The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries

Burcu Zengin

doi:10.30518/jav.1768349

The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries

Abstract

This study investigates the impact of environmental, social, and governance (ESG) practices on the financial performance of airlines, with profitability measured by return on assets (ROA). While the ESG–performance nexus has been widely explored in the finance literature, empirical evidence specific to the airline industry remains limited, despite the sector’s significant contribution to global emissions and its unique regulatory and competitive pressures. Drawing on stakeholder theory and the triple bottom line framework, the study examines whether ESG engagement serves as a strategic driver of financial outcomes alongside its social and environmental objectives. Using a panel dataset of European Union airlines covering an eleven-year period, the analysis employs Random-Effects estimators with cluster-robust standard errors, complemented by Feasible Generalized Least Squares (FGLS) estimation as a robustness check against heteroskedasticity and autocorrelation. Regression results, reported across four model specifications, reveal a consistently positive and statistically significant association between ESG performance and ROA. This relationship indicates that higher ESG scores enhance firm profitability. Disaggregated findings further demonstrate that each ESG sub-dimension—environmental (E), social (S), and governance (G)—exerts a positive and statistically significant effect on ROA, underscoring that diverse sustainability-related practices collectively strengthen financial outcomes. The study contributes to the literature by offering sector-specific evidence on the ESG–performance relationship in aviation. By integrating stakeholder and triple bottom line perspectives, it highlights that ESG practices are not merely compliance-oriented but represent a strategic pathway to profitability, competitive advantage, and long-term value creation.

Keywords

Supporting Institution

None

Project Number

None

Ethical Statement

None

Thanks

None

References

Abdi, Y., Li, X., & Càmara-Turull, X. (2020). Impact of sustainability on firm value and financial performance in the air transport industry. Sustainability, 12(23), 9957.
Abdi, Y., Li, X., and Càmara-Turull, X. (2022). How financial performance influences investment in sustainable development initiatives in the airline industry: The moderation role of state-ownership. Sustainable Development, 30(5), 1252–1267.
Chen, F.-Y., Chang, Y.-H. and Lin, Y.-H. (2012). Customer perceptions of airline social responsibility and its eﬀect on loyalty. Journal of Air Transport Management, 20, 49–51.
Chung, S., Park, J.-W. and Lee, S. (2022). The influence of CSR on airline loyalty through the mediations of passenger satisfaction, airline brand, and airline trust: Korean market focused. Sustainability, 14, 4548.
Crace, L. and Gehman, J. (2022). What really explains ESG performance? disentangling the asymmetrical drivers of the triple bottom line. Organization & Environment, 36(1), 150-178.
Elkington, J. (1997). The triple bottomline of sustainable development. Capstone Publishing, Oxford.
European Commission. (2021). Fit for 55: Delivering the EU’s 2030 climate target on the way to climate neutrality. COM(2021) 550 final. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021DC0550
European Union. (2022). EU Climate Action. https://climate.ec.europa.eu/eu-action/transport- decarbonisation/reducing-emissions-aviation

Freeman, R.E. (1984). Strategic management: a stakeholder approach. Pitman, Boston (MA).
Gangi, F., Mustilli, M., Daniele, L. M., and Coscia, M. (2022). The sustainable development of the aerospace industry: Drivers and impact of corporate environmental responsibility. Business Strategy and the Environment, 31(1), 218–235. https://doi.org/10.1002/bse. 2883
Gujarati, D. and Porter, C. (2008). Basic Econometrics (5th ed.). McGraw-Hill Education. New York.
Gupta, I., Mishra, N. and Tandon, D. (2020). Triple Bottom Line: Evidence from aviation sector, International Journal of Business Ethics and Governance (IJBEG), 3(1), 71-80.
Kaﬀash, S., Chomachaei, F. and Aktaş, E. (2024). Environmental sustainability performance of US airlines: implications of ﬁnancial performance and technical eﬃciency, Journal of the Operational Research Society, 1-22.
Kao, F.-C., Ting, I.W.K., Chou, H.-C. and Liu, Y.-S. (2022). Exploring the influence of corporate social responsibility on efficiency: an extended dynamic data envelopment analysis of the global airline industry. Sustainability, 14, 12712, 1-21.
Karaman, A. S. and Akman, E. (2018). Taking-off corporate social responsibility programs: An AHP application in airline industry. Journal of Air Transport Management, Elsevier, 68(C), 187-197.
Kim, Y., Lee, S. S., and Roh, T. (2020). Taking another look at airline CSR: how required CSR and desired CSR affect customer loyalty in the airline industry. Sustainability, 12(10), 4281.
Kuo, T.-C., Chen, H.-M. and Meng, H.-M. (2021). Do corporate social responsibility practices improve financial performance? A case study of airline companies. Journal of Cleaner Production, 310,
Lee, S., Seo, K., and Sharma, A. (2013). Corporate social responsibility and firm performance in the airline industry: The moderating role of oil prices. Tourism Management, 38, 20–30.
Li, W., Cui, J., Gao, J. and Xiong, J. (2023). Corporate social responsibility in China's airline industry: A longitudinal content analysis of related reports. Journal of Air Transport Management, Elsevier, 111(C).
Sorsa, K. and Bona-Sánchez, C. (2024). Corporate social responsibility trends in the airline industry: a bibliometric analysis. Sustainability, 16, 2709, 1-18.
Vo, T.T., Xiao, X. and Ho, S.Y. (2019). How does corporate social responsibility engagement influence word of mouth on twitter? evidence from the airline industry. Journal of Business Ethics, 157, 525–542.
Weber, O., Jones, D. and Makinde, A. (2025). The connection between sustainability ratings and financial performance in the aviation industry (June 02, 2025).
Yang, A. S. and Baasandorj, S. (2017). Exploring CSR and financial performance of full-service and low-cost air carriers. Finance Research Letters, Elsevier, 23(C), 291-299.
Yıldız, F., Dayi, F., Yücel, M. and Çilesiz, A. (2024). The impact of esg criteria on firm value: a strategic analysis of the airline industry. Sustainability, 16, 8300.
Zieba, M. and Johansson, E. (2022). Sustainability reporting in the airline industry: current literature and future research avenues. Transportation Research Part D: Transport and Environment, 102, Article ID: 103133.

Details

Primary Language

English

Subjects

Panel Data Analysis, Financial Economy, Sustainable Development

Journal Section

Research Article

Authors

Burcu Zengin ^*
0000-0001-5275-6748
Türkiye

Early Pub Date

October 9, 2025

Publication Date

October 19, 2025

Submission Date

August 19, 2025

Acceptance Date

September 15, 2025

Published in Issue

Year 2025 Volume: 9 Number: 3

DOI

https://doi.org/10.30518/jav.1768349

IZ

https://izlik.org/JA34BH28YE

Cite

RIS / Bibtex

APA

Zengin, B. (2025). The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries. Journal of Aviation, 9(3), 600-608. https://doi.org/10.30518/jav.1768349

AMA

1.Zengin B. The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries. JAV. 2025;9(3):600-608. doi:10.30518/jav.1768349

Chicago

Zengin, Burcu. 2025. “The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries”. Journal of Aviation 9 (3): 600-608. https://doi.org/10.30518/jav.1768349.

EndNote

Zengin B (October 1, 2025) The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries. Journal of Aviation 9 3 600–608.

IEEE

[1]B. Zengin, “The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries”, JAV, vol. 9, no. 3, pp. 600–608, Oct. 2025, doi: 10.30518/jav.1768349.

ISNAD

Zengin, Burcu. “The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries”. Journal of Aviation 9/3 (October 1, 2025): 600-608. https://doi.org/10.30518/jav.1768349.

JAMA

1.Zengin B. The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries. JAV. 2025;9:600–608.

MLA

Zengin, Burcu. “The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries”. Journal of Aviation, vol. 9, no. 3, Oct. 2025, pp. 600-8, doi:10.30518/jav.1768349.

Vancouver

1.Burcu Zengin. The Impact of ESG Performance on Financial Profitability: Evidence from the Aviation Sector in EU Countries. JAV. 2025 Oct. 1;9(3):600-8. doi:10.30518/jav.1768349