Management. New jersey: Prentice Hall International Editions.
  • İskenderoğlu Ö., Karadeniz E., ve Atioğlu E. (2012). Türk bankacılık sektöründe büyüme, büyüklük ve sermaye yapısı kararlarının karlılığa etkisinin analizi. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi 7.1, 291-311.
  • Jenatabadi, H. S., & Ismail, N. A. (2014). Application of structural equation modelling for estimating airline performance. J. Air Transp. Manag. 40, 25-33. doi: 10.1016/j.jairtraman.2014.05.005
  • Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12, 231-254. doi: 10.1016/0165-1889(88)90041-3
  • Macit, D., ve Göçer, S.G. (2020). Havayolu İşletmelerinin Finansal Performanslarının Ölçülmesi: Pegasus Hava Taşımacılığı AŞ ve THY AO Örneği. ODÜ Sosyal Bilimler Araştırmaları Dergisi, 10(3), 904-918. doi: 10.48146/odusobiad.689222
  • Mantin, B., & Wang, J. H. E. (2012). Determinants of profitability and recovery from system-wide shocks: The case of the airline industry. Journal of Airline and Airport Management, 2(1), 1-21. doi: 10.3926/jairm.2
  • Merkert R., & Hensher, D. A. (2011). The impact of strategic management and fleet planning on airline efficiency - a random effects Tobit model based on DEA efficiency scores. Transp. Res. Part A 45, 686-695. doi: 10.1016/j.tra.2011.04.015
  • Merkert, R., & Pearson, J. (2015). A non-parametric efficiency measure incorporating perceived airline service levels and profitability. J. Transp. Econ. Policy (JTEP) 49 (2), 261-275.
  • Middleton, V. T. C., & Clarke, J. (2001). Marketing in Travel and Tourism. Butterworth and Heinemann, Oxford.
  • Nasir A. M., Ahmed A., & Barkat, W. (2017). Operational performance and financial performance of Malaysia Airlines. Paradigms, 11(1), 34-40
  • Oum, T. H., & You, C. (1998). Cost competitiveness of major airlines: An international comparison. Transport Research Part A 32, 407–422. doi: 10.1016/S0965-8564(98)00007-X
  • Parast, M. M., & Fini, E. E. H. (2010). The effect of productivity and quality on profitability in US airline industry: an empirical investigation. Managing Service Quality: An International Journal. Vol. Issue 5, 458-474. doi: 10.1108/09604521011073740
  • Pesaran, H., & Shin, Y. (1995). An autoregressive distributed lag modelling approach to cointegration analysis. In S. Strom, A. Holly & A. Diamond (Eds.). Centennial Volume of Ranger Frisch. Cambridge University Press.
  • Pesaran H., Shin Y., & Smith, R. J. (2001). Bound testing approaches to the analysis of long run relationship. Journal of Applied Econometrics, 16(3), 289-326. doi: 10.1002/jae.616
  • Pineda, P. J. G., Liou, J. J., Hsu, C. C., & Chuang, Y. C. (2018). An integrated MCDM model for improving airline operational and financial performance. Journal of Air Transport Management, 68, 103-117. doi: 10.1016/j.jairtraman.2017.06.003
  • Porter, M. E. (1990). The competitive advantage of nations. The Free Press, New York.
  • Schefczyk, M. (1993). Operational performance of airlines: an extension of traditional measurement paradigms. Strategic Management Journal, Vol. 14 No. 4, 301-317. doi: 10.1002/smj.4250140406
  • Scheraga, C. A. (2004). Operational efficiency versus financial mobility in the global airline industry: a data envelopment and Tobit analysis. Transp. Res. Part A 38, 383-404. doi: 10.1016/j.tra.2003.12.003
  • Schmidt, P., & Sickles, R. (1984). Production frontiers and panel data. Journal of Business and Economic Statistics, Vol. 2 No. 4, 367-374. doi: 10.1080/07350015.1984.10509410
  • THY AO. (2020). THY Annual Reports, https://investor.turkishairlines.com/tr/mali-ve-operasyonel-veriler/faaliyet-raporlari (Access date: 21.12.2020).
  • Tsikriktsis, N. (2007). The effect of operational performance and focus on profitability: a longitudinal study of the US airline industry. Manufacturing and Service Operations Management, Vol. 9 No. 4, 506-517. doi: 10.1287/msom.1060.0133
  • Türkiş, İ. (2001). Kar Kavramına Kuramsal Yaklaşım. Vergi Sorunları Dergisi, (158).
  • Wang, Y. J. (2008). Applying FMCDM to evaluate financial performance of domestic airlines in Taiwan. Expert Systems with Applications, 34(3), 1837-1845. doi: 10.1016/j.eswa.2007.02.029
  • Yu, M. M., Chen, L. H., & Chiang, H. (2017). The effects of alliances and size on airlines’ dynamic operational performance. Transportation Research Part A: Policy and Practice, 106, 197-214. doi: 10.1016/j.tra.2017.09.015
  • Zhang, Q., Yang, H., Wang, Q., & Zhang, A. (2014). Market power and its determinants in the Chinese airline industry. Transportation Research Part A: Policy and Practice, 64, 1-13. doi: 10.1016/j.tra.2014.03.003

Operasyonel Performansın Karlılığa Etkisi: Türk Hava Yolları Üzerine ARDL Yaklaşımı

Year 2021, Volume: 23 Issue: 4, 1441 - 1452, 29.12.2021
https://doi.org/10.32709/akusosbil.890517

Abstract

Bu çalışmada yaygın olarak kullanılan operasyonel performans göstergelerinden ücretli yolcu kilometre, yolcu doluluk oranı ve ücretli yolcu sayısının özsermaye karlılığına etkisi Türk Hava Yolları'na yönelik olarak ARDL modeli ile incelenmiştir. Veri seti, 2010 ile 2019 yılları arasında üç aylık bazda 40 gözlem içermektedir. Çalışma, yolcu doluluk oranının özsermaye karlılığı üzerinde önemli bir etkiye sahip olduğunu göstermektedir. Ücretli yolcu kilometrenin özsermaye karlılığı üzerinde düşük olumsuz etkiye sahip olduğu, ücretli yolcu sayısının ise özsermaye karlılığı üzerinde düşük olumlu etkiye sahip olduğu ortaya çıkmıştır. Ampirik sonuçlar, ücretli yolcu sayısındaki artışın yolcu doluluk oranı ile desteklenmediğinde, bir başka deyişle maliyet açısından başabaş noktasının aşılmadığı uçuşlar nedeniyle, ücretli yolcu kilometre ve ücretli yolcu sayısının özsermaye karlılığını olumlu etkilemediğini göstermektedir.

References

  • Ahn, S. C., Good, D. & Sickles, R. C. (1997). A dynamic frontier approach to assessing the relative efficiency of Asian and North American airline firms. Presented at the Taipei International Conference on Efficiency and Productivity Growth.
  • Alan, Y., & Lapré, M. A. (2017). Investigating operational predictors of future financial distress in the US airline industry. Production and Operations Management, 27(4), 734-755. doi: 10.1111/poms.12829
  • Apak, S. ve Demirel E. (2010). Finansal Yönetim, İstanbul: Papatya Yayınevi.
  • Austria, M. (2000). The state of competition and market structure of the Philippine air transport industry. Philipp. Inst. Dev. Stud. Discussion Paper No. 2000-12.
  • Baltagi, B. H., Griffin, J. M. & Rich, D. P. (1995). Airline deregulation: the cost pieces of the puzzle. International Economic Review, Vol. 36, 245-259. doi: 10.2307/2527435
  • Barros, C. P., & Couto, E. (2013). Productivity analysis of European airlines, 2000-2011. J. Air Transp. Manag. 31, 11-13. doi: 10.1016/j.jairtraman.2012.10.006
  • Behn, B. K., & Riley Jr. R. A. (1999). Using nonfinancial information to predict financial performance: The case of the US airline industry. Journal of Accounting, Auditing & Finance, 14(1), 29-56. doi: 10.1177/0148558X9901400102
  • Bhadra, D. (2009). Race to the bottom or swimming upstream: performance analysis of US airlines. Journal of Air Transport Management 15.5: 227-235. doi: 10.1016/j.jairtraman.2008.09.014
  • Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149-163. doi: 10.1111/j.2517-6161.1975.tb01532.x
  • Citrinot, L., & Bailey, M. (2006). Low-cost airlines-international. Travel & Tour. Analyst 19, 1-63.
  • Coelli, T., Perelman, S., & Romano, E. (1999). Accounting for environmental influences in stochastic frontier models: with application to international airlines. Journal of Productivity Analysis, Vol. 11, 251-273. doi: 10.1023/A:1007794121363
  • Cornwell, C., Schmidt, P., & Sickles, R. C. (1990). Production frontiers with cross-sectional and time-series variation in efficiency levels. Journal of Econometrics, Vol. 46 No: 1/2, 185-200. doi: 10.1016/0304-4076(90)90054-W
  • Curran, A. (2019). Turkish Airlines Now Fly To An Incredible 125 Countries, https://simpleflying.com/turkish-airlines-125-countries/ (Access date: 21.12.2020).
  • Dayı, F., & Sezgin Alp, Ö. (2020). Efficiency Estimating in Airline Companies: An Application on Asia-Pacific Companies. Journal of Accounting & Finance, (86), 185-204. doi: 10.25095/mufad.710361
  • Dayı, F., & Ulusoy, T. (2020). The Effect of Operating Ratios on Firm Value: An Application in European Airlines. International Journal of Eurasia Social Sciences, 11(40), 493-505. doi: 10.7827/TurkishStudies.14348
  • Dayı, F. (2019). Faaliyet Kaldıraç Derecesinin Satış Gelirleri Üzerindeki Etkisi: Havayolu Şirketlerinde Bir Uygulama. Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi, 21(3), 923-941. doi: 10.32709/akusosbil.499374
  • Delbari, S. A., Ng, S. I., Aziz, Y. A., & Ho, J. A. (2016). An investigation of key competitiveness indicators and drivers of full-service airlines using Delphi and AHP techniques. Journal of Air Transport Management, 52, 23-34. doi: 10.1016/j.jairtraman.2015.12.004
  • Engle R. F., & Granger C. W. J. (1987). Co-integration and error correction: representation, estimation and testing. Econometrica, 55, 251–276. doi: 10.2307/1913236
  • Francis, G., Humphreys, I., & Fry, J. (2005). The nature and prevalence of the use of performance measurement techniques by airlines. Journal of Air Transport Management, 11(4), 207-217. doi: 10.1016/j.jairtraman.2004.10.003
  • Good, D., Röller, L. H., & Sickles, R. C. (1995). Airline efficiency differences between Europe and the US: implications for the pace of EC integration and domestic regulation. European Journal of Operational Research, Vol. 80, 508-518. doi: 10.1016/0377-2217(94)00134-X
  • Gunn, C. A. (2002). Tourism Planning. Taylor and Francis, New York.
  • Horne V. J., & Wachowicz, J. M. (1995). Fundamentals of Financial Management. New jersey: Prentice Hall International Editions.
  • İskenderoğlu Ö., Karadeniz E., ve Atioğlu E. (2012). Türk bankacılık sektöründe büyüme, büyüklük ve sermaye yapısı kararlarının karlılığa etkisinin analizi. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi 7.1, 291-311.
  • Jenatabadi, H. S., & Ismail, N. A. (2014). Application of structural equation modelling for estimating airline performance. J. Air Transp. Manag. 40, 25-33. doi: 10.1016/j.jairtraman.2014.05.005
  • Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12, 231-254. doi: 10.1016/0165-1889(88)90041-3
  • Macit, D., ve Göçer, S.G. (2020). Havayolu İşletmelerinin Finansal Performanslarının Ölçülmesi: Pegasus Hava Taşımacılığı AŞ ve THY AO Örneği. ODÜ Sosyal Bilimler Araştırmaları Dergisi, 10(3), 904-918. doi: 10.48146/odusobiad.689222
  • Mantin, B., & Wang, J. H. E. (2012). Determinants of profitability and recovery from system-wide shocks: The case of the airline industry. Journal of Airline and Airport Management, 2(1), 1-21. doi: 10.3926/jairm.2
  • Merkert R., & Hensher, D. A. (2011). The impact of strategic management and fleet planning on airline efficiency - a random effects Tobit model based on DEA efficiency scores. Transp. Res. Part A 45, 686-695. doi: 10.1016/j.tra.2011.04.015
  • Merkert, R., & Pearson, J. (2015). A non-parametric efficiency measure incorporating perceived airline service levels and profitability. J. Transp. Econ. Policy (JTEP) 49 (2), 261-275.
  • Middleton, V. T. C., & Clarke, J. (2001). Marketing in Travel and Tourism. Butterworth and Heinemann, Oxford.
  • Nasir A. M., Ahmed A., & Barkat, W. (2017). Operational performance and financial performance of Malaysia Airlines. Paradigms, 11(1), 34-40
  • Oum, T. H., & You, C. (1998). Cost competitiveness of major airlines: An international comparison. Transport Research Part A 32, 407–422. doi: 10.1016/S0965-8564(98)00007-X
  • Parast, M. M., & Fini, E. E. H. (2010). The effect of productivity and quality on profitability in US airline industry: an empirical investigation. Managing Service Quality: An International Journal. Vol. Issue 5, 458-474. doi: 10.1108/09604521011073740
  • Pesaran, H., & Shin, Y. (1995). An autoregressive distributed lag modelling approach to cointegration analysis. In S. Strom, A. Holly & A. Diamond (Eds.). Centennial Volume of Ranger Frisch. Cambridge University Press.
  • Pesaran H., Shin Y., & Smith, R. J. (2001). Bound testing approaches to the analysis of long run relationship. Journal of Applied Econometrics, 16(3), 289-326. doi: 10.1002/jae.616
  • Pineda, P. J. G., Liou, J. J., Hsu, C. C., & Chuang, Y. C. (2018). An integrated MCDM model for improving airline operational and financial performance. Journal of Air Transport Management, 68, 103-117. doi: 10.1016/j.jairtraman.2017.06.003
  • Porter, M. E. (1990). The competitive advantage of nations. The Free Press, New York.
  • Schefczyk, M. (1993). Operational performance of airlines: an extension of traditional measurement paradigms. Strategic Management Journal, Vol. 14 No. 4, 301-317. doi: 10.1002/smj.4250140406
  • Scheraga, C. A. (2004). Operational efficiency versus financial mobility in the global airline industry: a data envelopment and Tobit analysis. Transp. Res. Part A 38, 383-404. doi: 10.1016/j.tra.2003.12.003
  • Schmidt, P., & Sickles, R. (1984). Production frontiers and panel data. Journal of Business and Economic Statistics, Vol. 2 No. 4, 367-374. doi: 10.1080/07350015.1984.10509410
  • THY AO. (2020). THY Annual Reports, https://investor.turkishairlines.com/tr/mali-ve-operasyonel-veriler/faaliyet-raporlari (Access date: 21.12.2020).
  • Tsikriktsis, N. (2007). The effect of operational performance and focus on profitability: a longitudinal study of the US airline industry. Manufacturing and Service Operations Management, Vol. 9 No. 4, 506-517. doi: 10.1287/msom.1060.0133
  • Türkiş, İ. (2001). Kar Kavramına Kuramsal Yaklaşım. Vergi Sorunları Dergisi, (158).
  • Wang, Y. J. (2008). Applying FMCDM to evaluate financial performance of domestic airlines in Taiwan. Expert Systems with Applications, 34(3), 1837-1845. doi: 10.1016/j.eswa.2007.02.029
  • Yu, M. M., Chen, L. H., & Chiang, H. (2017). The effects of alliances and size on airlines’ dynamic operational performance. Transportation Research Part A: Policy and Practice, 106, 197-214. doi: 10.1016/j.tra.2017.09.015
  • Zhang, Q., Yang, H., Wang, Q., & Zhang, A. (2014). Market power and its determinants in the Chinese airline industry. Transportation Research Part A: Policy and Practice, 64, 1-13. doi: 10.1016/j.tra.2014.03.003
There are 46 citations in total.

Details

Primary Language English
Journal Section Law
Authors

Eyup Atioğlu 0000-0001-9460-4822

Publication Date December 29, 2021
Submission Date March 3, 2021
Published in Issue Year 2021 Volume: 23 Issue: 4

Cite

APA Atioğlu, E. (2021). Operasyonel Performansın Karlılığa Etkisi: Türk Hava Yolları Üzerine ARDL Yaklaşımı. Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi, 23(4), 1441-1452. https://doi.org/10.32709/akusosbil.890517

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