Techniques for efficiency assessment of subsidized air transportation as the basis for reasoned management decisions

Abstract

The issues of a complex assessment of air transportation efficiency are currently important. They are concerned during management analysis when financial and economic activity of an airline company is discussed. The investment increase is currently an important aspect of airline companies. These investments include airline services subsidized by the government. The techniques for the costs evaluation of subsidized air transportation are discussed in the article. They are based on a set of indicators including the assessment of an average load of an aircraft, production cost of air transportation, suggested passenger traffic, subsidized income and co-financing of airline company’s costs. The consideration of the above mentioned indicators when making management decisions allows us to refine the subsidized air transportation costs, to calculate service rates, to prevent losses, to reduce unreasonable costs, to forecast possible changes in the passenger traffic and to provide evidence of route network extension of an airline company. The conclusion about obligatory analysis of the efficiency of air transportation subsidized by the government has been made. All stages beginning with the planning one till the actual financial result obtained by an airline company should be analyzed. The novelty of the worked out techniques concerns economic and feasibility indicators of the efficiency valuation of subsidized air transportation that are included in the research. The method also includes the assessment of social and economic result of budget funds utilization, the availability of flights for the population from remote regions and transportation to unclaimed destinations, as well as the airline costs on transportation co-financing. Thus, studies devoted to efficient use of budget funds spent on transport services development and on the support of stable functioning of airline companies are acute in terms of the extension of the government support in a form of subsidizing for air transportation. The development of issues concerning the efficiency valuation of subsidized air transportation allows us to identify an economically valid mechanism of subsidies and the prospects for its application in the perspective of further improvement of models of the airline company management.

Keywords

efficiency of subsidized air transportation, forecasting of passenger traffic, production cost of air transportation, financial result, criteria of economic viability of air transportation, indicator system, management decisions

For citation

Skipin D.L., Gushchina A.S. Techniques for efficiency assessment of subsidized air transportation as the basis for reasoned management decisions. Perm University Herald. Economy, 2018, vol. 13, no. 4, pp. 638–653. DOI 10.17072/1994-9960-2018-4-638-653

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