ABSTRACT
Potential airline profit cycle drivers were categorised into general economic factors, airline industry environment features, and airlines' internal mechanisms. It was found that airline industry practitioners mainly hold general economic developments responsible for the profit cycle. This chapter examines their impact on airline profits empirically. The methodology suitable to address the systemic and dynamic nature of the research problem is System Dynamics. A System Dynamics model can capture the interrelated and entangled nature of the airline industry and can simulate different behaviour options for airlines under varying circumstances. It will thus yield not only a set of factors as a result but also the explanation of why these particular factors cause and drive the profit cycle, and how they do that. This will give starting points for finding policies that dampen the system. A brief introduction to System Dynamics is given in the chapter.
