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DETERMINANTS OF AIRLINES PROFITABILITY
The airline industry has become more rapid growth in a two decades. Number of passengers increase drastically. On the other hand, airlines facing some challenges in conjunction with internal capacity creates and external shocks. Increasing demand do not linearly increasing profitability since they have to compete over the rivals. Deregulation airline industry has changing the entry and exit to market lower. The study about determinants of airlines profitability is required to ensure the airlines in profitabile operations. By multiple linear regression, research is examining operational, financial, and competition issue to find these effect into profitability. The research results confirmed previous study that operational performance has affect to airlines profitability. Several factors in operational has
tested. Fleet size as variables operational has consistently impact to profitability. However, alliances as the other ways increasing size could be considering as part of strategic to growth while load factor has no affect in predicting profit.
The industry concentration as competition measurement has provide insight to the research that competition has affect to profitability. Increasing concentration could achieved by increase fligth frequencies particularly into routes that profitable. In addition, airlines shall attract passengers more by offering product market quality that can distinguished by consumers. Since the industry growth driven by demand, airlines required more financial supports in
providing capacity of air traffics. The financial leveraged has play a key role in generating profitability.
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