Effects of Firm Resources on Airline Competitiveness

Mei Wan Joyce LOW, Singapore Management University
B.K. Lee


This article examines the performances of 42 major international airlines between 1987 and 2009 using the resource-based theory. Our results advocate that competitive airlines should operate as a lean organization because higher intensity of personnel deployed per unit of passenger seats kilometre represents higher labour cost that may not necessarily lead to higher consumption. Aircraftfleet, without being excessive large, should possess a right mix of aircrafts that are well-utilization. Safety remains as a key component of an airline's intangible resource. With the exception in 1987 when human and physical resources are substitutes to intangible resources, all the three resources are found to be complementary to one another subsequently. Additionally, the increasing consumer acceptances of new airlines connote that established airlines cannot be complacent. Following the emergence of budget airlines that provide point-to-point service to short distance destinations, full carriers could differentiate themselves by offering direct connections on long distant flights.