A Profitability Analysis of Air Navigation Service Providers in European Zone: COVID-19 Crisis

Year 2023, , 110 - 122, 17.03.2023

Olcay Ölçen , Serdar Alnıpak

https://doi.org/10.30518/jav.1231880

Abstract

The civil aviation sector is important for the logistics system. Besides, Air Navigation Service Providers (ANSP) are one of the main parts of the total civil aviation system. This study is about their profitability structure and assessment of performance. Out of the general and classical ratios such as ROA and ROE, authors utilized 13 different profitability ratios to understand the general picture of ANSP in the context of profitability performance by using GRA and MABAC methods. Analysis were made for 34 airport service providers from different countries with annual data between 2017 and 2020. The findings show that COVID-19 crisis has got a deep impact on ANSP’s profitability structures in general and by firms. Besides it is seen that the most profitable companies are Turkish, Georgian and Estonian ANSP.

Keywords

Air Navigation Service Providers, Quantitative Techniques, Logistics Management, Civil Aviation Industry, Aviation Finance

References

• Adelopo, I., Lloydking, R., and Tauringana, V. (2018). Determinants of bank profitability before, during, and after the financial crisis. International Journal of Managerial Finance, 61, 1-14.
• Adiloglu, B., and Vuran, B. (2017). The importance of EBIT-EBITDA disclosure in annual reports: A comparison from Turkey. International Journal of Social Sciences and Education Research, 3(2), 397-405.
• Adler, N., Delhaye, E., Kivel, A., and Proost, S. (2020). Motivating air navigation service provider performance. Transportation Research Part A: Policy and Practice, 132, 1053-1069.
• Alarussi, A. S., and Alhaderi, S. M. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 1-21.
• Alarussi, A. S., and Gao, X. (2021). Determinants of profitability in Chinese companies. International Journal of Emerging Markets. 17(2),120-141.
• Andres, C. (2008). Large shareholders and firm performance—An empirical examination of founding-family ownership. Journal of Corporate Finance, 14(4), 431-445.
• Arias, J. C. (2011). Banking profitability determinants. Business Intelligence Journal, 4(2), 209-230.
• Assaf, A. (2009). Accounting for size in efficiency comparisons of airports. Journal of Air Transport Management, 15(5), 256-258.
• Ayçin, E., and Çakın, E. (2019). Ülkelerin İnovasyon Performanslarının Ölçümünde Entropi ve MABAC Çok Kriterli Karar Verme Yöntemlerinin Bütünleşik Olarak Kullanılması. Akdeniz İİBF Dergisi, 19(2), 326-351.
• Bezerra, G. C., and Gomes, C. F. (2018). Performance measurement practices in airports: Multidimensionality and utilization patterns. Journal of Air Transport Management, 70, 113-125.
• Bilotkach, V., Gitto, S., Jovanović, R., Mueller, J., and Pels, E. (2015). Cost-efficiency benchmarking of European air navigation service providers. Transportation Research Part A: Policy and Practice, 77, 50-60.
• Blondiau, T., Delhaye, E., Proost, S., and Adler, N. (2016). ACCHANGE: Building economic models to analyse the performance of air navigation service providers. Journal of Air Transport Management, 56, 19-27.
• Bouwens, J., De Kok, T., and Verriest, A. (2019). The prevalence and validity of EBITDA as a performance measure. Comptabilite Controle Audit, 25(1), 55-105.
• Bozanic, D., Pamucar, D. and Karovic, S. (2016). Use of the fuzzy AHP-MABAC hybrid model in ranking potential locations for preparing laying-up positions. Military Technical Courier, 64(3), 705-729.
• Button, K., and McDougall, G. (2006). Institutional and structure changes in air navigation service-providing organizations. Journal of Air Transport Management, 12(5), 236-252.
• Castelli, L., Labbé, M., and Violin, A. (2013). A network pricing formulation for the revenue maximization of European air navigation service providers. Transportation Research Part C: Emerging Technologies, 33, 214- 226.
• Creixans Tenas, J., and Arimany-Serrat, N. (2018). Influential variables on the profitability of hospital companies. Intangible Capital, 14(1), 171-185.
• Demir, G., Özyalçın, A.T. and Bircan, H. (2021). Çok Kriterli Karar Verme Yöntemleri ve ÇKKV Yazılımı ile Problem Çözüm. Nobel Akademik Yayıncılık, 1. Baskı, Ankara.
• Dempsey-Brench, Z., and Volta, N. (2018). A cost-efficiency analysis of European air navigation service providers. Transportation Research Part A: Policy and Practice, 111, 11-23.
• EUROCONTROL (2022). https://ansperformance.eu/ economics/ finance/, Access time: 24.12.2022.
• Fernández‐López, S., Rodeiro‐Pazos, D., and Rey‐Ares, L. (2020). Effects of working capital management on firms' profitability: evidence from cheese‐producing companies. Agribusiness, 36(4), 770-791.
• Grebenšek, A., and Magister, T. (2012). Effect of seasonal traffic variability on the performance of air navigation service providers. Journal of Air Transport Management, 25, 22-25.
• Güneysu, Y., Er, B. and Ar, İ. (2015). Türkiye’deki Ticari Bankaların Performanslarının AHS ve GIA Yöntemleri ile İncelenmesi. Karadeniz Teknik Üniversitesi Sosyal Bilimler Enstitüsü Sosyal Bilimler Dergisi, 5(9), 71-93.
• Hafizuddin-Syah, B. A. M., Shahida, S., and Fuad, S. H. (2018). Sustainability certifications and financial profitability: An analysis on palm oil companies in Malaysia. Jurnal Pengurusan, 54(2018), 143-154.
• Hermawan, M., and Mulyawan, S. (2014). Profitability and corporate social responsibility: An analysis of Indonesia’s listed company. Asia Pacific Journal of Accounting and Finance, 3(1).
• Hooper, P. G., and Hensher, D. A. (1997). Measuring total factor productivity of airports—an index number approach. Transportation Research Part E: Logistics and Transportation Review, 33(4), 249-259.
• Ison, S., Francis, G., Humphreys, I., and Page, R. (2011). UK regional airport commercialisation and privatisation: 25 years on. Journal of Transport Geography, 19(6), 1341-1349.
• Javaid S, Anwar J, Zaman K, and Ghafoor A (2011). Determinants of Bank Profitability in Pakistan: Internal Factor Analysis, J. Yasar Univ, 23(6), 3794-3804.
• Lukason, O., Laitinen, E. K., and Suvas, A. (2016). Failure processes of young manufacturing micro firms in Europe. Management Decision, 54(8), 1966-1985.
• Malik, H. (2011). Determinants of insurance companies’ profitability: an analysis of insurance sector of Pakistan. Academic research international, 1(3), 315.
• Pamučar, D. and Ćirovic, G. (2015). The selection of transport and handling resources in logistics centers using Multi-Attributive Border Approximation Area Comparison (MABAC). Expert Systems with Applications, 42(6), 3016-3028.
• Peris, R. W., Contani, E., Savoia, J. R. F., and Bergmann, D. R. (2017). Does better corporate governance increase operational performance? Corporate Governance: The International Journal of Business in Society.
• Pervan, M., and Mlikota, M. (2013). What determines the profitability of companies: case of Croatian food and beverage industry. Economic research-Ekonomska istraživanja, 26(1), 277-286.
• Raghavan, S., and Yu, C. (2021). Evaluating financial performance of commercial service airports in the United States. Journal of Air Transport Management, 96, 102111.
• Richardson, C., Budd, L., and Pitfield, D. (2014). The impact of airline lease agreements on the financial performance of US hub airports. Journal of Air Transport Management, 40, 1-15.
• Saleem, Q., and Rehman, R. U. (2011). Impacts of liquidity ratios on profitability. Interdisciplinary journal of research in business, 1(7), 95-98.
• Shahida, S., Ba M, H.S., and Fuad, S. H. (2019). Does MSPO certification matter for profitability of Malaysian palm oil companies? International Journal of Economics & Management, 13(2).
• Singh, F., and Mogla, M. (2010). Profitability Analysis of Acquiring Companies. IUP Journal of Applied Finance, 16(5), 72-83.
• Sultan, A. S. (2014). Financial statements analysis-measurement of performance and profitability: applied study of baghdad soft-drink industry. Research Journal of Finance and Accounting, 5(4), 49-56.
• Tomová, A. (2016). Are commercial revenues important to today's European air navigation service providers? Journal of Air Transport Management, 54, 80-87.
• Tomová, A. (2017). Two businesses of air navigation service providers: The case study of NATS. Transportation Research Procedia, 28, 99-105.
• Toydemir, Ö. and Mutlu, A.A. (2019). The Dance of Change In Turkısh Aırspace. https://skybrary.aero/sites/default/ files/bookshelf/4522.pdf, Access date: 30.12.2022.
• Üstünışık, N. Z. (2007). Türkiye’deki İller ve Bölgeler Bazında Sosyo Ekonomik Gelişmişlik Sıralaması Araştırması: Gri İlişkisel Analiz Yöntemi ve Uygulaması. Yayınlanmamış Yüksek Lisans Tezi, Ankara, Gazi Üniversitesi Fen Bilimleri Enstitüsü, Ankara.
• Vesković, S, Stević, Z., Stojić, G., Vasiljević, M. and Milinković, S. (2018). Evaluation of The Railway Management Model by Using A New Integrated Model DELPHI-SWARA-MABAC. Decision Making: Applications in Management and Engineering, 1(2), 34-50.
• Vogel, H. A. (2011). Do privatized airports add financial value? Research in Transportation Business & Management, 1(1), 15-24.
• Wen, K.L., (2004). Grey Systems: Modeling and Prediction. Yan’s Scientific Research Institute, USA.
• Yıldırım, F.B. (2014). Gri İlişkisel Analiz, Yıldırım, F.B. ve Önder, E (Ed.). Operasyonel, Yönetsel ve Stratejik Problemlerin Çözümünde Çok Kriterli Karar Verme Yöntemleri. Dora Yayınları, 1. Baskı, Bursa.
• Zeli, A., and Mariani, P. (2009). Productivity and profitability analysis of large Italian companies: 1998–2002. International Review of Economics, 56(2), 175-188.
• Zhaoxuan, L. I. U., Kaiquan, C. A. I., and Yanbo, Z. H. U. (2021). Civil unmanned aircraft system operation in national airspace: A survey from Air Navigation Service Provider perspective. Chinese Journal of Aeronautics, 34(3), 200-224.