Airline Sustainability Modeling: A New Framework with Application of Bayesian Structural Equation Modeling

Abstract

There are many factors which could influence the sustainability of airlines. The main purpose of this study is to introduce a framework for a financial sustainability index and model it based on structural equation modeling (SEM) with maximum likelihood and Bayesian predictors. The introduced framework includes economic performance, operational performance, cost performance, and financial performance. Based on both Bayesian SEM (Bayesian-SEM) and Classical SEM (Classical-SEM), it was found that economic performance with both operational performance and cost performance are significantly related to the financial performance index. The four mathematical indices employed are root mean square error, coefficient of determination, mean absolute error, and mean absolute percentage error to compare the efficiency of Bayesian-SEM and Classical-SEM in predicting the airline financial performance. The outputs confirmed that the framework with Bayesian prediction delivered a good fit with the data, although the framework predicted with a Classical-SEM approach did not prepare a well-fitting model. The reasons for this discrepancy between Classical and Bayesian predictions, as well as the potential advantages and caveats with the application of Bayesian approach in airline sustainability studies, are debated.

Drivers of Big Data Analytics’ Adoption and Implications of Management Decision-Making on Big Data Adoption and Firms’ Financial and Nonfinancial Performance: Evidence From Nigeria's Manufacturing and Service Industries

“…Before (survey) the data collection phase, the survey questions were pilot tested (across Nigeria's manufacturing and service sectors) with ten management experts in August 2021. This was done because existing literature purport that pilot studies enhance survey quality by offering input from various viewpoints to prevent problems that may develop during the actual data-gathering process [104]. According to [104] the construct questions were deemed appropriate for inclusion in the final survey after undergoing several proposed modifications based on the pilot study's results and respondents' comments (see construct items and their symbols in Appendix A).…”