Key value drivers in the airline industry : additional focus on the long-haul low-cost business model : some econometric results

This thesis aims to identify key value drivers in the airline industry. The objective was to analyze the effect key value drivers have on the total return to shareholders as well as their impact on the gross margin. For the analysis, we constructed a panel dataset consisting of 24 airlines from 2010 through 2019. The analysis results suggest that the selected value drivers have contrasting effects on the total return and the gross margin. Highlighting the important distinction academics, investors, and airline managers have to make when considering an appropriate measure on financial performance in the airline industry. Our findings suggest that an increase in the passenger yield has a statistically significant and substantial effect on total return to shareholders and should be considered a key value driver in the airline industry. Multiple factors in our analysis showed a statistically significant effect on the gross margin, with the results indicating that airlines can improve upon their gross margin by increasing their ESG grade as well as benefiting from using an older fleet. An increase in the passenger yield, as well as fleet heterogeneity, negatively impacted the gross margin of the airlines analyzed