Oil price fluctuations and airline profitability: The case of Turkish Airlines

Abstract

This study examines the potential relationship between oil price fluctuations and airline profitability, focusing on Turkish Airlines (THY) from 2001 to 2022. The study uses wavelet analysis to explore the correlation between oil prices and the airline's profit and loss data, considering geopolitical factors and unexpected events that may affect airline operations. THY's financial performance is significantly impacted by oil price fluctuations in the short and medium term, while its long-term profitability remains stable. Strategic planning and intelligent fuel management, including hedging, are imperative to mitigate the effects of volatile oil prices on airline operations. The results of this study provide valuable insights for the airline industry, assisting in better-informed decision-making and contributing to future research. Wavelet analysis proves effective in uncovering complex relationships and trends, offering a comprehensive understanding of the dynamic interactions between oil price changes and airline profitability.