Title: Investigating the effect of productivity, quality, and safety on profitability in the US airline industry

Authors: Mahour Mellat Parast, Elham H. Fini

Addresses: Department of Economics, Finance, and Decision Sciences, School of Business, University of North Carolina – Pembroke, Pembroke, NC 28372, USA. ' Department of Civil Engineering, North Carolina A&T State University, 447 McNair Hall, Greensboro, NC 27411, USA

Abstract: This study addresses the effect of productivity, quality, and safety on profitability in the US airline industry. Using data from 1989 to 2008 on airlines operations, we determine the inter-relationships between productivity, quality, and safety and their effect on profitability. Our analysis suggests that labour productivity is the main source of profitability in the US airline industry. The relationship between aircraft productivity and airline productivity appears to be significant, supporting the positive effect of technological advancement in the aircraft industry on profitability in the airline industry. On-time performance is not related to profitability, while service quality is directly related to profitability. Safety has a positive effect on productivity but it is not significantly related to profitability. Recommendations for future research are outlined at the end.

Keywords: safety; profitability; airline industry; USA; United States; airlines; labour productivity; aircraft; technological advancement; on-time performance; service quality; logistics systems; logistics management.

DOI: 10.1504/IJLSM.2011.042054

International Journal of Logistics Systems and Management, 2011 Vol.10 No.1, pp.70 - 89

Published online: 23 Aug 2011 *

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