THE INFLUENCE OF COST STRUCTURE, EFFICIENCY, AND AIRLINE TYPE ON THE FINANCIAL PERFORMANCE OF AIRLINES

Financial performance is one of the key indicators used to assess the success of
airline companies in managing their operations. Such performance may be
influenced by several factors, including cost structure, operational efficiency, and
airline type. This study aims to obtain empirical evidence regarding the effect of
cost structure, efficiency, and airline type on the financial performance of airline
companies. The study employs a quantitative approach using secondary data
obtained from 30 publicly listed airlines during the 2020-2024 period, resulting in
150 panel observations. Financial performance is measured using profitability
indicators, namely Return on Assets (ROA), Return on Investment (ROI), Return
on Equity (ROE), Net Profit Margin (NPM), and Gross Profit Margin (GPM).
The independent variables in this study consist of cost structure, operational
efficiency, and airline type, which is classified into Full-Service Carrier (FSC) and
Low-Cost Carrier (LCC). The theory underlying this study emphasizes that cost
management and operational efficiency are the main factors in creating corporate
profitability. The results show that cost structure affects financial performance,
although the effect is partial because not all cost components influence all
profitability indicators. Fuel costs, aircraft maintenance costs, labor costs, as well
as flight and navigation costs are found to affect several profitability ratios. In
addition, operational efficiency also affects financial performance, particularly Net
Profit Margin (NPM) and Gross Profit Margin (GPM).
This study also finds that airline type does not have a significant effect on financial
performance. These findings indicate that differences in business models between
Full-Service Carriers and Low-Cost Carriers do not directly determine the level of
corporate profitability. Thus, the financial performance of airlines is more strongly
determined by management’s ability to control cost structure and improve
operational efficiency than by the airline type itself. This study implies that airline
companies need to focus their strategies on controlling dominant costs and
improving efficiency in order to maintain financial performance amid increasingly
intense competition in the airline industry