Determinants of Profitability in the Airline Industry: A Comparison with Turkish Airlines

ABSTRACT: In order to be competitive, the profitability of a firm plays an undeniable role. Therefore, investigation of the factors determining profitability of a firm would provide useful insights for firms in the process of decision making and strategic planning. The airline industry of Turkey has been known as a prominent sector because of its significant contribution to economic development and growth of employment over time. Therefore, the main aim of this study is to investigate the determinants of profitability for the Turkish airlines. Accordingly, a sample of major airlines is chosen and their data is extracted from Data Stream covering 1994 to 2013. Based on the panel data analysis, findings show that tangibility of assets, growth opportunities and liquidity ratios have significant impacts on the profitability of the firms. Tangibility of assets are negatively affecting the profitability of the firms in the airline industry, while growth opportunities are also inversely affect the profitability of airline companies in the sample. In addition, liquidity ratio is another factor which represents a negative and statistically significant relationship with the profitability of the firms. Keywords: Determinants of Profitability, Airline Industry, Turkish Airlines, Panel Data Analysis. …………………………………………………………………………………………………………………………