engleski

EVOLUTION OF AIRLINE PROFITABILITY MODELING

Economic development worldwide cannot be imagined without civil aviation contribution due to continuous increasing of connections among the cities enabling the flow of people, goods, capital, technology and ideas. In terms of evolution of airline profitability positive and negative cycles alternated. In the first decade of the 21st century (2000-2009) commercial airlines worldwide generated 50 billion USD net losses. But, the financial performance in the period 2010-2016 was totally opposite with net profit of 130 billion USD. Airline route and network profitability metrics is a complex and often misunderstood process, followed by the situation on the air transport market characterized by keen competition and fast changes going on. The paper outlined different key performance indicators to be understood how the modelling of route profitability of an airline is provided in practical business life. It includes Pearson's correlation coefficient, cost of capital, return on capital invested, breakeven and achieved load factors, the role of network management and the changes that e-Commerce is bringing in the aviation practice. Paper is also dealing with regional trends and influences, namely in Southeast Europe. Finally, implementation of Croatia Airlines restructuring program and the specific details of route profitability metrics are analyzed.

airlines, route profitability, competition, connectivity, performance indicators

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