TY - JOUR
T1 - Airline Sustainability Modeling: A New Framework with Application of Bayesian Structural Equation Modeling
AU - Salarzadeh Jenatabadi, Hashem
AU - Babashamsi, Peyman
AU - Khajeheian, Datis
AU - Seyyed Amiri, Nader
PY - 2016/11/22
Y1 - 2016/11/22
N2 - 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.
AB - 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.
KW - Airline performance index
KW - Bayesian structural equation modeling
KW - Cost function
KW - Gibbs sampler
KW - Airline sustainability
UR - http://www.mdpi.com/2071-1050/8/11/1204
M3 - Journal article
SN - 2071-1050
VL - 8
SP - 1
EP - 17
JO - Sustainability
JF - Sustainability
IS - 11
ER -