Coventry University

DOCTOR OF PHILOSOPHY

Airline Sustainability in a Liberalised Environment

Generating a Conceptual Framework with a Holistic Approach to Airline Sustainability

Athousaki, Roxani

Award date:
2020

Awarding institution:
Coventry University

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Download date: 02. Jul. 2024

AIRLINE SUSTAINABILITY IN THE
LIBERALISED ENVIRONMENT:
Generating a Conceptual Framework with
a Holistic Approach to Airline
Sustainability

Roxani Athousaki

A thesis submitted in partial fulfilment of the University’s requirements

for the Degree of Doctor of Philosophy in Aviation Management

December 2019
 Acknowledgements
I would like to acknowledge my appreciation to Coventry University for supporting this
research study, especially the School of Mechanical, Aerospace and Automotive
Engineering and the overall Aviation Management team. I would also like to
acknowledge my former DoS Professor Mike Blundel for his help and encouragement.
Likewise, I acknowledge my current DoS Dr. Steve Martin for his guidance and useful
feedback during the writing-up process. His comments were most valuable for the
completion of this study. In addition, I would like to express my gratitude to my other
two supervisors, Dr. Alexeis Garcia Perez and Dr. Georgios Kapagiannis for their
guidance and scholarly support. I would also like to thank Dr. Mark Hooper and Dr. John
Huddlestone for their help with Grounded Theory and Gordon McJannett for his valuable
support in my PRP process. Also, I would like to acknowledge the help and support of
Dr. Steve Scott for the many hours of scholarly discussion and focus on my dissertation
topic and thank him for becoming a member of my supervisory team. I am grateful to
my very good friend Dr. Kostas Iatrou for his continuing support on this length journey.
His continuous commitment to the well-being of the air transport industry was an
inspiration all along. In addition, I would like to acknowledge the group of aviation
professionals that took part in the interview process. Their names do not appear due the
ethics process requirements. However, their views were valuable and their contribution
was most important for the development of this study.

I would also like to thank representatives from the following organisations ICAO, IATA,
ACI, EATEO and HERMES for the excellent discussions on the subject of sustainability
that took place during the several events in which I participated as part of this research.
Similarly, I would like to thank Emirates Aviation University for giving me the
opportunity to present the first findings of this research during the proceedings of the 3rd
IAMC. Finally, I am filled with gratitude for my beloved husband Ilias, for his help and
support during my studies. I would also like to express my love and gratitude to my
‘precious’ son Manos for his love and motivation to achieve this goal.

Overall, this has been a journey driven by my passion and commitment for the well-being
of the aviation industry. It was an experience that was most rewarding and motivated by
Socrates' words: Wisdom begins in wonder!!

[i]
 Abstract
Airline failures have increased in the past five years despite improvements in traffic
growth. Airlines enable connectivity and provide numerous benefits with their wider
socio-political and economic role. However, various systems, pressures and trends
disturb the operation of the Commercial Air Transport (CAT) system and its existing
balance with society, economy and the environment. Airlines, as principal stakeholders
of the CAT system, are influenced in multiple ways. Thus, airline sustainability is a
concept that ‘is complex and conceptual’ and requires a holistic approach based on
systems thinking paradigm. The objective of this study was to introduce a new
sustainability approach with the development of a Conceptual Framework that generates
a holistic approach and creates the foundation for the establishment of a Sustainability
(Su) Management System for Airlines operating in a liberalised environment. This
research is underpinned with theory on the domain of business sustainability and follows
a Grounded Theory methodology. Successive interpretations in the qualitative data
analysis process resulted in developing a ‘sustainability construct’ that engages airlines
in a systematic review of their main Areas of Concern (AoC). The sustainability construct
consists of eight (8) Sustainability Business Drivers (Su Business Drivers) with properties
(i.e. focus areas) and dimensions; and, the Conceptual Framework designed to utilise the
Su Business Drivers and to implement a systems thinking approach to airline
sustainability. The Su Business Drivers assist airlines to understand their current state in
the liberalised environment and to draw valuable conclusions on various sustainability
areas. In addition, the use of a Conceptual Framework for airline sustainability based on
a Plan-Do-Check-Act (PDCA) process cycle approach is another significant contribution
of this study as it provides the foundation for the development of a Sustainability
Management System (SuMS) and the ability to operationalise sustainability. Finally, the
holistic approach contributes to a more sustainable path for the airline industry and opens
multiple areas for further research across different domains in the CAT system.

Keywords: Airline Sustainability; Liberalised Environment; Holistic Approach; Systems

Thinking; Plan-Do-Check-Act.

[iii]
 Table of Contents

Library Declaration Form ...............................................................................................

Ethics .................................................................................................................................

Acknowledgements .......................................................................................................... i

Abstract .......................................................................................................................... iii

Table of Contents ............................................................................................................ v

List of Tables ................................................................................................................... x

List of Figures .............................................................................................................. xiii

List of Abbreviations .................................................................................................... xv

Chapter One: Introduction ............................................................................................ 1

1.1 Research Background and Motivation .................................................................... 1

1.2 An Introduction to the Commercial Air Transport Industry ................................... 3
1.2.1 The Structure of the CAT System .....................................................................5
1.2.2 The Role of the Airline Industry in the CAT System .......................................8
1.2.3 The Sustainability Approach ...........................................................................10
1.3 Research Problem and Key Research Questions .................................................. 13
1.3.1 Research Problem ............................................................................................13
1.3.2 Key Research Questions..................................................................................13
1.4 Research Objective and Sub-objectives ................................................................ 13
1.5 Research Hypothesis ............................................................................................. 14
1.6 Conceptual Framework Overview ........................................................................ 15
1.6.1 Principles of the Conceptual Framework ........................................................17
1.6.2 Sustainability Criteria (Su Criteria).................................................................17
1.7 Research Limitations ............................................................................................ 18
1.8 Research Structure ................................................................................................ 18
1.9 Chapter Summary ................................................................................................. 20

Chapter Two: Literature Review ................................................................................ 22

[v]
 2.1 The Origins of the CAT System ........................................................................... 23
2.1.1 The Evolution of Liberalisation ......................................................................25
2.1.2 The Strategic Role of ICAO in the Liberalisation Process .............................30
2.2 The Status of the Airline Industry in the Liberalised Environment ...................... 34
2.2.1 The Evolution of LCCs ...................................................................................36
2.2.2 The Full Service Network Carriers Response to Change ................................38
2.2.3 The Global Landscape .....................................................................................42
2.2.4 The Challenges of Traffic Growth ..................................................................44
2.2.5 Corporate Social Responsibility (CSR) and the Airline Industry ...................47
2.3 The Sustainability Discussion ............................................................................... 50
2.3.1 The Roots of the Sustainability Discussion.....................................................52
2.3.2 A Systems Thinking Approach .......................................................................55
2.3.3 Airline Sustainability from a Systems Thinking Perspective .........................58
2.4 The Concept of Continuous Improvement ............................................................ 59
2.5 Criteria for an Integrated Solution ........................................................................ 60
2.6 The Role of Literature Review in Grounded Theory as an Application of this Study
.................................................................................................................................... 61
2.7 Chapter Summary ................................................................................................. 63

Chapter Three: Research Design ................................................................................ 65

3.1 Philosophical Stance of the Research Study ......................................................... 65

3.1.1 The Research Paradigm ...................................................................................67
3.1.2 The Research Methodology ............................................................................69
3.2 Key Ingredients in Grounded Theory ................................................................... 70
3.2.1 Purposive Sampling.........................................................................................71
3.2.2 Data Gathering ................................................................................................71
3.2.3 Coding and Categorisation ..............................................................................71
3.2.4 Constant Comparison ......................................................................................77
3.2.5 Memoing .........................................................................................................77
3.2.6 Diagraming ......................................................................................................77
3.2.7 Theoretical Sampling ......................................................................................77
3.2.8 Theoretical Sensitivity ....................................................................................77
3.2.9 Saturation ........................................................................................................78
3.2.10 Theory Building and Theory Evaluation .......................................................78

[vi]
 3.3 The Application of Grounded Theory in the Research Study............................... 80
3.3.1 Data Set I and the Application of Purposive Sampling ...................................81
3.3.2 Data Set II and the Application of Initial and Focused Coding ......................85
3.3.3 Data Set III and Theory Building ....................................................................92
3.3.4 Validity and Reliability ...................................................................................95
3.4 Chapter Summary ................................................................................................. 97

Chapter Four: Research Results, Analysis and Discussion ...................................... 98

4.1 Results of Data Set I: The Seven Thematic Units................................................. 99

4.1.1 The Study of the Extant Documents ...............................................................99
4.1.2 The Analysis and Discussion of the ICAO Working Papers ........................101
4.2 Results of Data Set II: The Analysis of Published Interviews and CSR Reports
.................................................................................................................................. 109
4.3 The Identification and Development of the Core Category ................................ 114
4.4 Results of Date Set III: Testing the Core Category and the Saturation Process . 117
4.4.1 Outcomes of the Interview Process ...............................................................118
4.4.2 The Saturation Process ..................................................................................125
4.5 The Airline Sustainability Construct .................................................................. 126
4.5.1 The Sustainability Business Drivers Concept ...............................................128
4.5.2 The Formation of the Conceptual Framework ..............................................133
4.5.3 Holistic Approach and the Commercial Imperative for Sustainability .........133
4.5.4 Risk-Based Thinking .....................................................................................134
4.5.5 Continuous Improvement ..............................................................................135
4.6 Chapter Summary ............................................................................................... 136

Chapter Five: The Conceptual Framework ............................................................. 137

5.1 The Attributes of the Conceptual Framework .................................................... 137

5.1.1 The Su Criteria ..............................................................................................140
5.1.2 Su Business Drivers ......................................................................................140
5.1.3 Action for Sustainability (Su) Leadership and Workforce Motivation .........141
5.1.4 UN Sustainable Development Goals (SDG) Contribution ............................143
5.1.5 The Levers of Change ...................................................................................144
5.1.6 The Role and Relevance of Existing Sustainability Indicators in the
Development of the Conceptual Framework .........................................................146
5.2 The Structure of the Conceptual Framework ...................................................... 150

[vii]
 5.3 Implementation Guide for the Effective Use of the Conceptual Framework ..... 152
5.3.1 Suggested Tools for the PLAN Process ........................................................156
5.3.2 The Six Segment Diagram ............................................................................156
5.3.3 The Road to Context - A Guide by Bertels and Dobson ..............................157
5.3.4 Standards and Processes ................................................................................158
5.3.5 Performance Measurement and Feedback Loops..........................................159
5.3.6 Flagging System and Adaptive Capacity ......................................................159
5.4. Chapter Summary .............................................................................................. 160

Chapter Six: Framework Validation and Contribution to Knowledge ................. 162

6.1 Meeting Literature Criteria ................................................................................. 162

6.1.1 Create a comprehensive list of factors than what is currently covered by the
current CSR reporting initiatives............................................................................162
6.1.2 Address challenges in the context of sustainable development and the Triple
bottom line approach from an operational and a business strategy perspective. ...163
6.1.3 Reengineer the concept of airline business sustainability through the lens of an
integrated paradigm based on contemporary sustainability views and a systems
thinking approach. ..................................................................................................163
6.1.4 Contribution to the SDGs initiative...............................................................163
6.2 Validation Interviews .......................................................................................... 164
6.3 Conceptual Framework Case Study: The Case of Ryanair ................................. 167
6.3.1 Overview: Ryanair, Europe’s Leading Low-Cost Airline ............................167
6.3.2 How Systems Thinking Paradigm can Inform the Case of Ryanair .............169
6.3.3 Challenges and Opportunities .......................................................................169
6.3.4 The Use of the Conceptual Framework.........................................................172
6.4 Grounded Theory Criteria ................................................................................... 175
6.5 Chapter Summary ............................................................................................... 177

Chapter Seven: Discussion......................................................................................... 178

7.1 Overview of the Research Journey ..................................................................... 178

7.2 Research Limitations .......................................................................................... 181
7.3 The Idea to Operationalise Sustainability ........................................................... 183
7.4 Chapter Summary ............................................................................................... 184

Chapter Eight: Conclusions....................................................................................... 186

8.1 Sub-Objective One .............................................................................................. 188

[viii]
 8.2 Sub-Objective Two ............................................................................................. 189
8.3 Sub-Objective Three ........................................................................................... 189
8.4 Sub-Objective Four ............................................................................................. 190
8.5 Sub-Objective Five ............................................................................................. 191
8.6 Sub-Objective Six ............................................................................................... 192
8.7 Sub-Objective Seven ........................................................................................... 192

Chapter Nine: Recommendations for Further Work ............................................. 194

Appendices .................................................................................................................. 197

Appendix A: Liberal Agreements ............................................................................ 197

Appendix B: Data Set I ............................................................................................. 199
Appendix B.1: ICAO WPs Database ATConf/5 2003 ............................................. 199
Appendix B.2: ICAO WPs Database ATConf6 2013 ............................................... 202
Appendix B.3: ICAO WPs Database A/39 2016 ..................................................... 206
Appendix C: Data Set II............................................................................................ 209
Appendix C.1: Published Interviews ........................................................................ 209
Appendix C.2: CSR Reports ..................................................................................... 212
Appendix D: Aviation Media Corporate Information .............................................. 215
Appendix E: Interview Questionnaire ...................................................................... 216
Appendix F: List of Events attended by the Researcher to Enhance the Holistic
Approach ................................................................................................................... 220
Appendix G: Business Sustainability Management.................................................. 221
Appendix G.1: CISL Certificate ............................................................................... 221
Appendix G.2: CPD Certificate ................................................................................ 222
Appendix H: Evidences of the Ryanair Case Study Analysis .................................. 223
Appendix H.1: Ryanair Challenges and Uncertainties ............................................ 223
Appendix H.2: Challenges and Uncertainties Grouped ............................................ 226
Appendix H.3: Sixth Segment Analysis ................................................................... 227

List of References........................................................................................................ 230

[ix]
 List of Tables
Table 1-1 Worldwide Airline Industry Results ............................................................... 9

Table 1-2 ICAO Objectives and Relevance to the Airline Industry ............................... 10

Table 1-3 Su Business Drivers ....................................................................................... 17

Table 2-1 Areas of Economic and Non-Economic Regulation ..................................... 24

Table 2-2 Effects of Economic Regulation .................................................................... 25

Table 2-3 European Liberalisation Process as adopted by Kassim and Stevens ............ 26

Table 2-4 ATConf/6 Sustainability Agenda ................................................................... 32

Table 2-5 Benefits from Airline Commercial Activities to the CAT System ................ 34

Table 2-6 Failed Airlines ................................................................................................ 35

Table 2-7 Top 10 LCCs .................................................................................................. 37

Table 2-8 Top 10 Airline Group per Passenger (PAX) Traffic and Numbers ............... 42

Table 2-9 Top 10 PAX Airline Group Revenue and Operating Result .......................... 43

Table 2-10 STEEP Factors ............................................................................................. 45

Table 2-11 Ecosystem Pressures, Trends and Global Risks ........................................... 51

Table 2-12 UN Sustainable Development Goals ............................................................ 54

Table 2-13 Approaches to Systems Thinking................................................................. 56

Table 2-14 Integrated Decision-Making Framework for Urban Sustainability ............. 57

Table 2-15 CI Initiatives ................................................................................................. 59

Table 2-16 Criteria for an Integrated Solution Approach to Airline Sustainability ....... 61

Table 3-1 Answering Questions in the Research Planning Process ............................... 66

Table 3-2 Set of Beliefs ................................................................................................. 67

Table 3-3 Analysing the Epistemology of Corporate sustainability as adapted by

Vildåsen, Keitsch and Fet ............................................................................................... 68

Table 3-4 Coding Process Characteristics ..................................................................... 71

[x]
Table 3-5 NVIVO 12 Features ...................................................................................... 75

Table 3-6 Evaluation Criteria for Grounded Theory Validation .................................... 79

Table 3-7 Data Set I ........................................................................................................ 81

Table 3-8 Pilot Interviewee Information ........................................................................ 82

Table 3-9 Extant Documents .......................................................................................... 84

Table 3-10 Data Set II “Initial and Focused Coding Data” ............................................ 86

Table 3-11 Published Interviews from Aviation Media ................................................. 88

Table 3-12 Categorising Example .................................................................................. 89

Table 3-13 CSR Reports ................................................................................................. 91

Table 3-14 Data Set III “Interviewee Information”........................................................ 93

Table 3-15 Constructivist Criteria .................................................................................. 96

Table 3-16 Validation Methods Used for the Research ................................................. 96

Table 4-1 Timeline of World-Wide Air Transport Conferences .................................. 100

Table 4-2 Recorded Observations from ATConf/6 ...................................................... 103

Table 4-3 Concluding Notes from ATConf/6 .............................................................. 103

Table 4-4 Extant Documents ........................................................................................ 104

Table 4-5 Theme Identification and Grouping as an Outcome of Elaborative Coding 106

Table 4-6 Initial Coding Examples............................................................................... 110

Table 4-7 Constructed Categories from the Published Interview Process ................... 111

Table 4-8 Examples from the Coding List ................................................................... 112

Table 4-9 CSR Coding Results..................................................................................... 113

Table 4-10 Summarised Information ............................................................................ 118

Table 4-11 Results for Sustaining Equity over Time in a Liberalised Environment ... 122

Table 4-12 Properties and Dimensions of the Su Business Drivers ............................. 130

Table 4-13 The PDCA Cycle ....................................................................................... 135

[xi]
Table 5-1 The Su Business Drivers Block ................................................................... 141

Table 5-2 Existing Sustainability Indicators ................................................................ 147

Table 5-3 Industry Specific Criteria ............................................................................. 149

Table 5-4 Implementation Guide for the SuMS Development .................................... 153

Table 5-5 Six Areas of Operational and Strategic Risk and Opportunity of Embracing
Sustainability within an Organisational Context as adopted by CISL. ........................ 156

Table 5-6 Steps to Contextualisation as adapted by Bertels and Dobson ................... 158

Table 5-7 Set of Suggested Tools for Performance Measurement ............................... 159

Table 6-1 Experts’ Profile ............................................................................................ 164

Table 6-2 Experts’ Comments ...................................................................................... 165

Table 6-3 Ryanair’s Strength and Weaknesses based on CAPA- Centre for Aviation 168

Table 6-4 Suggested Guidelines for the use of the Conceptual Framework in the Case of
Ryanair ......................................................................................................................... 173

Table 6-5 Check List for Evaluation Criteria based on Charmaz................................. 175

Table 7-1 Statement from the CISL Forum 07/08/2018 .............................................. 180

Table 7-2 IAMC Conference Paper Abstract ............................................................... 180

Table 8-1 Example of Q1 Journals reviewed ............................................................... 191

[xii]
 List of Figures
Figure 1-1 World Annual Growth Rate of Scheduled Air Passenger Numbers ............... 5

Figure 1-2 Actors of CAT System .................................................................................... 7

Figure1-3 The Researcher’s Conceptual Framework ..................................................... 16

Figure 1-4 Research Structure ........................................................................................ 19

Figure 2-1: The CAT Value Chain ................................................................................ 28

Figure 2-2 Porter Five Forces Model for the Airline Industry as adopted by IATA ...... 39

Figure 2-3 Airline Sustainability Reporting Frameworks and Standards– indicative

examples as adopted by Mayer and GRI ....................................................................... 48

Figure 2-4 Set of Keywords Researched ........................................................................ 62

Figure 3-1 Grounded Theory Strategies and Techniques ............................................... 70

Figure 3-2: The Coding Process in Grounded Theory ................................................... 72

Figure 3-3 Guiding Questions “Initial Coding” ............................................................. 73

Figure 3-4 Guiding Questions “Focused Coding” .......................................................... 73

Figure 3-5 The Use of NVIVO in this Study ................................................................. 76

Figure 3-6 The Airline Sustainability Project in NVIVO 12 ......................................... 76

Figure 3-7 Necessary Factors for Integration ................................................................. 78

Figure 3-8 Application of Grounded Theory.................................................................. 80

Figure 3-9 Elaborative Coding Technique ..................................................................... 83

Figure 3-10 Gap Between Thematic Units and Focused Categories .............................. 90

Figure 3-11 The Researcher’s Eight (8) Focused Categories ......................................... 91

Figure 3-12 Plan-Do-Check-Act (PDCA) Principles. .................................................... 95

Figure 4-1 The Coding Approach for Delivering the 7 Thematic Units ...................... 102

Figure 4-2 A Model of the Structure of the Business Sustainability Management Course,
as adopted by CISL Course Syllabus ........................................................................... 115

[xiii]
Figure 4-3 Core Category ‘Su Business Drivers’ ......................................................... 116

Figure 4-4 Participant Results per Category ................................................................ 119

Figure 4-5 Actors of the CAT System as Constructed by the Interview Process and
Academic Literature .................................................................................................... 121

Figure 4-6 Impediments to Sustainability .................................................................... 123

Figure 4-7 In-Vivo Words Cloud ................................................................................. 124

Figure 4-8 High Level Synthesis of the Sustainability Construct ................................ 127

Figure 4-9 The Su Business Drivers as Part of the Sustainability Construct ............... 129

Figure 4-10 The Nested System as adopted by Bertels and Dobson ........................... 134

Figure 5-1 The Researcher’s Conceptual Framework .................................................. 139

Figure 5-2 The Cambridge Impact Leadership Model as adopted by CISL ................ 142

Figure 5-3 ICAO Strategic Objectives Linked to SDGs .............................................. 144

Figure 5-4 The 4 C’s Concept as adopted by Peattie and Belz ................................... 146

Figure 6-1 Ryanair’s Su Business Drivers Diagram .................................................... 170

Figure 7-1 The Idea to Operationalise Sustainability ................................................... 184

[xiv]
 List of Abbreviations
A4E: Airlines for Europe
AACO: Arab Air Carriers Organisation
ACAC: Arab Civil Aviation Commission
ACI: Airport Council International
AFCAC: The African Civil Aviation Commission
AFRAA: African Airlines Association
AGB: Always Getting Better
ALI: Air Liberalisation Index
ALTA: Latin American and Caribbean Air Transport Association
ANSPs: Air Navigation Service Providers
AoC: Areas of Concern
APD: Air Passenger Duty
ASAs: Air Service Agreements
ASEAN: Association of Southeast Asian Nations
ASK: Available Seat Kilometres
ATAG: Air Transport Action Group
ATConf: Word-wide Air Transport Conference
AVG: Average
AW: Aerial Work
BSI: British Standards Institution
CA: Civil Aviation
CAB: Civil Aviation Board
CAP: Capacity
CASK: Cost per Available Seat Kilometre
CAT: Commercial Air Transport
CEM: Customer Experience Management
CEO: Chief Executive Officer
CI: Continuous Improvement
CILM: Cambridge Impact Leadership Model
CISL: Cambridge Institute for Sustainability Leadership
CO2 : Carbon Dioxide
CON PTC: Consumer Protection

[xv]
CORSIA: Carbon Offsetting and Reduction Scheme for International Aviation
CRS: Computer Reservation System
CS: Corporate Sustainability
CSR: Corporate Social Responsibility
CVP: Customer Value Proposition
E: Estimated
EASA: European Aviation Safety Agency
EATEO: European Association of Aviation Training and Educational Organisations
EC: European Commission
ECAC: European Civil Aviation Conference
ECO FTP: Economic Footprint
EFF: Efficiency
ENV: Environmental Conformity
ERA: European Regions Airline Association
ESG: Environmental Social and Governance
ESR: Ethical and Social Responsibility
EU ETS: European Union Emissions Trading Scheme
EU: European Union
F: Forecasted
FAA: Federal Aviation Administration
FL: Full Liberal
FR: Ryanair
FSF: Flight Safety Foundation
FSNC: Full Service Network Carriers
FTL: Flight Time Limitations
FTP: Footprint
FY: Fiscal Year
GDP: Gross Domestic Product
GDPR: General Data Protection Regulation
GDS: Global Distribution System
GHG: Greenhouse Gas
GIS: Geographic Information System
GRI: Global Reporting Initiative
GSTC: Global Sustainable Tourism Council

[xvi]
H: Hypothesis
IAG: International Airlines Group
IAMC: International Aviation Management Conference
IATA: International Air Transport Association
IBAC: International Business Aviation Council
ICAN: ICAO Air Service Negotiations Conference
ICAO: International Civil Aviation Organisation
ICSA: International Coalition for Sustainable Aviation
IGBP: International Geosphere-Biosphere Programme
ISO: International Organization for Standardization
KPIs: Key Performance Indicators
LACAC: Latin-American Civil Aviation Commission
LCC: Low Cost Carrier
LRP: Labour Relations and Productivity
MRO: Maintenance Repair and Overhaul
NOx: Nitrogen Oxides
O&C: Ownership and Control
oc: organisational culture
OECD: The Organisation for Economic Co-operation and Development
OSA: Opens Skies Agreements
OTP: On time Performance
P: Interview Participant
PAX: Passengers
PDCA: Plan-Do-Check-Act
PLC: Product Life Cycle
PM: Particulate Matter
PMS: Performance Measurement System
QDA: Qualitative Data Analysis
REG RQT: Regulatory Requirements
RNP: Required Navigation Performance
RPK: Revenue Passenger Kilometres
SBP: Sustainable Business Practices
SCA: Sustainable Competitive Advantage
SCI: Supply Chain Interdependencies

[xvii]
SDGs: Sustainable Development Goals
SMART: Specific Measurable Achievable Realistic Time Related
so: sustainable outcomes
SPC: sustainable Production and Consumption
STEEP: Social Technological Economic Ecological Political
Su Business Drivers: Sustainability Business Drivers
Su Criteria: Sustainability Criteria
Su Indicators: Sustainability Indicators
Su: Sustainability
SuMS: Sustainability Management System
SWOT: Strengths Weaknesses Opportunities Threats
TD: Traditional
TIACA: The International Air Transport Association
TS: Transitional
UFTAA: United Federation of Travel Agents
UK CAA: United Kingdom Civil Aviation Authority
UN: United Nations
UNWTO: United Nations World Tourism Organisation
U.S.A: United States of America
USD: United States Dollar
WASA: World Air Service Agreements
WCED: World Commission on Environment and Development
WCS: World Conservation Strategy
WPs: Working Papers
WTO: World Trade Organisation
WWF: World Wide Fund for Nature
YD: Yamoussoukro Decision
YoY: Year on Year

[xviii]
 Chapter One: Introduction
This research examines the commercial aviation sector and analyses the concept of airline
sustainability in a liberalised environment. The first chapter primarily provides necessary
background information, the research problem, the key research questions, the main
objective and sub-objectives for this study. Secondly, it gives an insight into the
Commercial Air Transport (CAT) industry in the liberalisation era and further
explanation of the sustainability concept along with definitions, principles and hypotheses
adopted in this study. An overview of the proposed solution to the research problem is
presented in a Conceptual Framework aiming to achieve the desired outcomes. Finally,
the chapter presents the thesis structure and a summary with the key points.

1.1 Research Background and Motivation

The airline industry is a global industry that facilitates the process of travelling, connects
people and cultures, supports trade and is a main contributor to the global economy and
the wider air transport sector (ATAG 2016, 2018a). Airlines transported more than 4.3
billion passengers in 2018, achieving a record year in commercial aviation history (ICAO
2018). According to the latest ATAG report (2018a) the total number of passengers is
estimated to reach 7.7 by 2036 based on an optimistic scenario and 5.6 billion based on a
less optimistic scenario. Traffic growth in the air transport industry is associated with
technological achievements and the evolution of liberalisation policies that emerged in
the late 70s, and mainly lifted barriers set by governments to airline commercial activities
and market access (Belobaba et al 2016, de Wit 2014; Doganis 2019, 2010; InterVISTAS
2015).

To begin with, in the early years of Commercial Air Transport (CAT), airlines were
heavily regulated by their national governments. This was as a result of the outcomes of
the 1944 Chicago Conference, where protectionist trends overruled the attempt made by
the United States, the Netherlands and Sweden to create a more liberalised economic
environment for airlines in the CAT industry (Lykotrafiti 2015). That happened for
mainly two reasons; the first one was to foster economic protectionism in order to
safeguard national carriers and the second was to provide an additional safety net to
national security (Lykotrafiti 2015). The outcome of the Chicago Conference created a
protective environment for airlines that were mainly government owned (Gourdin 2016).

[1]
Consequently, subsidised state-owned airlines, strict control over domestic and
international airfares, route monopolies, and capacity and frequency constraints were
some of the side effects of the early regulatory environment for an industry that was meant
to be global (Finger and Button 2017).

In the late 70s, it became obvious that the industry was in need of a lift to initiate
additional traffic growth. New technologies with the evolution of new and faster wide-
body aircraft, internet, and sophisticated computerised booking systems supported mass
travelling and the introduction of new business models (InterVISTAS 2015). The era of
liberalisation was mainly introduced in the 80s and the airline industry was transformed
by the liberalisation process, introducing airline privatisation, new international routes
and increased passenger numbers (Belobaba et al 2016). In addition, new business models
emerged in the liberalised markets, like the Low Cost Carriers (LCC) business model that
increased competition and significantly affected market share distribution (Gross and
Lück 2013). Nevertheless, it became obvious that, apart from benefits, airlines also faced
significant challenges caused by competitive pressures; as a result a number of established
airlines either exited the market or survived through consolidation. The industry’s
concertation was influenced by economic cycles and external shocks affecting
competitiveness in different ways (Finger and Button 2017).

In fact, in the airline industry there is a widely accepted paradox; despite the growth that
the air transport sector has experienced over four decades of liberalisation, the airline
industry remains marginally profitable (Doganis 2019: 9). According to Cronrath (2018:
3) the average net annual profit between 1978 and 2010 was -0.04 billion USD, despite
incremental traffic growth. In addition, even despite the existence of market instability
to a certain degree in all industries, air transportation seems to suffer in particular from
inherent market instability. Button states that, “the various forms of instability in air
transportation tend to ripple through time and across markets in an interactive way that
affect its components industries” (Finger and Button 2017: 285). The motivation of this
study is driven by the paradox and the challenges associated with market instability with
a focus on airlines that operate in a liberalised environment and need to find a more
sustainable way to meet the growth they will encounter in the next twenty years.

During the era of liberalisation one may find multiple examples of airlines that failed to

[2]
sustain their existence. By way of example, in 2017 the airline industry suffered the loss
of two high profile European airlines: Air Berlin and Monarch. Both airlines suffered
from financial difficulties and tried for at least two years to remain on a sustainable path
by implementing different strategies. In addition, Darwin Airlines operating as Etihad
Regional, also ceased operations in 2017 following acquisition plans and restructuring
strategies that failed to produce effective results. Furthermore, in 2018 Primera Air and
Cobalt, both EU registered carriers, collapsed, in 2019 WOW and Thomas Cook ceased
operations, and the most recent victim in the European market is Flybe, which ceased
operations in 2020. It is evident, therefore, that airline sustainability is still a key
challenge in one of the most competitive markets in the world. Subsequently, for the
purpose of this study, it will be argued that a more integrated and systemic manner is
needed to ensure that airlines operating in a competitive environment can create value
that sustains over time; this will be based on the three pillars of sustainability, these being
social, economic and, environmental.

In recent years, national and international regulatory bodies, airline operators and
researchers in the aviation management field are continuously trying to explore and
analyse the pertinent factors that affect sustainability and to understand how the
sustainability dimension of the CAT system could be further comprehended and
improved to benefit key actors. Airline sustainability in the literature review is rich,
mainly concentrating on financial (Cronrath 2018; Forsyth 2011; Jenatabadi et al 2016,)
and/or environmental elements (Cui and Li 2017; Efthymiou and Papatheodorou 2018;
Kim, Yun and Lee 2014) and less so on areas in Corporate Social Responsibility
(Upadhaya et al 2018). However, a Conceptual Framework that covers the wider context
of sustainability based on an integrated systems thinking approach is missing.
Consequently, this study uncovers factors that influence the sustainability of airlines in a
liberalised environment, in an effort to introduce a holistic approach that improves ‘equity
over time’, where equity refers to both tangible and intangible attributes.

1.2 An Introduction to the Commercial Air Transport Industry

The term ‘Civil Aviation’ (CA) refers to the use of aircraft for transporting people and
goods over a distance for business, leisure or private purposes rather than military
(Cambridge Dictionary 2019). Commercial Air Transport (CAT), Aerial Work (AW) and

[3]
General Aviation (GA), are the core operational activities in civil aviation. CAT
operations in particular refer ‘to the transportation of people, cargo or mail for
remuneration or hire’ and, consist of both scheduled and non-scheduled services operated
by air carriers (ICAO 2010: I - II - III). Air Carriers or airlines are those ‘enterprises that
engage in the provision of transportation services by aircraft for remuneration or hire’
(ICAO 2004: 5.1-1).

The contribution of airlines in the development of the CAT sector is pivotal. A close look
at the economic profile of civil aviation in the 21st century shows that 3.6% of global
Gross Domestic Product (GDP) is supported by aviation, 65.5 million jobs are generated
by aviation-related activities in travel and tourism, more than 50% of international tourists
choose to travel by air, while the entire industry’s economic output adds more than 2.7
trillion USD to the world’s economy (ATAG 2018a: 4-5). The latest ATAG report
(2018a: 5) stated that, in numbers, the CAT sector counts 1303 commercial airlines, 170
Air Navigation providers, 3,759 airports with scheduled commercial flights and more
than 31,717 aircraft in the sky. As illustrated in Figure1-1, the status of civil aviation is
strong and the industry continues to grow in passenger numbers, meeting significant
growth since 1978, and benefiting all the key stakeholders (i.e. passengers, airlines,
airports, employees, governments, manufacturers, aircraft maintenance organisations and
ground handling).

The year 1978 marked the beginning of the liberalisation process in the airline industry.
In this year, the United States formally launched the Airline Deregulation Act of 1978,
initiating a positive momentum for less government control over airline commercial
actions (Wensveen 2015). Liberalisation spread out successfully in another core market:
The European Union initiated a gradual liberalisation process in 1987 that resulted in the
formation the Single European Market that changed air mobility, stimulating traffic
growth, airline competition and challenges that are tight with a new aviation strategy
initiative (European Commission Mobility and Transport 2018a). The development of
liberalisation at a global level was a difficult task, embraced eventually, by core air-
transport markets in the Middle East and the Asia Pacific regions. Both regions met
significant growth with the use of liberalised Air Service Agreements (ASAs). Latin
America has also made significant progress, with a notable growth in traffic in 2018 of
6%. Africa on the other hand, is still behind the worldwide average of 6%, but improving

[4]
 and meeting a traffic growth of 3.5% in 2018 (IATA 2018).

This item has been removed due to 3rd Party Copyright. The unabridged version of the thesis can be found in
the Lanchester Library, Coventry University.

Figure 1-1 World Annual Growth Rate of Scheduled Air Passenger Numbers (World Bank Data 2018)

1.2.1 The Structure of the CAT System

The structure of the CAT sector is highly complex, and defines a system characterised by
diversity and strong interdependencies. A system, by definition, promotes an organised
way in which involved parties ‘create a larger unified whole that neither one of the parts
could have produced alone’ (Jacques 2015: 46). The literature offers different approaches
to the structure of a CAT system. A system’s engineering approach views CAT as a
‘system of systems’ consisting of substructures that have their own sub systems comprised
of several components (Schmitt and Gollnick 2016: 11). To understand this approach
one can view the CAT system as consisting of substructures such as airlines, airports, air
traffic services and infrastructure etc. In this system, an airport’s terminal is considered
as a subsystem, while check-in areas and gates are components to the terminal subsystem
(Schmitt and Gollnick 2016: 11). A management’s approach looks at the CAT system
from a different perspective. It acknowledges that CAT is ‘a complex system of
overlapping socio-technical systems’, adding that those systems operate within a highly
competitive business environment that constantly changes mainly due to exogenous

[5]
shocks (Lofquist 2010: 1522). This condition adds a diversity to the system’s dynamics
that may significantly affect organisational performance.

For the Air Transport industry, the Chicago Conference in 1944 was the tipping point for
creating an international regime that intended to guide, support and set common standards
in the CAT system until today (Kearns 2018). Several important outcomes resulted from
the Chicago Conference, but two were significant: the first was the Interim Agreement
on International Civil Aviation that resulted in the creation of the International Civil
Aviation Organization (ICAO), a central ‘organ’ in the Aviation Community that today
is a specialised United Nations (UN) agency consisting of 193 Member States1. The
second outcome was the Chicago Convention (Doc 7300) that became ‘the fundamental
legal foundation for the regulation of the world civil aviation’ and ICAO’s constitution
(ICAO 2004: 3.4-1). In this frame, every Member State has the right to exercise a
significant ‘property right’, that of ‘sovereignty of its own airspace’, as defined by Article
1 of the Chicago Convention (ICAO 1944).

As a result, the CAT system was designed to be driven by different treaties, bilateral
agreements between States and detailed national rules (Kassim and Stevens 2009). This
made aviation a highly regulated industry both at an operational and economic level. The
airline industry, a key actor and stakeholder of the CAT system, depended solely on how
contracting Member States exercised their privileges both on a national and international
level. During the Chicago Conference a standard form of Bilateral Agreement was
produced as the means of granting traffic rights and regulating commercial air service
between States (Doganis 2019). Today, Air Service Agreements (ASAs) are the means
for granting the right to operate commercial air services between Member States
(Lykotrafiti 2015). ASAs regulated the traffic between two Member States through main
provisions applying to airlines and related to traffic access, capacity, designation, tariffs,
competitive, commercial and cooperative activities (Belobaba et al 2016). The established
regime in aviation affected the entire value chain. The researcher, in an effort to gain a
deeper understanding based on a holistic view of the principal actors of the CAT system,
has developed a schematic that presents the actors of the CAT system, as shown in Figure
1-2.

1
as of 13 April 2019 (ICAO 2019a).

[6]
 Non Governmental Industry
Driven Organisations

linkages
linkages linkages

linkages
linkages linkages

Intergovernmental Related Publics Commercial

Organisations (Passengers – Local Societies)
Air Transport Industry
and Regulatory Bodies

linkages
linkages
Wider Value Chain

linkages linkages
Workforce in Aviation

Figure 1-2 Actors of CAT System

[7]
The schematic suggests that the CAT system consists of five distinct groups:

- Intergovernmental organisations and regulatory bodies at a national, regional and

international level responsible for maintaining a desired degree of order in
aviation.
- The aviation value chain, mainly consisting of enterprises that support air
transport operations, i.e. Airports, aircraft manufacturers, airlines, Air
Navigation Service Providers (ANSPs), Maintenance Repair and Overhaul
(MRO) companies, ground handling operators, global distribution systems
(GDS), lessors, training centres and others (Tretheway and Markhvida 2014).
- Aviation employees and their Union representatives setting a core aim to
safeguard the interests of the labour force and the well-being of the industry and
the travelling public.
- The travelling public that drives the demand in aviation and forms the market
value.
- A group of non-governmental organisations that protects the interests of the value
chain.

Interdependence, another key characteristic of the CAT system, also makes relationships
very dynamic and highly complicated (Wittmer, Bieger and Müller 2011). Actors in this
system have different interests and motivation for the development of the various groups
but they also share a common vision, namely the sustainable growth of commercial
aviation.

The airline industry is the backbone of the wider air transport industry and the main
facilitator of international traffic in terms of goods and people (ATAG 2018a, Button
2010). It is an industry that shaped the development of commercial aviation and a
principle actor in the CAT system, contributing significantly to the phenomenal growth
of the last 50 years.

1.2.2 The Role of the Airline Industry in the CAT System

The airline industry facilitated the growth and increased the momentum of the entire value
chain. The development of technology with aircraft and systems that were more reliable,
airworthy, fast, user-friendly and safe was one of the significant factors that allowed
airlines to increase their traffic (InterVISTAS 2015). The second factor was a shift from

[8]
protectionism to a more open market access regime expressed by liberalisation that
fostered liberalised Air Service Agreements (ASAs) and commercial practices between
Member States (Button 2009; Cosmas, Belobaba, and Swelbar 2010). Liberalisation
changed the regulatory environment and the way airlines operate to this day. The benefits
of the liberalisation process were many: the new environment created a new cluster of
business models for airlines, improved network connectivity, developed airports and
other infrastructure, offered more affordable air fares to the public that seized the
opportunity to travel, fostered tourism and trade development (Button 2009; Finger and
Button 2017) and made an overall positive contribution to social welfare and multicultural
cooperation (ATAG 2016, 2018a).

As a result, the airline industry grew significantly with upgraded products, networks that
were more sophisticated and new business models. Today, the status of the airline
industry looks promising, albeit challenging. Table 1-1 shows key performance indicators
for the worldwide airline industry, including Forecast (F) figures for 2019.

Table 1-1 Worldwide Airline Industry Results (IATA 2019a, 2019b)

System-wide global commercial 2017 2018 2019F

airlines
Revenues $ billion 755 812 865
Expenses $ billion 698 765 822
Net post-tax profits $ billion 37.7 30 28
Profit per Passenger ($) 9.21 6.9 6.1
Available seats, million 4.1 4.4 4.6
Employment, million 2.79 2.88 2.94
Aircraft fleet 28,305 29,633 30,697

Airlines, as businesses that run for profit in a market-driven environment, encounter

pressures both at a micro and macro level. Financial instability and increased costs, safety
and security issues, pilot shortages, capacity constraints, protectionism, climate change,
hostile labour relations and unfair competition are some of the core challenges that airline
management has to address effectively in an effort to sustain the business.

These challenges, which still exist today, contribute to a wider sustainability problem that
this research is looking to address in an effort to recommend a solution for continual
improvement that will benefit not only the airline industry, but also the CAT system and

[9]
its flying public.

1.2.3 The Sustainability Approach

A fundamental pillar of this study is that aviation sustainability and airline sustainability
are two concepts that are highly related and interdependent. Therefore, one cannot ignore
that after a period of continuous liberalisation, impediments to sustainability have been a
main concern for the entire CAT industry. This has created a need to an approach to
sustainability that is more holistic. The word holistic is derived from the Greek word
‘holos’, meaning treating something or someone as a whole and not just as a part
(Cambridge Dictionary 2018). Therefore, it is important to investigate the concept of
airline sustainability in a holistic way and not in isolation from the wider CAT system. A
starting point may be ICAO, an important actor of the entire CAT system that acts as a
global forum for its Member States (ICAO n.d.). ICAO initiated a discussion on
Sustainability of Air Transport in 2013 during the proceedings of the 6th World-Wide Air
Transport Conference (ATConf6) organised at ICAO headquarters in Montreal. The
Conference focused on the imbalances, asymmetries, and impediments caused by the fact
that regions adopted liberalisation at a different pace and as a result key aviation
stakeholders including airlines had to face the consequences, both positive and negative.
In addition, the Conference concluded that further development in liberalisation raises the
issue of sustainability and the need for the key actors to embrace a global understanding
in designing a long-term strategy (Athousaki, Hooper and Lykotrafiti 2016; ICAO
2013a).

Furthermore, ICAO introduced five strategic objectives that connected with the
prosperity of the CAT system and that of the airline industry, as shown in Table 1-2. The
five strategic objectives demonstrated a universal need for common strategies in areas
like safety, air navigation infrastructure, security, economic development and the
environment.

Table 1-2 ICAO Objectives and Relevance to the Airline Industry (Abeyratne 2014; author; ICAO 2019b)

[10]
 Objective Description Relevance to the Airline Industry
Safety Enhance global civil aviation safety focused Safety is the number one priority of
primarily on the State’s regulatory the airline industry and among other
oversight capabilities. things contributes to customer
confidence and demand building.
Air Increase the capacity and efficiency of the The ability to operate in a system
Navigation global aviation system, upgrading air that is reliable and assures effective
Capacity and navigation and aerodrome infrastructure and efficient operations relates
Efficiency and developing new procedures to optimise closely to an airline’s operational
(CAP/EFF) system’s performance. efficiency, cost effectiveness and
passenger satisfaction.
Security and Enhance global civil aviation security and Airlines see security as another
Facilitation facilitation. factor that allows for customer
(SECURITY) confidence and affects demand.
Economic Foster the development of a sound and Harmonisation of the Aviation
Development economically viable civil aviation system. scene, liberalisation and fair
of Air competition are important influences
Transport for the prosperity of the airline
(ECO/DEV) industry.
Environment Minimise the adverse environmental effects A common objective that the airline
Protection of civil aviation activities. industry has to implement as part the
(ENV) new regulatory environment.

As interdependence is a key characteristic of the global aviation system, the airline

industry was part of the discourse that included the future of the aviation scene. For this
reason, the chosen approach to airline sustainability for this study examines how, and to
what extent, the entire aviation system affects airlines that operate in a liberalised
environment.

The term ‘sustainability’ in the air transport context generally refers to the capability of
an airline to maintain its corporate existence in the marketplace, and includes the effective
continuation of air services to/from its home territory (ICAO 2003a). Furthermore, the
word sustainability can be interpreted in many different ways but for the purposes of this
study, it is deemed necessary that sustainability embraces a concept of responsible
business development covering the global aspect of the airline industry. The view that
sustainability consists of three key pillars, namely Social, Economic and Environmental
is well recognised among scholars and key organisations (Portney 2015; Thiele 2016).

[11]
The Brundtland Report (WCED 1987: 15-17) was a landmark for the sustainability
discussion because it was the first time that the concept of sustainable development
emerged as a viable solution. In the question, ‘how to put global development on a
sustainable path?’, the report concentrated on both present and future needs and urged
policy makers to initiate ‘a process of change in which the exploitation of resources, the
direction of investments, the orientation of technological development, and institutional
change can be made consistent with future as well as present needs.’

Sustainability today at a global level is not a theoretical concept but a concept with
applicability across society. In 2014, the UN organisation introduced a transformational
vision of the world and asked its Member States to encompass seventeen (17) objectives,
namely Sustainable Development Goals (SDGs) (Sustainable Development Goals n.d.).
The role of SDGs in this research is further explained in the following chapters. However,
what is important to understand is that they put forward a new way of thinking in business
development. This new mind-set is more integrative and differs from conventional
management thinking as it takes into account concepts like Sustainable Production and
Consumption (SPC), design technology and planning for sustainability, collaborations
and partnerships for achieving sustainability goals, sustainability marketing and
leadership for sustainability. Airlines can also link their strategic objectives to assist the
SDGs initiative and change the way they exercise their business strategy and operational
practises.

Sustainability ‘is an essentially contested concept’ (Thiele 2016: 15). Airline

sustainability is very close to Michael Jacob’s (Dobson 1999) approach regarding the dual
definition of contested concepts, one agreed upon but vague and the other concerning
interpretations of the term for practice. Airlines and different aviation stakeholders
interpret the concept of airline sustainability in different ways; however, they all share
common concerns. Sustainability literature acknowledges that ‘those who focus more on
economics tend to adopt weak sustainability approaches that require less transformation
of society’ (Jacques 2015: 41). Airlines today still focus on economic sustainability but
have taken considerable steps to be more inclusive towards members of society,
introducing both tangible (new aircraft technology, new mobile applications, etc) and
intangible (i.e. services, safety processes, etc) attributes that improve the travelling
experience. In addition, from an environmental perspective, airlines have made steps to

[12]
contribute to the reduction of global CO2 Emissions. Corporate and Social Responsibility
(CSR) programmes provide a more integrated approach in aiming at environmental and
social goals (Karaman and Akman 2018). However, there are concerns about the
effectiveness of the programmes and the reporting process that documents the CSR
actions and results (Kuo et al 2016).

1.3 Research Problem and Key Research Questions

The study has recognised the following research problem and key research questions:

1.3.1 Research Problem

Despite the growth of the air-transport industry, airlines are still looking to unfold a
sustainable path in the liberalised environment and that includes profitability and market-
driven competition (Belobaba et al 2016). Airline operations are characterised by
increased competition, high cyclicality, a level playing field that is questionable and
challenging, low profitability, market seasonality, volatile prices, high fixed costs and
vulnerability to external shocks (Cronrath 2018; Doganis 2019; Holloway 2016). The
airline industry needs to address sustainable growth more effectively and with better use
of available resources. This requires an in-depth understanding of the concept of
sustainability and an integrated decision-making mind-set. Consequently, the lack of a
holistic approach to airline sustainability in a liberalised environment creates many
challenges for the future of the air transport industry.

1.3.2 Key Research Questions

This particular study explores and further examines the following key research
questions:

1) How could airlines continuously improve their sustainability when operating in a

liberalised environment?

2) Could a Conceptual Framework based on a holistic approach assist airlines to

understand the requirements for developing a sustainable path?

1.4 Research Objective and Sub-objectives

The twofold objective of this study is:

[13]
 (a) to develop a Conceptual Framework that generates a new and holistic total system
approach to airline sustainability,

(b) to create the foundation for the establishment of a Management System for
airlines operating in a liberalised environment.

This integration conjointly tries to improve “equity over time” in the context of SDGs
whilst establishing a standardised process for improving airline sustainability in a
complex, dynamic and liberalised environment.

For achieving the objective, the study has the following sub-objectives:

(1) Understanding the concept of sustainability for airlines that operate in a liberalised
environment and provide the scope and the sustainability definition for the purposes of
this research study.

(2) Examine the key dimensions of sustainability and evaluate the impact of liberalisation
on airline performance taking into account the evolution and change that took place in
different geographic regions.

(3) Explore the idea of applying a Grounded Theory approach and select a suitable
research strategy for conducting the research.

(4) Introduce an integrated systems thinking approach to sustainability and examine the
type of drivers that can be effectively drawn in an effort to operationalise sustainability,
creating a more holistic path to business sustainability.

(5) Develop a Conceptual Framework that generates a total system approach to airline
sustainability and creates the foundation for the establishment of a SuMS in line with a
continuous improvement approach, whilst providing a sound basis for sustainable
development initiatives.

(6) Validate the Conceptual Framework, based on interviewing airline industry experts,
the use of a case study analysis and a set of criteria derived from literature.

(7) Fill an academic literature gap in the airline sustainability improvement process.

1.5 Research Hypothesis

For the purpose of this research, the following assumptions or research Hypotheses (H)
have emerged from the application of Grounded Theory:

[14]
 a) Several impediments to sustainability create a threat to ‘equity over time’ in the era
of liberalization (H-1).

(b) A Conceptual Framework that generates a holistic approach to sustainability and

creates the foundation for the establishment of a Management System for
Sustainability could improve airlines’ ‘equity over time’ in a liberalised
environment (H-2).

1.6 Conceptual Framework Overview

The proposed research Conceptual Framework is the outcome of an extensive primary

and secondary research data analysis, and utilises the PDCA Cycle next to a set of
Sustainability principles and Sustainability Criteria (Su Criteria) aimed to set well
defined directions in the context of sustainability that the framework suggests.
Furthermore, the framework is translated into a practical implementation guide that
provides the foundation for the development of a Management System for Sustainability
suitable for airlines operating in a liberalised environment.

A schematic representation of the proposed framework is presented in Figure 1-3. The

Conceptual Framework could apply to any airline that is operating in a complex, dynamic
and constantly changing environment such as the CAT system. This framework is
described in further detail in Chapter five (5).

[15]
 PLAN

Pillars of the PLAN process

Situational review of the
organisational environment
and existing sustainability
challenges and opportunities
Setting sustainability
objectives and
measurable targets
across the Su Criteria
Developing the
Establishing a process
Business Case for
approach to achieve targets
Sustainability with a
and facilitate planning and
focus on Su Criteria
control of management
and the Levers of
activities
Change

Su Criteria
Levers of Change (CISL 2018h)
Action for Su Su Business Drivers with Impact of the Regulatory Environment
Leadership and associated properties and Sustainable Production and
Workforce dimesons (Author) Consumption
motivation ECO FTP SCI Design Technology and Planning for
CVP LRP Sustainability
UN SDGs REG RQT ENV Marketing and Communication
Contribution CON PTC ESR Collaboration and Partnerships

DO
Plan in Action

Pillars of the DO process

Organisation
Collaboration and Implementing alignment to
Partnerships aligned contextual Sustainability Context
with Su Business strategy Communication and
Drivers and Marketing aligned
UN SDGs with Su Business
Effective
Impact of the Drivers and UN SDGs
Communication of
Regulatory Sustainability Strategy
Sustainable Production Environment Design Technology
and Consumption aligned with Su and planning for
aligned with Business Drivers sustainability aligned
Su Business Drivers and and with Su Business Workforce motivation
UN SDGs UN SDGs Drivers and (Sustainability leaders
Feedback UN SDGs
Feedback and Champions)
for innovation
for
and
reconsidering
further
sustainability
improvement
objectives
on CHECK
sustainability Performance Evaluation

Monitoring successful
implementation vs
deviations from targets
Feedback
for
Improving targets

Meeting the Meeting partially Fail to meet the

targets the targets targets

ACT
Feedback for Action

Yellow Flag Red Flag Green Flag

Single Loop Double Loop Double Loop
Developing solutions Developing solutions Developing innovative
that feed the DO for improvement that solutions that feed the
process feed the PLAN process PLAN process

Figure1-3 The Researcher’s Conceptual Framework

[16]
 1.6.1 Principles of the Conceptual Framework

The Conceptual Framework encompasses the following core principles that are further
explained in Chapter four (4) and Chapter five (5).

- Holistic approach and Commercial Imperative for Sustainability (CISL 2018g).

The Conceptual Framework generates a new holistic, total system approach as it
examines airline sustainability as part of the ecosystem.
- Continuous improvement (CI). The framework advocates a CI process based on
the Plan-Do-Check-Act (PDCA) Cycle methodology.
- Risk-based thinking. Risk-based thinking is implemented in the proposed
framework throughout the PDCA cycle and in an effort to effectively address
challenges and opportunities associated with achieving anticipated results.

1.6.2 Sustainability Criteria (Su Criteria)

These are a set of criteria that guide the business case, the objectives and strategies for
sustainability, as well as the development of the right activities and processes in the
Conceptual Framework. The Su Criteria are embedded in the Conceptual Framework and
include:

- The Sustainability Business Drivers (Su Business Drivers). The main outcome of
primary research consisted of eight (8) significant areas for the sustainability of
airlines in a liberalised environment. The Su Business Drivers, as shown in Table
1-3, alongside the Conceptual Framework form the Sustainability Construct of
this research.

Table 1-3 Su Business Drivers

Economic Footprint (ECO FTP) Supply Chain Interdependencies (SCI)

Customer Value Proposition (CVP) Labour Relations and Productivity (LRP)
Regulatory Requirements (REG RQT) Environmental Conformity (ENV)
Consumer Protection (CON PTC) Ethical and Social Responsibility (ESR)

- Action for Sustainability (Su) Leadership and Workforce Motivation. Leadership

is a key ingredient for changing views and initiating purposeful actions in the
context of sustainability. The leadership model to be used as an exemplar is the
Cambridge Impact Leadership Model (CISL 2018a). In addition, workforce

[17]
 motivation is critical in order to achieve and maintain sustainable outcomes (Exter
2014).

- SDG Contribution. The UN SDG have been developed to motivate businesses to

contribute to the wellbeing of society and the environment. The framework
considers objectives and strategies that support any of the 17 SDGs as part of the
sustainability.

In addition to the Su Criteria, business sustainability management addresses key concepts

that impact businesses and their ability to form sustainability objectives and effective
strategies. The following five (5) areas are considered as Levers of Change and inform
decision making towards the sustainability direction (CISL 2018b, 2018c, 2018d, 2018e,
2018f):

Impact of Regulatory environment

Sustainable Production and Consumption (SPC)
Design Technology and Planning for Sustainability
Communication and Marketing
Collaboration and Partnerships

The Conceptual Framework was designed to meet the objectives of this research and
presents for the airline industry a more comprehensive solution to airline sustainability
than what it is currently available through the CSR approach.

1.7 Research Limitations

The research study has multiple limitations as it was conducted in the context of
Sustainability and with a methodological approach that adds more limitations in
the collection of data. In addition, the Conceptual Framework is guided by an
explicit CI approach, the PDCA cycle methodology. Further elaboration on
limitations can be found in Chapter seven (7).

1.8 Research Structure

The thesis is structured to include the introductory chapter one (1), three different parts,
(Part A, Part B and Part C) and recommendations for further research in chapter nine (9),
as shown in Figure 1-4. Chapter one (1) explains the motivation for this research and

[18]
presents the research problem, research objective and the emerged hypotheses. The
chapter concludes with the presentation of the Conceptual Framework, the core outcome
of the research and the research structure.

Figure 1-4 Research Structure

Chapter 1
Research Overview

Lack of a holistic approach to airline sustainability in a

liberalised environment
The research Problem

PART A Understanding the concept of sustainability for airlines that operate in a liberalised
environment and provide the scope and the sustainability definition. Identifying the appropriate
research methodology for this problem.

Chapter 2
A Review of the Chapter 3
Literature Research Design
The current status of the airline A qualitative approach Qualitative research
industry and the sustainability approach
concept in the context of the Constructivism – Interpretive
research.

Grounded Theory

PART B New Approach to Airline

Sustainability PART C Assessment of the New Approach
Identify the core category that enables Closeness of the fit between theory and data
business sustainability for airlines with Theory makes sense to people working in
the use of the conceptual framework . the field (Glaser and Strauss 1967: 237)

Sustainability Construct:
Chapter 4 Chapter 7
Su Business Drivers
The Outcomes of Chapter 6
Conceptual Framework Discussion
Data Set I, II, III Framework
and
Validation
Limitations

Chapter 5
Conceptual Chapter 8
Framewok Conclusions

Chapter 9
Further Work

Part A is comprised of Chapters two (2) and three (3). Chapter two (2) explores the links
between liberalisation and sustainability and identifies the knowledge gap and a set of
criteria the research study needs to fulfil. Chapter three (3) explains the main
philosophical worldviews that underpin the research on business sustainability and

[19]
presents the selected research methodology. The study incorporates a qualitative research
approach. Grounded Theory was chosen as the preferred research method for this study.
The application of Grounded Theory in this research was thoroughly discussed and
explained.

With a solid research design approach and a sustainability concept in place, Part B
identifies the new sustainability approach in Chapters four (4) and five (5). Chapter four
(4) discusses the results from three different sets of Data (i.e. Data Set I, Data Set II and
Data Set III) and introduces the ‘Sustainability Construct’ consisting of the Su Business
Drivers concept and the Conceptual Framework. Chapter five (5) provides a
comprehensive overview of the Conceptual Framework and explains how airlines can use
the framework to establish a more sustainable path.

Part C consists of Chapter six (6), Chapter seven (7) and Chapter eight (8). Chapter six
(6) presents the outcomes of the validation process and the contribution of the research to
the academic community and the aviation industry. Chapter seven (7) reflects the research
journey discussing the research experience, research limitations and the idea to
operationalise sustainability. Chapter eight (8) concludes the research discussion and
outlines how the main objective and sub-objectives have been achieved. Finally, Chapter
nine (9) explores multiple areas for further work.

1.9 Chapter Summary

Commercial Air Transport (CAT) is a core part of Civil Aviation and a principal
contributor to the global economy and society. The CAT sector is highly complex and
dynamic and is considered as a ‘system of systems’ comprised of multiple subsystems and
components. A trend favouring liberalisation, dated back in 1978, reformed the CAT
system. Studies on the impact of liberalisation associated liberalisation with many
positive attributes like traffic stimulation, improved market access, route development,
business innovation, social benefits, technological achievements, regulatory progress and
economic growth. A principal stakeholder of the wider aviation industry, airlines
experienced positive and negative effects under the liberalisation era.

The aviation paradox suggests that the airline industry fails to capture the full value
gained by the liberalisation momentum despite the positive externalities that are evident
to consumers, the wider economy, and other key stakeholders of the aviation system.

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Regulatory bodies, professionals and researchers in the aviation field are continuously
analysing the current liberalised environment trying to understand how airlines could
operate on a more sustainable path.

Traffic growth in the next twenty (20) years will double in terms of passenger numbers
(ATAG 2018a). Whatever the growth, the airline industry has to enhance its presence in
the CAT system with strong performance and commitment to sustainable development
principles. This will require a more integrated systems thinking approach to decision
making. In this way, airlines can help sustain their ‘equity over time.’

For this reason, sustainability becomes the heart of the research problem and this chapter
provided the research questions followed by the main objective and sub-objectives that
affirm what the researcher aims to achieve. Also, an overview of the proposed solution to
the research problem was introduced in a form of a Conceptual Framework that aims to
shift mind-set from conventional thinking to understanding the concept of business
sustainability in the liberalised environment.

[21]
 Chapter Two: Literature Review
The airline industry is a principle actor for the well-being of the Commercial Air
Transport (CAT) System. Airlines enable connectivity and provide multiple benefits with
their wider socio-economic role (ATAG 2018a). Air service liberalisation was the force
that transformed the airline industry worldwide, fostering lower protectionist barriers
between countries in an effort to promote a series of benefits both at an economic and
social level. In the CAT environment, liberalisation became a significant pillar in the area
of economic regulation and a principal actor for the growth of the CAT industry to this
day (Finger and Button 2017). In contrast, the status of the airline industry in the
competitive environment remains ambiguous due the many external challenges the
industry experiences worldwide (Cronrath 2018). By 2036, different scenarios place
passenger numbers between 5.6 and 7.7 billion (ATAG 2018a). Airlines that today
experience high growth and profitability are likely to be challenged by a questionable
level playing field, market seasonality, volatile fares, high fixed costs and external shocks
(i.e. terrorism, epidemics, natural disasters, etc). Consequently, airlines will have to
address the opportunities and the challenges of travel growth from a more sustainable
perspective.

The purpose of this chapter is to present the different literature topics considered for the
development of a holistic solution to airline sustainability. The chapter consists of five (5)
parts. The first part concentrates on the status of the airline industry and the origins of the
CAT system. The discussion outlines the significance of change liberalisation brought to
the CAT system; highlights sustainability areas for key actors; illustrates the current state
of the airline industry in the liberalised environment, and explains how competition
changed the landscape of the industry with a focus on existing and future challenges,
addressing the need for a more sustainable path. The second part introduces the concept
of airline Corporate Social Responsibility (CSR), highlights different initiatives and
questions the need for a more integrated approach to sustainability. The third part initiates
a more inclusive sustainability discussion and concentrates mainly on the concept of
business sustainability from a systems thinking perspective. The fourth part introduces
the concept of Continuous Improvement (CI) and stresses the need to explore a
sustainability solution that favours gradual improvement at a strategic level. The final

[22]
part outlines the role of the literature review as part of the Grounded Theory approach in
this research study.

2.1 The Origins of the CAT System

The origins of the contemporary CAT system go back to 1944. The Chicago Conference2
was the tipping point for creating an international regime that guides, supports and sets
common standards for the air transport industry until today (Finger and Button 2017;
Forsyth et al 2013; ICAO 2004; Kearns 2018). Several important outcomes resulted
from the Chicago Conference but two of them stand out for the purposes of this research
study. The first one was the Interim Agreement on International Civil Aviation that
resulted in the creation of the International Civil Aviation Organization (ICAO), a central
‘organ’ in the Aviation Community. The second was the Chicago Convention (Doc
7300) that became ‘the fundamental legal foundation for the regulation of the world civil
aviation’ and ICAO’s constitution (Budd and Ison 2017; ICAO 2004: 3.2).

Under Article 1 of the Chicago Convention, an ICAO member State exercises a

significant ‘property right’, that of ‘complete and exclusive sovereignty over the airspace
above its territory’ (ICAO 1944: 3; Lykotrafiti 2015). As a result, Member States’ control
over air transport activities became the norm and the air transport sector became highly
regulated (Doganis 2019; Wittmer, Bieger and Müller 2011). Market access, one of the
cornerstones of commercial activity, was regulated at domestic and international level.
National regulation allowed airlines to operate through a licensing process when
registered in the relevant State, while Article 17 of the Chicago Convention provided that,
‘Aircraft shall have the nationality of the State in which they are registered’ (ICAO 1944;
Kearns 2018). In addition, States were able to pursue their national interests from different
standpoints and ensue negotiations on trading access with the means of Air Service
Agreements (ASAs) (Hooper 2014). ASAs took the form of bilateral agreements, which
were agreements between two parties, or multilateral agreements, in which many like-
minded States signed a common agreement (ICAO 2004). Overall, the regulatory
content, covered a wide spectrum of economic and non-economic areas, as shown in

2
The Conference took place from November 1st to December 7th 1944 with a core objective to "make
arrangements for the immediate establishment of provisional world air routes and services" and "to set up
an interim council to collect, record and study data concerning international aviation and to make
recommendations for its improvement” (ICAO Postal History n.d).

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Table 2-1, and individual airlines had to adapt their business plans accordingly.

Table 2-1 Areas of Economic and Non-Economic Regulation (ICAO 2004: 4.0-4.10-2)

Economic Non-Economic
regulating the business and commercial safety & technical
aspects

- Licensing - Aircraft airworthiness issues

- Basic Market Access Rights - Timing, nature and supervision of
- Capacity maintenance
- Air Carrier tariffs - Number of flights for cabin crew,
- Non-scheduled air services training issues, duties and functions on
- Airline commercial activities board
- Airline cooperative activities - Flight preparation, in-flight procedures
- Air Passenger related matters and operational issues
- Airport related matters - Standards dealing with aviation
infrastructure, airports, meteorological
services, navigational facilities, etc.

The area of economic regulation proved a drawback for the CAT industry. Originally, the
debate on opening the international markets was initiated during the proceedings of the
Chicago Conference. However, different views related to national security, defence and
economic protectionism resulted in policy disagreements among Member States over the
economic regulation of the air transport industry (Lykotrafiti 2015). As a result, the idea
of a multilateral agreement promoting free market access, advocated originally by the
United States, was overruled. Consequently, the system governing the industry between
1944 and late ‘70s was strict government control over domestic markets and that of
government-to-government negotiations for international markets, known as Bilateralism
(Athousaki, Hooper and Lykotrafiti 2016; Budd and Ison 2017; Lykotrafiti 2015).

Numerous published studies, as shown in Table 2-2, discussed how the tight economic
regulation of the air transport industry had a number of adverse effects for the airlines and
the travelling public. For example, tight economic regulation failed to unlock consumer
benefits while limiting innovation and market expansion. Airlines in a highly regulated
environment were more protected from competition; however, this was not associated
with higher profits because of higher expenditures (Belobaba et al 2016).

[24]
Table 2-2 Effects of Economic Regulation (Belobaba et al 2016; Bilotkach 2017; Doganis 2019; Vamos-
Goldman 1996; Wensveen 2015; Williams 2016)

Effects

- Restricted connectivity between the different countries and monopoly routes at large.
- Limited competition for airlines, airports and other actors of the CAT system.
- State subsidies and airlines with high capital expenditures.
- High labour costs across the value chain.
- High operating costs across the value chain.
- Limited consumer choices in terms of choosing an airline or an airport.
- Tariff fixing policies that resulted in expensive air fares.
- Limited access to funding for both infrastructure and commercial activities.

The airline industry suffered from these adverse effects in many ways. Unlike other
global industries, the airline industry was not free to grow in different markets due to
market access restrictions. Heavy government intervention, increased costs and state-
owned airlines draw a picture that hindered innovation. However, the progress of aircraft
technology provided the airline industry with new opportunities and as a result airlines
had the ability to explore new markets and connect with the world in a better way.
Protectionism stood as an obstacle for the development of the CAT industry. For this
reason, the late ‘70s is considered a landmark for the transformation of the CAT system
due to the launch of a more liberalised regime in the United States (US).

2.1.1 The Evolution of Liberalisation

At an early stage, the US was a country that was willing to embrace a more open market
approach compared to other countries in Europe and Asia. Indeed, the US was one of the
countries that allowed the establishment of private airlines and supported private
investment in the CAT sector. However, like the rest of the world, air transport was also
tightly regulated by the Civil Aviation Board (CAB). The CAB controlled the airline
industry both at domestic and international level, forcing controls over market access,
frequency, capacity and tariffs. In 1978, the Carter Administration signed the Airline
Deregulation Act of 1978. The key reasons that prompted the 1978 Act were associated
mainly with CAB’s inability to cope, having to decide on route availability, capacity and
pricing, and in general on all different aspects of an airline’s operations (Goetz and
Vowles 2009; Wensveen 2015). Therefore, the 1978 Deregulation Act was considered

[25]
the first step at a global level towards developing a more liberalised mind-set that
provided the potential to airlines to act as businesses that actually operate in a competitive
environment.

The second step came with the gradual liberalisation of the European market. Table 2-3
provides brief information about the liberalisation process and the key liberalized areas.

Table 2-3 European Liberalisation Process as adopted by Kassim and Stevens (2009: 121)

Policy Areas 1st Package 2nd Package 3rd Package Regulation

1008/2008

Licensing National Rules National Rules Full Freedom Full Freedom

subject to EU subject to EU
Criteria* Criteria**

Access Subject to EC Subject to EC Subject to EU rules Subject to EU

rules – (Gov. rules– (Gov. – Full access with rules– Full access
involvement involvement safeguards - with safeguards
apply) apply) environmental simplified – revised
provisions environmental
provisions

5th Freedom Permitted up to Permitted up to Permitted without

30% traffic. 30% traffic quota constraint

Cabotage No change No change Limited rights until Permitted without

April 1997 quota constraint

Capacity Yes but Yes but capacity Yes subject to Yes subject to
capacity restrictions apply safeguard. safeguard.
restrictions
apply

Fares Zonal System Zonal System Airlines set own Airlines set own
extended fares safeguards for fares safeguards for
excessively high excessively high
and low fares and low fares

Competition Articles 81/82 Competition rules Competition rules apply

rules apply

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Historically, the European aviation market was highly fragmented and characterized by
high levels of protectionism (Kassim and Stevens 2009). In 1987, the countries that
formed the European Community, now known as the European Union (EU), started a
process of gradual liberalisation with the adoption of three packages and the core
objective to create a single European air transport market. Liberalisation at a European
level was driven by the need to cope with the unprofitable flag carriers and strict control
over market access that limited European connectivity. The reason for the gradual
approach was that national governments were allowed a period of grace to come with
restructuring plans and eventually privatise state owned airlines (Lykotrafiti 2011). The
actual aim was to move airlines from the concept of the national carrier to the concept of
EU carrier and to create a CAT sector that was open to competition and growth.

The formation of the Single Aviation Market in Europe coincided with the introduction
of a new international policy from the United States, the launch of the US Open Skies
Agreements (OSAs). Founded on the principles of free market access, unrestricted
capacity, frequency and free pricing, OSAs aimed to transform the business landscape
internationally (Button 2009; Cosmas, Belobaba and Swelbar 2010; InterVISTAS 2015).
The first OSA that came into force in1992 was between the government of the United
States and that of the Netherlands. Today, only the United States counts more than 120
signed OSAs either at a bilateral or multilateral level (U.S. Department of State 2018)
while many more agreements of this type exist between other States on a global level.
Liberalisation benefited all the actors of the CAT system. With upgraded products and
more sophisticated networks, airlines created value for airports, aircraft manufacturers
and other significant actors of the CAT value chain (ATAG 2018b; IATA 2013;
Tretheway and Markhvida 2014), as described in Figure 2-1.

[27]
This item has been removed due to 3rd Party Copyright. The unabridged version of the thesis can be
found in the Lanchester Library, Coventry University.

Figure 2-1: The CAT Value Chain (ATAG 2018b; IATA 2013; Tretheway and Markhvida, 2014: 5)

The wider value chain could now benefit from travel growth and expand organically to
meet the needs and wants of the travelling public. In the liberalised environment, airlines
were able to also influence demand levels and lead in the development of the commercial
aviation value chain creating significant value for the entire CAT industry (IATA 2013;
Tretheway and Markhvida 2014). Due to liberalisation policies, governments and
regulatory bodies had to reform operational frameworks and practices to become more
efficient. The travelling public could enjoy better connectivity, lower fares and a variety
of service options. However, by no means can one say that the development of
liberalisation at a global scale was an easy task to implement. The reality is that not all
regions managed to capture the benefits of liberalisation equally and, as a result, the
growth of the airline industry in different geographic regions adapted at a different pace
(Hooper 2014). This asymmetry occurred mainly because ICAO Member States decided
to adopt a different approach in this area and therefore different results fostered as a result

[28]
of this decision (Forsyth et al 2013). For instance, Africa and Latin America were two
regions where the progress of liberalisation was stalled on different occasions (due to
factors like political instability, economic recession, etc). By contrast, North America
and Europe entered an era of excessive liberalisation. In addition, the Middle East, Asia
and Asia Pacific regions took advantage of more liberalised regimes and created national
strategies that fostered liberalisation, resulting in a phenomenal growth and placing their
airlines at the forefront of competition.

Liberalised bilateral Air Service Agreements (ASAs) became the mechanism to increase
liberalisation on a global scale. ICAO, through its World Air Services Agreement
database (WASA), classified bilateral agreements based on how liberal or prescriptive
they were, as Traditional (TD), Transitional (TS) or Full Liberal (FL). In 2015, the WASA
database had 6% of the agreements at a global level classified as FL, while 12% were TD
and 82% TS and the total number of bilateral agreements3 signed in 2015 was 2660
(ICAO 2015). In addition to ICAO’s classification, the World Trade Organisation (WTO)
introduced the Air Liberalisation Index (ALI) that classifies the ASAs in seven categories.
ALI has a range from zero (0), most restrictive agreements, to fifty (50), most liberal
agreements (Piermartini and Rousova 2008). Despite the different methods used to
measure ASAs in general, the most liberal form of bilateral still remains the Open Skies
Agreements (OSA) based on the US model.

Numerous studies have shown that liberalisation, with the implementation of liberal or
quasi liberal ASAs, had a positive impact on society and economy, with an increase in
passenger traffic, connectivity, employment and, price competitiveness inter alia (ATAG
2018a 2016; InterVISTAS 2015; Piermartini and Rousova 2008). Nevertheless, traffic
growth, as an outcome of the liberalisation process, also created multiple challenges for
all the main stakeholders of the CAT system – in particular for the airlines.

Despite the fact that liberalisation was introduced at State level, it emerged as a ‘preferred
approach’ at an ICAO level in 1994 (Hooper 2014: 18). Therefore, before discussing the
impact of liberalisation in the airline industry and the current status of the industry, it is
important to understand the strategic role of ICAO in the liberalisation process.

3
Refer to Appendix A for the main multilateral agreements in different parts of the world that currently
foster the formation of liberalised markets.

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 2.1.2 The Strategic Role of ICAO in the Liberalisation Process

Dr. Assad Kotaite (2013: 42), former president of ICAO, wrote in his memoirs ‘ICAO
has no enforcement power, so in a sense the weakness of international law is also its
strength: weakness because there is no authority to impose it, but strength because this
situation obliges States to work things out in the common interest, on an equal basis.
International law is not designed to protect the interest of States, but rather to protect the
persons flying.’ Therefore, it can be deduced that ICAO acts as a global forum where
solutions for the sustainable development of the CAT system can be produced.
Furthermore, ICAO has an active role in Civil Aviation with its work on the development
of the regulatory system. The use of Standards and Recommended Practices and
Guidelines developed by experts at an ICAO level allow Member States to adapt and
implement policies that strengthen standardisation (Abeyratne 2009). Therefore, it is
important to realise that what Member States decide on at ICAO level has a direct impact
on the CAT actors, especially the airline industry, that has to embrace regulations and
policies nurtured initially at this level.

ICAO is the worldwide intergovernmental organisation consisted of 193 Member States

and numerous stakeholders around its orbit with either direct or indirect impact on
aviation. Article 44 of the Chicago Convention defined ICAO’s aim and objectives and
also presented the role of ICAO in economic regulation, stating that ICAO is to be
responsible for the promoting, planning and development of international civil aviation
and safeguarding of orderly growth throughout the world (ICAO 1944; United Nations
System 2015). Over the years, ICAO has become the forum in which global solutions
can be found (Hooper 2014).

Liberalisation was discussed as a “preferred approach” at ICAO level in 1994 at the

proceedings of the Fourth Worldwide Air Transport Conference, known as ATConf4
(Hooper 2014:18). Examples from the United States and the European Union had a
significant impact on the international scene. Many of the ICAO Member States were
still reluctant to open their markets but they all understood that the momentum of
liberalisation was about to increase due to the creation of the Single European Market and
the spreading of OSAs. Notwithstanding the positive drive of ‘a global multilateral
agreement for the exchange of traffic rights’, it was not an idea that many ICAO Member

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States were willing to embrace (Hooper 2014: 18). Therefore, an important outcome of
the conference was that ICAO Member States could design their own path to liberalisation
and commit to this cause at their own pace, following the key principles of the Chicago
Convention (Hooper 2014: 18).

ICAO embraced liberalisation and supported key initiatives that were meant to develop
more liberalised approaches between States. This was a difficult task as many States were
still reluctant to open up their markets to competition. In 2003, ICAO convened at
ATConf/5 in Montreal with a core objective to design a framework for economic
liberalisation where ‘international air transport may develop and flourish in a stable,
efficient and economical manner without compromising safety and security and while
respecting social and labour standards’ (ICAO Postal History n.d.). The conclusions of
ATConf/5 essentially verified that liberalisation was a necessity and the only path that
could deliver growth and prosperity in the CAT system, but that also had various
implications for society (such as labour issues, safety and security concerns, and
consumer interest issues) and the environment (ICAO 2003b). The conference
acknowledged the need to limit the environmental impact but no real solutions at a global
level were adapted. The work of ICAO to promote liberalisation was enhanced when the
organisation introduced the Air Services Negotiation (ICAN) 4 events in 2008 with an
objective to provide guidance and assistance to States in the development of significant
bilateral ASAs (ICAO Secretariat 2016).

In 2013, ICAO convened ATConf/6. The key theme of ATConf/6 was the ‘Sustainability
of Air Transport’ focusing on ‘the impact of excessive liberalisation, the imbalances and
asymmetries caused by the fact that regions adopted a different pace that was a direct
consequence of the customised as opposed to a multilateral approach chosen by the
States’ (ICAO 2013a) . Several key issues were discussed and analysed at the conference.
The final report identified the key sustainability areas based on the discussed agenda
topics shown in Table 2-4, in which further work was necessary to safeguard the future
of the aviation industry.

4
States responded positively to this initiative and by the end of 2015 a total of 137 States utilized this
opportunity at least once. Between 2008 and 2015 over 2,800 bilateral meetings were held during these
events while over 1,850 bilateral agreements and arrangements had been concluded (ICAO Secretariat
2016).

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 Table 2-4 ATConf/6 Sustainability Agenda (Abeyratne 2014; ICAO 2013a; ICAO 2013b)

Market Access Air Carrier Ownership and Control

Consumer Protection
(i.e. protectionist trends and (O&C)
(i.e. compatibility of rules
resistance to the exchange (i.e. existing barriers in foreign
relating to consumer protection
of additional commercial investments and constraints on
and air passenger rights)
rights) airline financing)
Safeguards
(i.e. issues relating to the effective Taxation and other Levies
Fair Competition
and sustainable participation of all on international air transport
(i.e. avoidance of unfair
States and especially the (i.e. increasing trend from States
competitive practices and
developing countries in air to overcharge users such as
the establishment of a level
transport; assurance of services airlines and the travelling
playing field)
and avoidance of unilateral action public)
imposed on air transport).
Implementation of ICAO
Economics of Airports and Air Navigation Services policies and guidance
(i.e. issues related to infrastructure development, financing (i.e. lack of awareness on ICAO
challenges and management that could stall the development of policies and guidance related to
growth.) economic regulation of air
transport by Member States)

The sustainability areas identified above also have a direct impact on the status of the
airline industry. For example, market access is the cornerstone of commercial airline
activities, while fair competition is directly related to the success or failure of airlines in
competitive markets. Consumer protection and the way airlines handle the travelling
public is an increasingly important issue, mainly due to the increase in flight disruptions
as a result of various factors (such as extreme weather conditions, socio-political crises,
industrial action, failed infrastructure, etc). Air carrier Ownership and Control (O&C)
remains an area of slow progress, and economic assistance for airlines with financial
problems is not always a viable solution due to foreign O&C restrictions. Taxation and
levies limit airline profits while posing a threat to the propensity to fly. Unilateral actions
by States create numerous commercial and operational issues for airlines with air services
in these regions while the uneven development of air transport has environmental and
social implications. The economics of airports and air navigation services are crucial to
the airline industry as this directly affects costs and the assurance of air services. Lastly,
it is acknowledged that the airline industry is a global industry but airlines need to operate

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in unstable regions that are subject to various regulations. The fostering of
standardisation and interoperability in national legislations can assist in creating a more
harmonised regulatory environment for airline operations and can enhance safety,
security and economic development for the actors of the CAT system (ICAO 2013b).

A clear outcome of ATConf/6 was that ICAO was mandated by the 38th (A/38) session
of the ICAO Assembly5 to develop international agreements on the liberalisation of
market access, air cargo and air carrier ownership and control. In fact, this development
recognised the pivotal role of ICAO in the area of economic regulation (Resolution A38-
14 2013). Furthermore, the time has come to recognise the environmental impact of
aviation as an issue that is central to sustainability. The Assembly recognised that with
continuous passenger growth the adverse environmental effects of civil aviation activity
can be reduced by the application of a widely accepted environmental plan. The
Assembly also recognised the contribution of ICAO to ten (10) of the seventeen (17) UN
SDGs, setting an example for the aviation stakeholders (Resolution A39 2016; Resolution
A39-3 2016).

It is conceded that the role of ICAO in the dissemination of the liberalisation process was
significant. The organisation initiated a discussion among Member States to open their
markets but also addressed the effects of liberalisation on the environment, the society
and the industry. Airlines, as principal stakeholders of the CAT system, have been
influenced on numerous occasions by what has been decided at an ICAO level. The
Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the
Safety Management System (SMS) are two examples that demonstrate that ICAO
recommendations can shape airline operations in the liberalised environment. More
specifically, CORSIA, an ICAO initiative, was developed, and the airline industry had to
control the environmental impact to compensate for the adverse effects the industry is
having on the environment (Resolution A39 2016; Resolution A39-3 2016).

It became clear that a new era was initiated for the airline industry and the introduction
of new policies could affect the way airlines were doing business in the liberalised
environment. The following section identifies how the airline industry was developed in

5
The ICAO Assembly is comprised of all ICAO Member States and convenes every three years (ICAO
n.d.)

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the era of liberalisation and what the connection with the sustainability areas identified in
the current section are.

2.2 The Status of the Airline Industry in the Liberalised Environment

The liberalisation concept from an airlines’ perspective is associated mainly with the level
of freedom airlines exercised over their commercial activities, both at a national and
international level. Operating in a liberalised environment, the airline industry brought a
series of positive externalities to the wider value chain, governments, society and the
travelling public (Belobaba et al 2016; Tretheway and Markhvida 2014).

Table 2-5 shows that Governments benefited from taxes and other levies directly and
indirectly from airlines and their commercial activities. The travelling public enjoyed
better connectivity and lower fares. Society benefited from employment opportunities and
the economy from direct and induced benefits from tourism and other related activities
(ATAG 2018a; IATA 2019a). However, when looking at the actual value airlines created
for their own industry within the context of liberalisation the discussion becomes quite
controversial.

Table 2-5 Benefits from Airline Commercial Activities to the CAT System (IATA 2019a, 2019b)

Benefits from Airline Commercial Activities Year 2018 (expected)

Tax Revenues ($) billion 125
Supply Chain Jobs million 68.7
Average Return Fare per Passenger ($/pax) 331 (60% lower than 1998)
Unique City Pairs 21,332 (108% higher than 1998)
Value of tourism spend ($) billion 843

Liberalisation stimulated growth and opened many new markets but also released forces
of change in the airline industry. Forsyth (2014) stated that a country could potentially
gain benefits for its consumers but could also lose airline profits. Based on existing
literature, Alves and Forte (2015) elaborated that liberalised agreements in the form of
OSAs lead to increased competition in the marketplace. Airlines in a liberalised
environment are provided with the opportunity to optimise their network, increasing the
number of potential routes and number of flights in given markets (Alves and Forte 2015;
Button 2009; InterVISTAS 2015). Consequently, in order to maximise the positive
effects, airlines need to increase their efficiency and to reduce their costs (Fu, Oum and

[34]
Zhang 2010). However, airlines operate in an external environment where market
instabilities can occur due to external factors. In the CAT system shocks can be tied to
business cycles or individual events like terrorism attacks, epidemics and natural disasters
(Cronrath 2018).

With this in mind, it is unsurprising that Europe and North America were the two regions
where airlines had to adapt quickly to changes due to liberalisation process. As previously
stated the liberalisation process was initiated in these two regions and was then spread to
the rest of the world. Airlines from the United States and Europe experienced both
positive and negative effects from the liberalisation process. Established airlines in
Europe and the United States were the first that had to change priorities and focus on
redesigning their corporate strategies in a way that would increase their revenue, improve
their efficiency and minimise their costs (Vasigh, Fleming and Mackay 2018; Alves and
Forte 2015). However, not all efforts proved successful6. Table 2-6 provides a selective
list of well-known airlines that ceased operations during the period of research.

Table 2-6 Failed Airlines (Cirium Dashboard 2015, 2016, 2017, 2018, 2019a, 2019b)

Year Airline Country

2019 Thomas Cook UK
2019 Jet Airways India
2019 WOW Iceland
2019 Avianca Brazil Brazil
2019 Flybmi UK
2019 Germania Germany
2018 Cobalt Cyprus
2018 VLM Airlines Belgium
2018 Primera Air Nordic Latvia
Primera Air Scandinavia Denmark
2017 Etihad Regional Switzerland
2017 Air Berlin Germany
2017 Monarch Airlines UK
2016 TransAsia Taiwan
2015 Transaero Russia

6
Airlines like Pan Am, TWA, Swiss, Sabena, Ansett Australia, Olympic Airways, Cyprus Airways and
many more that once played a significant role in the international market failed to adapt and survive to the
new market conditions.

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There are many reasons for the bankruptcy of the following airlines. However, one area
that it is important to highlight is that of economic inefficiency. According to Kenneth
Button (Finger and Button 2017), studies have shown that when there is increased
competition air fares remain at the marginal cost level. Many airlines operate for a
considerable time at a marginal level in terms of profitability. Airline Management needs
to find ways to strengthen revenue and manage costs effectively. However, the lessening
of airline costs though legal means (such as Bankruptcy Laws) has created disputes
among airlines about fair competition practices, especially when airlines are using other
means to survive as opposed to their operational efficiency (Finger and Button 2017: 294-
295).

The concept of financial sustainability was developed more efficiently through the
development of airlines with low cost structures and focus on regional routes, high
frequencies, point-to-point networks, simple fare structure, no-frills, direct bookings,
flexible staffing and the use of technology innovation in terms of promotion and
advertising (Burghouwt and de Wit 2015). In fact, liberalisation proved a real challenge
for established carriers operating as Full Service Network Carriers (FSNCs) and an
opportunity for the development of newly arrived Low Cost Carriers (LCCs).

2.2.1 The Evolution of LCCs

Competition from LCCs posed a main threat to the sustainability of network carriers in
liberalised markets. In the case of Europe the development of the LCC model is
exemplary. This is because LCCs had not only established geographic comparative
advantages but also cost structures that were more simplistic. As previously stated,
managing airline costs effectively can be counted as a source of competitive advantage.
LCCs managed not only to create competitive cost structures but also to create demand
with flights in underserved areas and win customers by offering lower fares and value for
money. Despite the fact that not all the LCCs were successful the business model
flourished in the liberalised environment. Network airlines responded in many different
ways, from lowering airfares to even adapting ‘airline within airline’ concepts, which in
some cases weakened their hub operations and added more complexity at a management
level (Pearson and Merkert 2014; de Wit 2014).

The key characteristics of the business model include: single/young fleet approach, flying

[36]
to secondary airports, simplified route structures, fast turnaround times, maximum
workload, short to medium haul flights, simple fare scheme, direct sales, avoidance of
competition where possible, and maximising the use of ancillary revenues (Gross and
Lück 2013). Since 2008, the low-cost carrier sector doubled its size at a global level and
today one-hundred and twenty-one (121) budget carriers are flying worldwide
(FlightGlobal Dashboard 2019). In recent years the Low Cost business model included
the attempt to differentiate with long haul operations. This attempt had its origins in the
early 80s with the rise and fall of Laker Airways. Although it is widely acceptable that
not all Low Cost principles are transferable Long Haul LCCs there are markets that could
support the concept (Gross and Lück 2013). LCCs account for one third of intra-regional
seat capacity with the Asia Pacific region now being the world’s largest LCC market,
accounting for 35% of global LCC seats in 2018 (CAPA 2019a). Southwest is the largest
LCC in passenger numbers in the world, followed by Ryanair and EasyJet, as shown in
Table 2-7. The table also includes airlines that also operate long-haul flights like Lion Air
and the Air Asia Group.

Table 2-7 Top 10 LCCs (Airline Business 2019a)

Biggest LCC groups by seat capacity* Biggest LCCs by revenue 2018 Biggest LCCs by passengers 2018
1. Southwest Airlines 211m 1. Southwest Airlines $22 bn 1. Southwest Airlines 163.6 m
2. Ryanair 148m 2. Ryanair $9.3 bn 2. Ryanair 137.3 m
3. Easy Jet 104m 3. Easy Jet $7.9 bn 3. Easy Jet 88 m
4. Indigo 83m 4. JetBlue Airways $7.7 bn 4. Indigo 61.8 m
5. AirAsia Group 66m 5. Norwegian $4.9 bn 5. AirAsia Group 44.4 m
6. JetBlue Airways 52m 6. Eurowings $4.7 bn 6. JetBlue Airways 42.1 m
7. Lion Air 51m 7. Indigo $4.3 bn 7. Eurowings 38.5m
8. Norwegian 47m 8. WestJet $3.6 bn 8. Norwegian 37.3 m
9. Gol 43m 9. Spirit Airlines $3.3 bn 9. Lion Air 35.5m
10. Vueling Airlines 40m 10. Gol $3.1 bn 10. Wizz Air 33.8m
9.6% rise in capacity among the 20 biggest LCCs groups from last year.
10.8% increase in revenues of the largest 10 LCCs in 2018.- * (year ending 30 June 2019)

The LCC concept is now a mature concept that still maintains comparative advantages to
the FSNC concept. Bearing in mind that the LCC concept advocates a cost advantage, it
becomes very sensitive to any condition that adds costs to commercial activities.
Therefore, despite the fact that LCCs can build a competitive advantage over their rivals,
sustaining this advantage is a difficult task, especially when they have to face challenges

[37]
like fuel price rises, currency fluctuations, increased labour costs and additional taxes and
levies (Vasigh, Fleming and Tacker 2018). In addition to these areas there is also concern
for safety, as consumers may interpret that cost savings come at the expense of safety; the
need to address environmental issues with greater sensitivity; and market saturation, as
expansion strategies in markets that are well served is a risky option (Gross and Lück
2013).

The liberalised environment is the birthplace of the LCC concept but also the environment
that caused FSNC to transform their business models in order to survive the intense
competition.

2.2.2 The Full Service Network Carriers Response to Change

At the beginning of the liberalisation process Full Service Network Carriers (FSNCs) had
a slow response. However, it became obvious that the new reality required a better and
more efficient approach as the new competitive scene was full of challenges. Market
access and the level playing field were the two areas where FSNC had to review their
strategies in order to develop a more effective reaction to the changed conditions.
Following Michael Porter’s Five (5) Forces Model as shown in Figure 2-2, FSNCs had
to compete in an industry where almost all forces were high. Consequently, this had a
negative effect on the industry’s profitability.

[38]
 Figure 2-2 Porter Five Forces Model for the Airline Industry as adopted by IATA (2011)

The analysis of the model shows:

- The threat of new entrants was high. The new licencing regime imposed lower
barriers to new entrants. Despite the low industry profitability and the failing of
new entrants to survive, more than 1300 new airlines entered the industry between
1978 and 2009 (IATA 2011). Nevertheless, the introduction of the LCC model
provided a competitive advantage and added pressure to existing airlines.
- The intensity of the rivalry was also high. The new ASAs allowed more direct
and indirect competitors to enter core liberalised markets. Established carriers
begun to compete increasingly with the Low Cost rivals but also with other
FSNCs, resulting in lower yields and increased capacity.
- The bargaining power of the suppliers was also high due to the established
monopolies and oligopolies in the wider aviation value chain and the expansion
of the industry which left small room for better deals.

[39]
 - The bargaining power of buyers was high. The travelling public had more fare
and connectivity options. Air travel could be viewed as a commodity and that
increased the price sensitivity. Fare comparison accessibility with the use of
internet increased price sensitivity especially for economy travellers. Loyalty was
low with the incentive programmes (i.e FFPs) increasing competition.
The threat of substitute products was medium with the tendency to rise. A range
of substitute products (i.e. new technologies - modes of transport or even
environmental challenges) posed a real threat, limiting air travel or threatening
high yield traffic (IATA 2011; Porter 2008, 1979).

FSNC in this environment responded by following two norms. The first was the formation
of global strategic alliances and the second was consolidation. One of the key advantages
in creating alliances was that of increased network coverage and optimisation of the use
of the customer base that could result in improving efficiency and capacity utilisation for
member airlines (Gudmundsson 2018; Iatrou and Oretti 2007). The greatest growth in
alliances happened between 2000 and 2010. During this period thirty-two airlines jointed
the three key schemes7, while between 2011 and 2015 nineteen additional members
joined the alliances. In 2017, the three alliances, Star Alliance, Oneworld and SkyTeam,
accounted for 59.2 % of the total traffic, while it was clear that the alliance concept had
entered the maturity phase as no new members have recently been attracted (Flight Airline
Business 2018). However, whether aligned or non-aligned, the majority of FSNC airlines
have pursued some form of cooperation in the past ten years. Cooperation in the era of
liberalisation could take the form of codesharing or an even deeper approach, such as that
of joint ventures or consolidation.

Consolidation proved to be a very pragmatic solution for the financial sustainability of

FSNCs. It was also unavoidable for airlines in the two key aviation markets, North
America and Europe; transformation became a necessity for market leaders in both
regions in order to survive, address structural weaknesses and act as global players, both
in traffic and revenue. Different type of mergers occurred within the same countries or
across the border and opinions vary as to whether stability was reached through this
process or the unstable nature of the industry experienced ‘waves of concentration or de-

7
Star Alliance established in 1997; Oneworld established in 1999; and SkyTeam established in 2000 (Flight
Airline Business 2018).

[40]
concentration’ (Gudmundsson 2018: 18).

Looking at how the ‘liberalisation effect’ reengineered the airline industry in those two
regions provides useful outcomes for the sustainability discussion. In the US market the
dominant players managed to survive the ‘perfect storm’. A number of events
commencing with a downturn in the airline business cycle in 2000, followed by the 9/11
attacks, SARS, the second Gulf War and high fuel prices added to the normal
uncertainties and caused additional reduction in demand that led major US airlines to file
for bankruptcy protection (Button 2009). The recovery, however, was remarkable. Delta,
United and American used government protection, not only to cut costs and restructure
but also to find partners suitable for merger, as shown in Table 3-4. Consolidation proved
a successful median to financial sustainability for the US carriers and today airlines in
this region are leading the entire airline industry’s performance, with expected profits of
$15 billion in 2019 (IATA 2019a, 2019b).

European airlines, on the other hand, faced a different reality. The birth of a Single
Aviation Market promoted ‘regulatory convergence’ among Member States. Regulation
1008/2008 created a common framework for air transport in Europe setting out the rules
for the operation of air services in the Single Market (European Commission Mobility
and Transport 2018a). In this environment, emerging business models such as LCCs
benefited more from targeting pan-European operations, mainly short to medium haul,
while maintaining low cost structures. Established carriers, on the other hand, in an effort
to react and remain sustainable, experienced concentration and formed Airline Groups
through either mergers and/or acquisition processes. From this process, three main
Groups formed in Europe: the Lufthansa Group, the Air France-KLM Group and the IAG
Group.

What made the case of Europe even more interesting is that stakeholder partnerships were
extended beyond EU borders. In a process that was concluded in 2013, Delta acquired
forty nine percent of Virgin Atlantic’s stakes. Qatar Airways acquired 9.9% of IAG in
2015 and the airline’s stake reached 20%. Etihad also made significant attempts to
maintain equity partnerships in the single market, but without significant success.

Today, airlines in Europe and North America still sustain 46.3 % of global passenger
numbers (IATA 2018). However, the latest figures clearly show that the Middle East,

[41]
Asia and Asia Pacific regions are still experiencing high year on year growth rates
compared to the saturated numbers in Europe and North America (IATA 2018).
Competition is entering a new stage at a global level as market access is challenged, not
only at a regulatory level but also in terms of feasibility, with focus on capacity and
efficiency constraints in urban areas. The current scepticism that expansion strategies
employed by the big three (3) Gulf carriers (Etihad Airways, Emirates Airlines and Qatar
Airways) are challenging the sustainability of their rivals in Europe and North America
is still strong. As a result, protectionist trends are emerging on a global scale.

2.2.3 The Global Landscape

The top ten (10) airline groups ranked in passenger traffic are mainly airlines registered
in four key regions: North America, Europe, Middle East and Asia Pacific. Airlines in
North America lead in passenger traffic, while Emirates and the Chinese carriers have
built strong passenger traffic, as shown in Table 2-8.

Table 2-8 Top 10 Airline Group per Passenger (PAX) Traffic and Numbers (Airline Business 2019b)

World's Top 10 Airline Pax traffic RPKs (m) World's Top Top 10 Airline Groups Passenger (m)
Rank Groups by Traffic 2018 Rank by Passenger Numbers 2018
1 American Airlines Group 372,015 1 American Airlines Group 203.7
2 United Continental 370,319 2 Delta Air Lines Group 192.5
3 Delta Air Lines Group 362,489 3 Southwest Airlines 163.6
4 Emirates Airline 299,967 4 United Continental 158.3
5 Lufthansa Group 284,561 5 Lufthansa Group 142.3
6 IAG 270,657 6 Ryanair 142.1
7 China Southern Air 259,194 7 China Southern Air Holdings 140.0
8 Air France-KLM 255,406 8 China Eastern Airlines Holdings 122.5
9 Air China Group 220,728 9 IAG 113.0
10 Southwest Airlines 214,505 10 Air China Group 110.0
7.1% 3.81bn
Increase in passenger traffic in RPKS across the 100 Total passengers carried among leading airlines in
biggest groups, at a load factor of 82.2% 2018, an increase of 6.6% on the previous year

All top 10 Airlines presented above are from geographical regions with strong ties to the
implementation of liberalisation policies and the employment of strategic choices by
actors of the CAT value chain. This fostered technological progress, product innovation,
the emergence of new successful business models and the ability to manage change
effectively. Revenue performance, as shown in Table 2-9, remains strong at least at group
level. An increase in revenue is observed across the ten (10) airline groups, although
operating results present a diverse picture across the different regions. Profitability at an

[42]
industry level remains fragile, while North America airlines perform better than airlines
in other regions. More specifically, performance since 2016 shown for the three network
carriers (Delta, United and American) indicates that they have increased and maintained
yield growth, largely due to the increase in international operations (Stalnaker et al 2019).

Table 2-9 Top 10 PAX Airline Group Revenue and Operating Result (Airline Business 2019b)

Operating result
Rank Revenue (Sm) Rank ($m)
2018 Airline/Group 2018 2017 2018 Airline/Group 2018 2017
1 American Airlines Group 44,541 42,207 1 Delta Air Lines 5,264 5,966
2 Delta Air Lines 44,438 41,244 2 International Airlines Group ( IAG ) 4,328 3,026
3 Lufthansa Group 42,182 40,449 3 Lufthansa Group 3,337 3,375
4 United Continental Holdings 41,303 37,784 4 United Continental Holdings 3,292 3,671
5 FedEx 37,331 36,172 5 Southwest Airlines 3,206 3,407
6 Air France-KLM Group 31,204 29,313 6 American Airlines Group 2,656 4,058
7 Emirates Group 29,746 27,882 7 Air China 2,161 1,746
8 International Airlines Group (28,721
IAG ) 26,012 8 FedEx 2,123 2,105
9 Southwest Airlines 21,965 21,146 9 Japan Airlines Group 1,587 1,576
10 China Southern Air Holding 21,636 18,987 10 Air France-KLM Group 1,568 1,692

8.4% 6.9%
Rise in revenues in US dollar terms across the 100 Collective operating margin of biggest carrier groups
biggest airline groups to total over $780 billion in 2018, down almost one percentage point on 2017

The aviation paradox clearly demonstrates that traffic growth does not coincide with
profitability growth and therefore the asymmetry in this area is of great concern for the
industry and the entire CAT system. According to the latest figures from IATA (2019)
North America leads in net post-tax profits with a projection of $15 billion for 2019,
marking lower profits than last year, and mainly driven by higher fuel costs. Europe is
expected to see profits of $ 8.1 billion, which represents a fall, caused by low yields due
to competition in the common market and high regulatory costs. Airlines in the Middle
East region are expected at a collective level to experience losses of $(-1.1) billion, taking
into account the current geopolitical conflicts and the slow-down in capacity growth. In
Asia and the Asia Pacific region, profit results are quite diverse. The region is expected
to experience a 9.8% increase in passenger traffic (Pearce 2018), with net profits expected
to fall to $ 6 billion from $ 7.7 in 2018. This is mainly due to weaknesses in world trade
and cargo. Airlines in Latin America are expected to reach marginal profits of $0.2
billion. Despite the fact that the Brazilian economy is recovering, oil prices, regional
instability and exchange rate weaknesses reduce the possibility for higher profits. Lastly,

[43]
Africa is expected to face another year of losses. Although the region’s performance is
improving slowly, demand is low due to lack of progress in the liberalisation process.

Consequently, the net performance of the airline industry in the era of liberalisation
suggests that the industry is growing in terms of capacity and passenger traffic but not in
terms of profit. The profitability paradox has not been addressed effectively and airlines
are still looking for a more sustainable path. Nevertheless, there is also a growing
scepticism around the challenges that flow from the liberalisation process and the traffic
growth in the coming years.

2.2.4 The Challenges of Traffic Growth

Airlines played a pivotal role in meeting the current level of passenger numbers.
However, new challenges lie ahead. According to the latest report published by
EUROCONTROL (2018: 5), the European Single Market will be facing three key
challenges by 2040:

- The capacity gap. The main problem is escalating as expected: 1.5M flights will
fall short of capacity in primary airports. Therefore, it is important to deliver
airport capacity plans in a more efficient way.
- Network delays. By 2040 network delays are expected to reach an average of 20
minutes per flight. On a typical summer day in 2040, 16 airports will reach
Heathrow’s current level of congestion. On Time Performance (OTP) and the
quality of service will be greatly affected.
- Disruptions due to climate change. The effects of climate change are expected as,
“damage of aviation infrastructure, altered patterns of passenger demand, and
more disruption of daily operations.” It is vital for the CAT sector to recognise
the need for adaptation before it is too late; however, only a small number of actors
of the value chain have taken measures in this direction.

The issues raised by EUROCONTROL in Europe are also valid for other geographical
regions. In fact, the lack of capacity on the ground and in the air is a global challenge
(Hololei 2018). The same applies for climate change, as extreme weather events are
expected to increase and create major disruptions to air travel worldwide. Thus, for
airlines that operate in a liberalised environment, an increase in traffic growth can be
considered both a challenge and an opportunity.

[44]
Similarly, airlines have to take into account additional challenges and opportunities that
arise from the external environment. Two studies from IATA (IATA 2016; IATA –SOIF
2017) deal with social, technological, economic, ecological and political factors that
constitute the external environment of airlines. The main factors are presented in a Social-
Technological-Economic-Ecological-Political (STEEP) format, as shown in Table 2-10.
The majority of these factors are also acknowledged by academic literature, with different
impacts likely on individual airlines. .

Table 2-10 STEEP Factors (IATA 2016; IATA-SOIF 2017)

STEEP Factors
Social inequalities and the future of the middle class in key markets; urbanisation
and the growth of mega cities; labour relations and the competition for talent
acquisition; asymmetrical global population growth in different parts of the world
(i.e Asia-Africa); global aging in key markets (Europe and North America);
Social
workforce and gender inequality; consumer awareness; changing consumer trends
and new modes of consumption; passenger identity and fraud; unionisation of
labour; changing nature of work; employee shortages; terrorism; tensions between
data privacy and surveillance.
Air space management technologies; interoperability gaps; cybersecurity; artificial

Technological intelligence; new aircraft and engine designs; use of data; use of internet; robotics
and automation; digitalisation (i.e. seamless travel technologies).

Strength and volatility of global economy (i.e Gross Domestic Product (GDP) and
Economic inflation); trade cycle; global income inequality; price of oil; credit availability;
taxation and other levies; aircraft financing.
Energy use; noise pollution; carbon quotas and air pollution; environmental
Ecological activism; climate change; pandemics; alternative fuels; waste management; water
consumption and pollution; biodiversity.
Geopolitical instability (shifting borders, power and sovereignty); the future of
deregulation policies vs protectionist trends; level playing field and fair
competition issues; government intervention and state aid; ownership and control;
GDPR; safety and security issues and constraints; airport slot allocation;
Political
privatisation of infrastructure; environmental policies and international regulation
of emissions and noise pollution; government ownership of airspace and critical
infrastructure; rise of populist movements; consumer protection legislation;
security regulations; aircraft maintenance regulations; flight time requirements.

[45]
In fact, the literature argues that the airline industry is cyclical and highly influenced by
external factors (Doganis 2019; Mayer 2018). In addition, the IATA studies (IATA 2016;
IATA-SOIF 2017) show that these factors are likely to inform decision-making process
at a corporate level. For example, a STEEP discussion provides valuable insights for the
external environment of individual airlines. Whilst the external environment brings
opportunities for growth, it is also is filled with ambiguity and uncertainty. Today airlines
must manage customer expectations more effectively, and develop their products creating
an edge over competitors. This is a difficult task to achieve when the external
environment is so dynamic and profits or financial surplus is marginal. Airlines that
operate in a liberalised environment under STEEP conditions require shrewd resource
utilisation to increase their market share in critical markets. However, as Kenneth Button
advises (Finger and Button 2017: 289) market instabilities can occur from external shocks
and initially impact the airline industry before passing to other stakeholders of the CAT
system.

Furthermore, a STEEP discussion raises the following questions across the three
sustainability pillars, i.e Economic, Social and Environmental:

(a) How can airlines address profitability challenges and respond effectively to social
and political pressures?
(b) What is an airline’s level of responsibility for systems not designed to support
high levels of traffic growth (eg, poor air space management and airport
infrastructure constraints)?
(c) How safe is it for airlines to expand constantly in an industry with employee
shortages in critical areas (i.e. pilots, engineers)?
(d) How can airlines become more environmentally friendly in a liberalised
environment?

There are neither easy answers to these questions, nor easy solutions to implement. In
general, airlines are currently responding with strategies that minimise their costs and
optimising their resources. Their need for a healthy cash flow often creates problems
with labour relations especially when cost cutting involves employee benefits. Pilot
unions are at the forefront of industrial action in the airline industry, creating serious flight
disruptions.

[46]
In addition, when airlines grow their network they overlook the ecological impact. More
specifically, environmental considerations will be a subject of great interest. Airlines, for
example, decide to fly longer routes to pay less for Air Navigation Services (ANS),
consuming more fuel and producing higher levels of emissions (Efthymiou and
Papatheodorou 2018: 564). The aviation sector is considered part of the top-ten global
emitter industries and emissions are expected to increase dramatically by 2050 (ICSA and
Climate Action Network 2018). Environmental activism is growing and airlines are held
accountable for air pollution, noise and increase in CO2 emissions that contribute heavily
to climate change.

Therefore, since the STEEP discussion includes a strong social and political agenda, it is
interesting for this study to address how airlines have adapted the concept of Corporate
Social Responsibility (CSR) in their strategic planning.

2.2.5 Corporate Social Responsibility (CSR) and the Airline Industry

CSR can be considered an intricate concept (Karaman and Akman 2017: 187). A
definition commonly used refers to CSR as ‘the continuing commitment by business to
contribute to economic development while improving the quality of life of the workforce
and their families as well as of the community and society at large’ (Mayer 2018;
WBCSD 1999: 3). The value of CSR for the airline industry is significant mainly due to
the social nature of the concept. Airlines facilitate the air transport of billions of people
at a global level. Therefore, the engagement of an airline with activities that bring value
to the communities are welcomed by the traveling public (Nikbin et al 2015) and investors
(Lee and Park 2010). However, limited studies have taken place in the airline industry
for assessing the effectiveness of CSR programmes and for addressing their importance
to the well-being of the industry (Karaman and Akman 2017). Nonetheless, CSR
initiatives are increasing (Kuo et al 2016) as airlines around the world are increasingly
looking for sustainability initiatives that increase their competitive advantage. “The
degree to which an organisation improves its performance towards its global sustainable
development responsibilities” (Morioka and de Carvalho 2016: 2) is known as
sustainability performance.

Airlines mainly use CSR reports to document outcomes of social and environmental
initiatives. CSR reporting is a voluntary action (Karaman and Akman 2017). A recent

[47]
study on motivations and barriers for CSR reporting revealed that major motivations from
the perspective of airline managers are connected to brand value, employees’ CSR
awareness, stakeholder relations, management systems, management culture, market
share and transparency with the government (Kuo et al 2016: 193). Barriers, on the other
hand, are mainly related to the effort that is needed to produce a reliable report and to the
level of data that needs to become publicly available. Currently, there is no common
approach to airline CSR reporting. This is causing confusion about what is measured
from a sectoral point of view (Stevenson and Marintseva 2016). There are two well-
known reporting systems, as shown in Figure 2-3, by the Global Reporting Initiative
(GRI) and the International Organisations for Standardisation (ISO) (Mayer 2018: 288).

Sustainability Sustainability
(GRI Framework Features) (ISO 26000 Framework Features)

Economic Environmental
Social
Organisational
Carbon Material Human Rights
Labour Conditions governance
Offsetting Sourcing and
Use
Labour Management
Economic Relations
Direct and Renewable /
Indirect alternative
Cabin Personnel
Benefits energy Source Labour Practices The Environment
Health and Safety
Energy Efficient
Cabin Air Quality
Initiatives
Unlawful sex tourism
Air Quality
Fair Operating
Persons with special Consumer issues
Emissions to Practices
needs access to
Air
services and facilities
noise
Emergency
Preparedness
Community
Involvement and
Fleet Technological
Developement
Improvement

Other (Corporate
Governance and
Sourcing
strategy for
aircrafts and
components

Figure 2-3 Airline Sustainability Reporting Frameworks and Standards– indicative examples as adopted
by Mayer (2018: 288-289) and GRI (2013)

In addition to the different standards, other external organisations (such as consulting

[48]
companies) also engage in the validity of CSR reporting. There are additional
environmental standards (i.e. ISO 14001) and other known eco-labels (i.e. environmental
performance certifications) that can add additional credibility to the CSR effort (Mayer
2018). The CSR concept is also complemented by the ‘Triple Bottom Line’ term. The
term states that ‘an organisation’s results should be measured in terms of inter-related
environmental, economic and social dimensions’ (Marcelino-Sádaba, González-Jaen, and
Pérez-Ezcurdia 2015: 2). The Triple Bottom Line term provides a more holistic scope in
the airline sustainability discussion and creates a commercial imperative for sustainability
(CISL 2018g: 8).

The GRI initiative as well as the ISO standards (26000 and 14001) provide valuable
guidance for CSR planning. However, a closer look to the sustainability topics that all
three initiatives cover reveals gaps in terms of what is considered significant to the
sustainability of airlines in a liberalised environment. For example, customer value and
all the benefits airlines promise to deliver is one area that is not addressed effectively in
the GRI or the ISO initiative. In fact, it is not clear what the reporting indicators are
addressing in this case. Another example relates to environmental reporting. A recent
study from the Transition Pathway Initiative (TPI) at the London School of Economics’
Grantham Research Institute (Dietz et al 2019) discloses that although many of the
world’s twenty (20) largest listed airlines have formally adopted industry standards to
reduce net emissions their approach relies on carbon offsetting8. Therefore, it is unclear,
based on the targets the same airlines are setting for growth, how they plan to reduce their
own emissions. Both examples demonstrate the need to link the CSR strategy to corporate
goals in order to fully integrate a Triple Bottom Line approach (PWC 2011).

The Triple Bottom Line approach is a domain that most airlines fail to address effectively
and a research area with limited literature. In the case of the TPI research (Dietz et al
2019) the results revealed that out of the twenty (20) airlines examined for management
quality that covered governance of greenhouse gas emissions and the risks and
opportunities arising from the low-carbon transition, only four (4) airlines9 have managed
to fulfil the following criteria:

8
Investing in environmental projects to balance out own impact.
9
ANA, Delta, United and Lufthansa (Dietz et al 2019)

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 - Company has set long-term quantitative targets (>5 years) for reducing its
Greenhouse Gas (GHG) emissions.
- Company has incorporated Environmental Social and Governance (ESG) issues
into executive remuneration.
- Company has incorporated climate change risks and opportunities in its strategy.
- Company undertakes climate scenario planning.
- Company discloses an internal carbon price.

This clearly shows the lack of addressing challenges more holistically at a management
level. When looking at the STEEP factors and the challenges the industry has to
overcome, CSR becomes a significant part of the sustainability discussion. However, a
key issue that lies with any sustainability discussion is the vagueness of the word itself
and the different interpretations of different stakeholders (Budd, Griggs, and Howarth
2013).

Therefore, it is important to provide a scope and direction for the sustainability discussion
that is based on contemporary views and the need to provide solutions in a more systemic
way.

2.3 The Sustainability Discussion

There is no actual agreement on the definition of sustainability (Alberti 1996) and

therefore, the word is widely applicable and has the ability to address a number of difficult
questions that involve the well-being of society, the economy and the environment. For
the purpose of this research, sustainability will be defined as ‘equity over time’ to reflect
the need for businesses to maintain and sustain tangible and intangible attributes in an
ever-changing world. With this in mind, the view that sustainability consists of three key
pillars, namely Social, Economic and Environmental, is now a very well recognised
concept among scholars (Cato 2009; Portney 2015; Thiele 2016) and key organisations
(United Nations n.d.). However, the need to open a discussion on sustainability at a global
level was initially necessitated by the radical developments that followed the era of the
industrial revolution in which the world met a phenomenal economic and technological
growth (CISL 2018g, 2018h).

To achieve global sustainability humans will need to rapidly reduce their impact on the
earth system (Gaffney and Steffen 2017). There is a variety of ecosystem pressures and

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trends that take part in the sustainability discussion (CISL 2018h). Table 2-11 provides
an overview of pressures, trends and global risks that could potentially damage the
existing balance between society, economy and environment. The STEEP discussion
(i.e. Table 2-10) that took place earlier has many factors in common with Table 2-11.
Airlines too can be affected by changes in the external environment and this type of global
risk can disrupt their prosperity and most significantly their operational resilience10.

Table 2-11 Ecosystem Pressures, Trends and Global Risks (CISL 2018h; World Economic Forum 2019)

Ecosystem Pressures and Trends

Growing Population Ever Expanding Growing energy

Rapid urbanisation
and need for prosperity economy demand
Widening gap between Food security and
Increasing consumption Migration
the rich and the poor water for life

Global Risks

Failure of climate
Extreme weather events Natural disasters change mitigation and Cyber attacks
adaption
Profound social
Interstate conflicts Terrorist attacks Fiscal crises
instability
Critical information
Unemployment or Failure of critical Spread of infectious
infrastructure
underemployment infrastructure diseases
breakdown
Adverse consequences
Failure of financial
Energy price shock of technological Data fraud or theft
mechanism
advancements

There are several examples where airlines have seen a downturn in their margins due to
terrorism activities (i.e. September 11 attacks), extreme weather events (i.e. volcano
eruptions – hurricanes), fiscal crises (i.e. 2008 world recession), spread of infectious
diseases (i.e. SARs), interstate conflicts (i.e. UAE – Qatar conflict, Syria war) and failure
of critical infrastructure (i.e. British Airways booking system failure), to name a few.
Therefore, a brief description of what initiated the sustainability discussion and how this
discussion relates to business development is presented in the following section.

10
Operational resilience is the ability of airlines to meet published schedules allowing for potential
disruption and building in a cushion to recover when the unexpected happens (Stalnaker et al 2019).

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 2.3.1 The Roots of the Sustainability Discussion

Western economies benefited massively from innovations that transformed the very
structure of the society and fostered an economic system focused on consumption rather
than production (CISL 2018g). Human population increased, life expectancy improved
while people could stay healthier and more productive for longer. In economic theory,
the Gross Domestic Product (GDP) was used as a principal indicator of growth and as a
result a demand driven economy led the development of industrial capitalism and
globalisation (CISL 2018g). Nevertheless, the desire to consume more caused
unprecedented deterioration of natural resources and irreversible damage to the
environment, initiating a series of geopolitical conflicts for the control of natural
resources. This type of anthropogenic intervention has driven rapid rates of change in the
earth system (Gaffney and Steffen 2017; Steffen, Crutzen and McNeil 2007).

The sustainability discussion opened in the ‘80s when the World Conservation Strategy
report (WCS) was published in an effort to address planetary conservation at three levels:
‘maintenance of essential ecological processes and life-support systems; preservation of
genetic diversity; sustainable utilization of species and ecosystems’ (WCS 1981: I). In
1987 The World Commission on Environment and Development (WCED) became a
landmark for the sustainability discussion with the formation of a new concept, that of
sustainable development (WCED 1987: 15-17).

Sustainable development shaped the concept of sustainability towards the realisation that
society is in need of an economic growth model that doesn’t compromise future prosperity
(WCED 1987: 43). Sustainable business development was the concept that was
introduced in order to develop the economic model that safeguards future resources
(WCED 1987). The concept of sustainable development included three key principles:
environmental integrity11; economic prosperity12 and social equity13 (Bansal 2005: 198-
199).

A more integrative approach came with the discussion on ‘Great Acceleration’, a term
used to describe the rapid acceleration of progress and resource degradation over the past

11
protecting the planet from human activities (Bansal 2005).
12
equal access to income-related benefits (Bansal 2005: 199; WCED 1987).
13
equal access to resources and opportunities (Bansal 2005).

[52]
50 years (Steffen et al 2015). The International Geosphere Biosphere Programme (IGBP)
and the Stockholm Resilience Centre conducted studies to identify the correlation
between economic growth and changes at a planetary level. Their high level research on
“planetary boundaries”14 (Rockström et al 2009) argued that ‘there is an urgent need to
identify Earth System thresholds, to analyse risks and uncertainties, and to apply a
precautionary principle, to identify planetary boundaries to avoid crossing such undesired
thresholds’ (Rockström et al 2009: 320).

Transportation was identified as one of the socio-economic trends that also contributed
to the phenomenon of Great Acceleration or, in other words, the deterioration of the
earth’s natural resources (Steffen et al 2015: 4,7). Of the main transportation means, air
transport has its own share in the phenomenon of Great Acceleration. The rapid increase
in passenger traffic that started in the late ‘70s and continues to this date was discussed
in detail in the liberalisation section. Globalisation in aviation enabled societies to
connect, to develop trade and tourism and to generate economic growth (ATAG 2018a).
Therefore, one may argue that the merits for humanity from the evolution of the air
transport industry were many and could offset the negative impacts. However, the
environmental impact and the fact that the planet lives within boundaries imposed the
need that every industry that continues to support additional growth will have to consider
the concept of sustainable development in an effort to counterbalance negative impacts.
Among the different environmental initiatives of the last twenty years, the Paris
Agreement (2015) was a landmark for achieving a sustainable low carbon future and for
combating climate change at States level (United Nations n.d.).

The sustainability literature argues that ‘to practice sustainability is to move beyond the
national, political, economic, ideological, racial, ethnic and, gender borders and
cleavages that fragment and divide us’ (Thiele 2016: 41). In this spirit, in 2014, the UN
organisation presented a transformational vision for humanity. By introducing the
seventeen Sustainable Development Goals15 (SDGs), the UN asked member States and
the private sector to meet these objectives by 2030 (Sustainable Development Goals n.d).

The initiators of this initiative argue that the SDGs create opportunities for business. This

14
A group of twenty eight (28) well known scientists led by Johan Rockström identified nine processes that
regulate the stability and resilience of the Earth system (Stockholm Resilience Centre n.d.).
15
Refer to UN site for SDG description.

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view is documented in a Global Opportunity Report that provides business leaders and
investors with information on market opportunities that complement the SDGs and help
to build a better world by 2030 (Global Opportunity Explorer 2018). Table 2-12 presents
briefly the SDGs and related opportunities based on four themes as identified in the latest
Global Opportunities report.

Table 2-12 UN Sustainable Development Goals (Global Opportunity Explorer 2018; Sustainable
Development Goals n.d)

UN SDGs Global Opportunities Report

GOAL 1 NO POVERTY Theme1: Responsible Production
GOAL 2 ZERO HUNGER and Consumption Opportunities:
GOAL 3 GOOD HEALTH AND WELL-BEING Reuse to Repower
GOAL 4 QUALITY EDUCATION Alternative food sources
GOAL 5 GENDER EQUALITY Construction in Progress
GOAL 6 CLEAN WATER AND SANITATION
GOAL 7 AFFORDABLE AND CLEAN ENERGY Theme 2: Reduced Inequalities

GOAL 8 DECENT WORK AND ECONOMIC Illuminating Supply Chain

GROWTH Unchanging Land rights

GOAL 9 INDUSTRY INNOVATION AND

INFRASTRUCTURE Theme 3: Climate Action

GOAL 10 REDUCED INEQUALITIES Upcycling Carbon

SUSTAINABLE CITIES AND Keeping IT Cool

GOAL 11
Sustainable Shipping
COMMUNITIES
GOAL 12 RESPONSIBLE PRODUCTION AND
Theme 4: Life below Water
CONSUMPTION
Reimagining Plastics
GOAL 13 CLIMATE ACTION
Alternative Aquaculture
GOAL 14 LIFE BELOW THE WATER
GOAL 15 LIFE ON LAND
GOAL 16 PEACE JUSTICE AND STRONG
INSTITUTIONS
GOAL 17 PARTNERSHIPS FOR THE GOALS

In an effort to contribute more effectively, ICAO embraced the ambitious initiative on

Sustainable Development Goals (SDGs) and linked its current strategic objectives to the
UN SDGs (ICAO 2019c). The airline industry, as a principle stakeholder of the CAT
system, also acknowledged the need for a more sustainable aviation sector in various
forums and other events. However, as discussed earlier in the CSR section, it is not clear

[54]
how individual airlines adapted strategies that contribute effectively at a collective level
to the SDGs initiative.

The challenges that come with the future growth of the CAT system and the further
development of the airline industry are also closely related to many of the challenges that
the SDGs initiative is trying to tackle. For instance, one key issue comes with the
sustainability of the growth in demand associated with the growth in cities and the
negative externalities that this brings, such as pollution and additional costs for
infrastructure (Neal 2018). Expansion strategies from airlines contribute to this problem.
It is imperative that the sustainability discussion becomes more holistic and more
integrated to include system pressures and trends that can act as impediments to business
sustainability. Business sustainability is a term that addresses the growing need and
prevalence of sustainability practices in business and ties with the concepts of Sustainable
Business Practices (SBP) and Sustainable Competitive Advantage (SCA) (Mahsud,
Imanaka and Prussia 2018). Therefore, it can be concluded that business sustainability is
interpreted as a continuous effort to survive across inter-related environmental, economic
and social dimensions and successfully embody social and environmental targets in
corporate planning. Consequently, for this research, sustainability can be defined as
‘equity over time’, placing the sustainability discussion in the context of business
sustainability domain. This seems relevant and appropriate to this study when looking at
the holistic approach this research is willing to embrace. However, maintaining ‘equity
over time’ encompasses a decision-making process that is complex. As a result, it is
considered important to explore how a systems thinking approach can benefit the airline
sustainability discussion.

2.3.2 A Systems Thinking Approach

Airline sustainability is a systemic concept, firstly due to the systemic character of the
sustainability concept (Williams et al 2017) and secondly due to the complexity of the
CAT system. Thinking differently is a principal parameter of ‘systems thinking’ and,
despite the fact that many could argue that this is an ambiguous concept, as an idea it can
influence many existing concepts in numerous scientific fields, including that of business
and management (Cabrera, Colosi and Lobdell 2008). ‘Thinking about the system’ and
‘systems thinking’ are two concepts that have distinct differences. When someone is

[55]
thinking about the system they are looking at it from a content perspective, looking at
the whole part initially and then for any particular pieces (Fuenmayor 1991). Systems
thinking, on the other hand, is a decision-making concept that is more context based,
‘complex and conceptual’ (Cabrera, Colosi and Lobdell 2008: 304). This research is
focusing on systems thinking as it is looking to incorporate the complexity of business
decisions and address connectivity between key issues of planning and development to
deliver sustainable solutions (Davidson and Venning 2011: 215).

There are three broad categories for systems thinking that could be useful to the
sustainability debate, as shown in Table 2-13. The aviation system is more in agreement
with the definition of the interpretive system. As a result, in this research, systems
thinking allows a holistic view and examines how airlines can become more sustainable,
taking into account not only the CAT system but additional social and ecological systems
and subsystems.

Sustainability business management encompasses a decision-making process that can -

particularly through the lens of systems thinking - “identify the points at which a system
is capable of accepting positive changes and the points where it is vulnerable” (Holling
2001: 392; Williams et al 2017). This is because a decision-making process that is
structured, robust and incorporates all key system elements can be beneficial in
supporting sustainable solutions (Davidson and Venning 2011). However, the practical
application of a system approach in achieving sustainable outcomes can encounter
difficulties or even failure due to lack of systematic rigor (Davidson and Venning 2011;
Porter and Córdoba 2009).

Table 2-13 Approaches to Systems Thinking (Davidson and Venning 2011: 215)

Factionalist systems are linear and mechanistic with origins in

Factionalist
the hard sciences (Sawyer 2005, Porter and Córdoba 2009).

Interpretive systems are interconnected, holistic and

Interpretive evolutionary in nature (Rabinow and Sullivan 1979, Hammond
2003).

Complex adaptive systems reflect a bottom-up approach

Complex Adaptive emanating from large populations of independent, interacting
and self-interested agents.

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Understanding core concepts like that of ‘interconnectedness’ as the ability to recognise
the complexity of interconnected social and ecological problems or the concept of
‘feedbacks’ as an effort to improve governance and decision-making can assist in
developing a more robust reaction to sustainability challenges (Williams et al 2017: 871).
Over the years, the sustainability discussion escalated at a social and political level and
numerous initiatives (i.e. Rio 2020, UN SDGs, the Paris Agreement) alongside
environmental regulations set a new scene for the sustainability discussion and the future
of companies in this context.

In the area of social science and in the context of urban sustainability and systems
thinking, there has been a very interesting attempt to operationalise sustainability with
the use of an integrated decision-making framework (Davidson and Venning 2011). The
architect of this framework embodies all the elements that could contribute in a more
robust integrated decision-making framework in the context of systems thinking and
sustainability. Table 2-14 provides an overview of the elements and the accompanied
tools used for the suggested integrated decision-making framework. These key elements
are ‘objectives and their inter-relationships, inputs, through-puts and outputs and
processes for evaluation, feedback and control’ (Davidson and Venning 2011: 216).

Table 2-14 Integrated Decision-Making Framework for Urban Sustainability (Davidson and Venning
2011: 216)

‒ Elements: Context or environment within which you are operating (i.e. political and social
construct, clarification of sectoral and organisational level). Tools: Consultation (as
participants in defining the problem), environment scanning, policy analysis.
‒ Elements: Goals and objectives. Tools: Sustainability principles shape thresholds for projects,
for example, precautionary principle Trade-off rules Futures thinking, scenarios Interactive
consultation processes or engagement programmes (as participants in developing a shared
vision/principles)
‒ Elements: Inputs - Data and/or information. Tools: Geographic Information System (GIS)
Modelling
‒ Elements: Processes - Assessment includes consideration of risks, hazards, uncertainty, etc.
Tools: Sustainability assessment, risk assessment (risk and vulnerability assessment tools)
impact assessment alternatives assessment, criteria, modelling
‒ Elements: Outputs - actions evaluation and feedback. Tools: indicators and performance
measures reports (sustainability reports, corporate reports)

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Airlines have every interest to incorporate a systems thinking approach in their strategic
plans in a way that builds a robust business case for the present and the future of their
companies. The researcher looked for similar frameworks in the airline industry. In
contrast to airline business management and economics where numerous frameworks
exist, the researcher was not aware of any framework in the context of the framework
presented above. The advantages of creating a similar approach for airlines lies with the
ability to facilitate integrated thinking as opposed to frameworks that assist the individual
social-economic and environmental components (Davidson and Venning 2011: 218).

The idea to reengineer the concept of airline business sustainability through the lens of
an integrated paradigm based on systems thinking identifies the gap in knowledge and
demonstrates effectively the purpose of this study (i.e. to develop a Conceptual
Framework that generates a new holistic and total system approach to airline
sustainability).

2.3.3 Airline Sustainability from a Systems Thinking Perspective

Sustainability is a ‘moving target that is continuously changing and improving’

(Williams et al 2017:871, Gaziulusoy, Boyle and Mcdowall 2013). Companies and
especially airlines can reframe the way they think in the sustainability domain as
systemic limits to growth, set by planetary boundaries and commitments to society,
economy and the environment, can change the management’s mind-set (Gladwin,
Kennelly and Krause 1995; Ferguson 2011; Rockström et al 2009; Williams et al 2017).

The overall discussion that took place with the origins of the CAT system, the effects of
liberalisation process, the struggle of the airline industry, the sustainability discussion
and the systems thinking approach, prompts the researcher to explore solutions that
initiate a shift from the traditional thinking that focuses on matching supply with demand
to a solution that proposes a total system approach. A Conceptual Framework that
generates a holistic and total system approach to airline sustainability and creates the
foundation for the establishment of a Management System for Airlines operating in a
liberalised environment is missing. However, for the development of such a framework,
the literature informs about main topics that need to be addressed, including supportive
aspects of integration. The following section illustrates the concepts considered for the
development of the Conceptual Framework.

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2.4 The Concept of Continuous Improvement

The concept of Continuous Improvement (CI) drives significant initiatives with a mind-
set for sustainable changes. Anand et al (2009: 444) examines CI from the perspective
of the Dynamic Capability concept and concludes that “Continuous Improvement can
serve as a dynamic capability when it includes a comprehensive organizational context.”
Zollo and Winter (2002: 340) defines dynamic capability as a “learned and stable pattern
of collective activity through which the organization systematically generates and
modifies its operating routines in pursuit of improved effectiveness.” Contemporary
views consider this definition as most suitable for the concept of CI (Butler,
Szwejczewski, and Sweeney 2018: 386). The researcher considered the CI concept as an
important determinant of business performance (Farrington, Antony, and O’Gorman
2018). The idea to explore different CI initiatives that could assist the development of a
Conceptual Framework for the sustainability of airlines initiated various searches and
identified multiple models. However, three (3) different propositions, as shown in Table
2-15, included rationales with helpful insights.

Table 2-15 CI Initiatives (Gershon 2010; Panagopoulos 2016; Panagopoulos, Atkins and Sikora 2016;
Sokovic, Pavletic and Kern Pipan 2010; Pietrzak and Paliszkiewicz 2015)

CI Initiatives
Lean Six Sigma (L6S): A combination of two
robust management philosophies for quality
improvement. The Six Sigma approach seeks to
improve processes aiming for error free business
performance while lean thinking seeks to improve
the flow of activities when reducing several forms
of waste.
EFQM Excellence Model: The idea of sustained
excellence through learning, creativity
innovation is a core principle of the EFQM model.
The model deploys several criteria for improving
business performance and places great emphasis on
internal self-assessment for a given organisation.
The Deming Cycle or PDCA Cycle: The repeated
and continuous nature of improvement is a
significant part of the PDCA methodology.
Tools
DMAIC (Define, Measure, Analyse, Improve,
Control)
DMAIC is a well-defined improvement model
based on five interconnected phases with an
ultimate objective to achieve business process
improvements and maximise business success.
RADAR matrix (Result, Approach, Deploy,
and Assess, Refine)
The RADAR logic uses a structured approach to
assess organisational performance across the
different EFQM criteria and includes a scoring
mechanism as part of the assessment process.
PDCA Cycle (Plan, Do, Check, Act) Framework
The framework uses a four-stage methodology
that aims to correct continually any difference

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 Deming’s PDCA cycle is a rigour initiative that between the actual result and the set target.
aims to achieve temporary and permanent
corrective actions.

The researcher critically considered advantages and disadvantages of the relevant tools
for the purpose of this study. DMAIC was considered as an effective model for
developing a process-based approach. It was noted that it has the ability to produce
effective management systems (Hoyle 2009) while it has been used in Aviation Safety
producing successful outcomes (Panagopoulos 2016). However, due to its origins, Lean
and Six Sigma, the model is based on a methodology that is more systematic, fact-based
and data driven (Panagopoulos, Atkins and Sikora 2016). By contrast, the research
needed a framework that is more conceptual and less prescriptive.

The RADAR Matrix was looked more in detail as it was less prescriptive than DMAIC
and more conceptual when it comes to improving business performance. However, the
idea of implementing a Matrix was not feasible at an early stage while the scoring
mechanism increased complexity. The PDCA Cycle Framework was examined more
thoroughly due to the simplicity of the Framework and its ability for conceptualisation.
The researcher concluded that the PDCA cycle framework supports a better proposition
for a Conceptual Framework as it favours gradual improvement at strategic level, is more
inclusive to new interpretations and complements the planning effort with a process-
based approach that is less prescriptive. The PDCA cycle has also been used to facilitate
the development of effective management systems. For example, the International
Organisation for Standardisation (ISO) follows the PDCA cycle logic for the
development of Standards (Hoyle 2009). For these reasons the researcher decided to
study the PDCA cycle approach and explore the possibility to generate a Conceptual
Framework that follows its key principles.

2.5 Criteria for an Integrated Solution

The overall literature discussion proved useful and informative. A set of criteria, as shown
in Table 2-16, and derived from the different literature sections, was used in the following
chapters to guide a more inclusive discussion for the discovery of a suggested solution to
the airline sustainability problem.

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 Table 2-16 Criteria for an Integrated Solution Approach to Airline Sustainability

Criteria Literature
Create a more comprehensive list of factors than what is currently covered Section 2.2.5
by the current CSR reporting initiatives.
Address challenges in the context of sustainable development and the Section 2.1.2, 2.2.1, 2.2.2,
triple bottom line approach from an operational and a business strategy 2.2.3 and 2.2.4
perspective.
Reengineer the concept of airline business sustainability through the lens Section 2.3
of an integrated paradigm based on contemporary sustainability views and
a systems thinking approach.
Contribute to the SDGs initiative that has gained global acceptance and is Section 2.3.1
considered a major building block for sustainability actions (ACI Europe
2019).

The idea to introduce these criteria complements the controversial role of literature in this
study, as the outcome of the adapted Grounded Theory approach.

2.6 The Role of Literature Review in Grounded Theory as an Application of this

Study

The role of literature in this study as part of the Grounded Theory application differs from
a systematic literature approach. In fact, the role of literature is a divisive issue in the
field of Grounded Theory. In the first Grounded Theory publication, Glaser and Strauss
(1967) argued that it is better to ignore the literature before the collection of primary data
and focus on the area under study. However, many grounded theorists including Strauss
deviated from the original position acknowledging the need for an early review of relevant
literature (Dunne 2011: 114; Ramalho et al 2015: 3). The idea to ignore the literature was
not feasible in this study and the researcher considered that early stage literature would
be helpful. However, following the principles of the chosen Grounded Theory approach
the researcher limited the focus of the literature. The iterative nature of Grounded Theory
expanded the sustainability discussion and detailed engagement with the literature
followed the collection of data. Furthermore, during the data analysis process it was
clearly signalled that leading sustainability theories would be further explored for in-
depth engagement with the development of the Conceptual Framework

As shown in Figure 2-4, the initial literature exploration included existing literature in the
area of air service liberalisation and assisted knowledge articulation on the development

[61]
of the CAT system and the liberalisation aftermath. The search focused mainly on key
liberalised markets and the role of ICAO in the formation of the CAT system. However,
as the search progressed in time, the focus shifted from the aviation domain to the
sustainability area. A more open search was initiated in an effort to provide better
orientation in the context of sustainability. Given the complexity of the aviation industry
and the wide spectrum that the concept of sustainability covers, it was evident that the
researcher had to examine literature across different geographical and chronological
limits. The search expanded to include papers and relevant studies at a global scale. All
the literature material was reviewed in the English language.

Integrated Search
Business
Sustainability Management

Search across
Liberalised Markets Search across
Sustainability
Schools Systems Thinking

CAT System Dynamic

Liberalisation Capability
Sustainability Context
FSNCs and LCCs CSR Reporting Continuous
Airline Performance Improvement
Holistic Approach Initiatives
ICAO SDGs

Early Intemediate Final

da da da
Search Search Search

Early: 2013-2014
Intermediate: 2015 - 2017
Final: 2018

Figure 2-4 Set of Keywords Researched

The researcher looked for different sustainability schools and oriented the research study
in the Business Sustainability Management field. Different sustainability schools were
considered, mainly in the UK and the USA. The complexity of the CAT system and the
increased challenges to airline sustainability initiated an enquiry towards a systemic
approach. In this line of reasoning, the researcher looked for sustainability frameworks

[62]
that provide solutions from a systemic perspective. The search examined CI initiatives
and added interesting insights about existing frameworks. It is significant to outline that
any literature review that took place prior to the collection of data constituted an effort to
contextualise the study rather that to conduct a systematic literature review.

2.7 Chapter Summary

The chapter examined a wide range of topics that are important to demonstrate an
understanding when investigating the concept of airline sustainability in a liberalised
environment. To begin with, the roots of the CAT system addressed the regulatory
framework operated by airlines. The evolution of liberalisation and the strategic role of
ICAO explained the significance that ICAO and its Member States played in the
development of travel growth and in the development of the airline industry. The
transformation of the airline industry was discussed next, followed by the focus on airline
competition and challenges that occur at a global landscape. The literature revealed that
airlines have been confronted by multiple and complex problems (i.e. economic, social
and environmental) and that the future is looking even more challenging. CSR reporting
has been used by airlines in an effort to document their sustainability approach. However,
this is an optional initiative and the suggested indicators are not always clear on what they
measure.

Consequently, a discussion on sustainability was initiated to uncover a concept that could

fit the purpose of this research and identify the knowledge gap. The sustainability
discussion was associated with the phenomenon of ‘Great Acceleration’ and the fact that
the air transport industry has its own share in exploiting the earth’s system. System
pressures and trends urged the need for airlines to progress in a more sustainable way. In
this effort, a new mind-set based on system thinking looked more appropriate to this
research in an effort to further investigate and explore a set of potential sustainable
solutions for airlines that operate in a liberalised environment.

Sustainability was defined as ‘equity over time’ and the study was situated in the context
of business sustainability. The researcher looked for frameworks that are adopting a
systems thinking approach in the airline industry. In contrast to airline business
management and economics where numerous frameworks exist, the researcher was not
aware of any framework that meets the objective and sub-objectives of this research. As

[63]
a result, the idea to reengineer the concept of airline business sustainability through the
lens of an integrated paradigm based on systems thinking identifies the gap in knowledge
and demonstrates effectively the purpose of this study, which is to develop a Conceptual
Framework that generates a new and holistic total system approach to airline
sustainability.

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 Chapter Three: Research Design
The study of airline sustainability in a liberalised environment is a complex topic that is
open to various interpretations. It is a topic that needs a flexible, innovative and open to
theory generation research methodology. A qualitative research approach was considered
more appropriate to explore the wider concept of sustainability with the willingness to
discover a set of relationships among data that could provide useful insights into the
phenomenon of airline sustainability in a liberalised environment.

Grounded theory was chosen as the preferred research methodology for this study. This
type of methodology values the systematic generation of theory from rich data (Glaser
1992). It is an inductive approach that fosters creativity and has the potential for
conceptualisation (Hussein, Hirst and Salyers 2014). The world of participants in
grounded theory is multivalent and multivariate as well as connected (Cohen, Manion and
Morrison 2018: 717; Glaser and Strauss 1967). In fact, airlines are principle stakeholders
of the CAT system and, in an effort to meet the two-fold research objective, Grounded
Theory thoughtfully examines the relevant factors that might affect ‘equity over time’ and
the airlines’ role in and impact on the sustainability of the CAT system.

The chapter explains the main philosophical views that underpin the research on business
sustainability and presents the selected research method. The chapter also aims to provide
an insight on how Grounded Theory was implemented and how research data was
gathered and analysed. The research outcomes contributed in the development of the
sustainability construct that presents the proposed solution to the research problem.

3.1 Philosophical Stance of the Research Study

A coherent vision and philosophy guide how knowledge about the world is acquired,
developed and interpreted in the science field (Saunders, Lewis and Thornhill 2019; Long
2013). Ontology, Epistemology and Axiology are the three philosophical branches meant
to direct the research philosophy that steer the research methodology (Keso, Lehtimäki,
and Pietiläinen 2009; Rabusicová and Nehyba 2015). With this in mind and based on the
research aim and objectives, the researcher made decisions about the research planning
process answering the questions in Table 3-1.

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 Table 3-1 Answering Questions in the Research Planning Process

Concept Question Research Domain

Ontology What is knowledge? Search for ‘the being’ of
business sustainability.
Epistemology How do we know Knowledge? Embrace a wider understanding
of the business sustainability
domain.
Axiology What values go into knowledge? Unveil business sustainability
principles.
Methodology What is the process of studying Select the appropriate
knowledge? methodology for the nature of
this research.
Adapted by Kapogiannis (2015) Author

In this research study, Ontology explored ‘the being’ of the sustainability concept. The
researcher defined sustainability in the business domain by selecting the broad definition
of ‘equity over time’ and then examined the nature of the sustainability reality in the
airline industry. In this philosophical branch, the researcher made an effort to understand
what knowledge is and looked for concepts that explored interrelationships in the relevant
research domain (Sexton and Lu 2009; Eriksson and Kovalainen 2015). Consequently,
Epistemology unfolded ‘what constitutes as justified knowledge’ (Baker and Foy 2011;
Saunders, Lewis and Thornhill 2019; Mason 2018). In other words, the researcher
focused on how to produce knowledge in the domain of business sustainability that was
reliable, well founded and driven by a wider understanding of how airlines can become
more sustainable in a liberalised environment. Lastly, Axiology complemented the
philosophical enquiry allowing the researcher to make judgements about the values that
go into knowledge (Saunders, Lewis and Thornhill 2019). The researcher took into
account their own beliefs and preconceptions and explored the wider context of
sustainability in aviation. As a result, the study identified a set of principles that guided
the research design and the design of the Conceptual Framework. These principles are:

- Holistic approach and Commercial Imperative for Sustainability. The nature of

the sustainability concept is holistic and embraces the logic that suggested
solutions take into account all the key stakeholders. The commercial impact of

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 sustainability provides risks and opportunities and therefore changes the
landscape in which the business operates (CISL 2018: 8).
- Continuous improvement. Solutions to persistent problems can be mainly
achieved through change and improvement of processes.
- Risk based thinking. An organisation that effectively addresses threats and
opportunities (i.e. risks) associated with its context and objectives is more likely
to achieve its intended results.

The above principles will be further explained in Chapter five (5) as part of the discussion
on the Conceptual Framework. As far as the philosophical worldview that underpins this
research study, the following section provides supplementary information on business
sustainability.

3.1.1 The Research Paradigm

Within the research world the philosophical worldviews or research paradigms16 define
‘a general orientation about the world and the nature of research that a researcher holds’
(Creswell 2018; Kapogiannis 2015: 42). The research on business sustainability outlined
the following two main paradigms that provide a set of beliefs with relevance to this
study, as shown in Table 3-2:

(a) Positivism, the paradigm that suggests that ‘reasoning can be justified with the
help of empirical observations and/or experimental testing’ (Vildåsen, Keitsch;
Fet 2017: 42).
(b) Constructivism, the paradigm in which ‘people construct their own meaning in
different ways even in relation to the same phenomenon’ (Panagopoulos 2016: 74;
Houy, Fettke and Loos 2010).

Table 3-2 Set of Beliefs (Kapogiannis 2015; Panagopoulos 2016; Vildåsen, Keitsch, and Fet 2017: 42)

Paradigms
Positivism/Postpositivism/Objectivism Constructivism/Interpretivism
Position Knowledge is based on the assumption that a The individual values of the researcher
natural world exists, and that reasoning can and participants become an integral
be justified with the help of empirical part of knowledge development via
observations and/or experimental testing. hermeneutic interpretation.

16
Researchers refer to the term ‘worldview’ as a paradigm comprised of different standpoints (Mertens
1998)

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 Set of beliefs Determinism Reductionism Understanding
Empirical observation and measurement Multiple participant meaning
Theory verification Focus on interpretations
Social and historical construction
Theory generation
Dealing with Uncertainties can only be mitigated by Knowledge generation is per se
uncertainties constant testing and application of scientific contextual i.e. related to certain
methods and revision of hypotheses. historical and cultural place-bound
circumstances. Temporal and spatial
dependencies are thus not seen as un-
certainties, but as conditions for
analysis.
Reasoning Deductive Inductive
Reached conclusions believed to be true. Drawing conclusions from facts using
logic appeal.

As the topic of business sustainability is complex, any philosophical analysis should

integrate the three core sustainability pillars (economic, social and environmental).
Vildåsen, Keitsch, and Fet (2017) examined the most influential literature in the area of
corporate17 sustainability. As a result, they produced a framework for analysing the
epistemology of corporate sustainability. In addition, the framework shown in Table 3-3
incorporates positivist and constructivist elements across the three pillars.

Table 3-3 Analysing the Epistemology of Corporate sustainability as adapted by Vildåsen, Keitsch and
Fet (2017: 43)

Epistemology Value Constructs

Economic Social Environmental

Constructivist * *

Positivist * *

The literature suggests that a constructivist approach can be incorporated in the economic
and the social pillars, while the positivist approach is more suitable for the economic and

17
Corporate sustainability is a specific stream of literature interesting in the debate between traditional
economics and a systemic ecological perspective (Vildåsen, Keitsch, and Fet 2017: 40)

[68]
the environmental pillars. Furthermore, the philosophical worldview of this research is
closer to the constructivist route, arguing that a sustainability as a ‘phenomenon’ can be
explored and explained with the interpretation of qualitative data.

In this case, constructivism is also combined with another theoretical perspective, that of
interpretivism. The understanding of sustainability, as the ‘ability of the human system
to adapt to the ecological system’, can be found in systems theory (Vildåsen, Keitsch and
Fet 2017: 41; Ostrom 2004). This type of interpretation addresses the idea that business
sustainability is a systemic concept that requires a holistic view in order to address
effectively risks and uncertainties. Thus, the research approach is based on inductive
reasoning that favours theory generation emerging from qualitative data analysis.

3.1.2 The Research Methodology

Grounded theory was the selected research methodology for this study. Glaser and
Strauss (1967) are known as the founders of Grounded Theory. Their method comprised
‘an inductive and comparative approach for conducting inquiry for the purpose of
constructing theory, aimed to provide a clear basis for systematic qualitative research’
(Bryant and Charmaz 2007: 1; Charmaz 2006). The world of participants in this kind of
research is multivalent and connected while inconsistencies and relatedness in everyday
actions are taken into account in data collection and contribute in catching the naturalistic
element of the research (Cohen, Manion and Morrison 2018: 717).

There are different variations of Grounded Theory but three are widely referenced: the
original by Glaser and Strauss (1967); the revised by Strauss and Corbin (1994, 1998)
and the Constructivist by Charmaz (2006) (Cohen, Manion and Morrison 2018: 715).
However, of all the different methodological influences embraced in time, Charmaz’s
(2014: 13) constructivist turn was more suitable to this study. This is because it embraces
flexibility and understands the research as constructed rather than discovered.

The constructivist approach also uses many of the practices and techniques followed by
classical Grounded Theory standpoints. This is because there are common features across
the different versions of Grounded Theory. In Figure 3-1, the schematic illustrates the
common mechanisms used in Grounded Theory to support theory generation.

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Figure 3-1 Grounded Theory Strategies and Techniques (Athousaki, Hooper, Lykotrafiti 2016; Boyatzis
1998; Charmaz 2014; Birks and Mills 2015; Corbin and Strauss 2015)

Known Grounded Theory strategies include the use of iterative strategies between data
collection and analysis, coding and categorisation, theoretical sampling, comparative
methods and, memo-writing (Birks and Mills 2015). In this type of research, patterns in
data are to be discovered and theory is emergent as opposed to predefined (Strauss and
Corbin 1998; Cohen, Manion and Morrison 2018).

Having defined the research method of this study, it is now important to move on to
discuss the key ingredients of Grounded Theory.

3.2 Key Ingredients in Grounded Theory

It is widely accepted that there is a common set of methods that are essential to the
research design in order for the final outcome of the research to be counted as Grounded
Theory (Bryant and Charmaz 2007; Charmaz 2014; Cohen, Manion and Morrison 2018;

[70]
Silverman 2011).

3.2.1 Purposive Sampling

Purposive Sampling is the starting point of the research. Purposive sampling is an attempt
for initial sampling that feeds the very first steps of the research process and refers to data
that is relevant to the source of study. Getting started with material that is rich in data
and focused builds a diverse portfolio of initial themes (Charmaz 2014: 23). Examples
of data used for purposive sampling are, inter alia, early stage literature, pilot interviews,
documents, and observations.

3.2.2 Data Gathering

A correct approach to data gathering is essential to the effective implementation of a

Grounded Theory. The nature of data that needs to be used in Grounded Theory approach
flows from the research question and, from the need to fulfil the research objectives
(Charmaz 2014: 27). Data collection includes an inductive logic and as a result the
researcher ends with a wide variety of sources like interviews, extant documents,
observations, field-notes, texts and documents, life stories and memos (Charmaz 2014;
Goulding 2002: 57). Through this iterative process, this type of inductive data becomes
subject to rigorous comparative analysis that results in theory building.

3.2.3 Coding and Categorisation

Coding is located at the heart of the analytical process in Grounded Theory (Charmaz
2014). It is an interactive practice that guides the entire process and determines the final
outcome. The characteristics to good coding process are presented in Table 3-4.

Table 3-4 Coding Process Characteristics

Authors Coding Process Characteristics

Differentiation
i.e. examples
Indicators i.e.
Definition of A description to eliminate
Boyatzis qualifications or
what the of how to know possible
(1998: Label exclusions to the
theme when the theme confusion
53) identification of
concerns occurs when looking
the theme
for the theme

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 Deeper
Charmaz New insights Developing
Fit and understanding
(2014: on familiar Flexibility theoretical
Relevance of the empirical
13) subjects sensitivity
world

Identifies,
develops and
Strauss
Builds Provides Considers relates the
and
rather analytic tools alternative Is systematic concepts that
Corbin
than tests for handling meanings to and creative are the
(1998:
theory rich data phenomena building
13)
blocks of
theory

The current research identified four (4) different approaches to coding as described by
the relevant grounded theorists, as shown in Figure 3-2. The methodological approach to
coding in this study is closer to the Charmaz (2014) approach.

Figure 3-2: The Coding Process in Grounded Theory adopted by Birks and Mills (2015) and, Charmaz
(2014)

According to the Charmaz (2014) approach, initial coding takes place to uncover
meanings with analytic power. The researcher collects the first set of data, analyses the
data, constructs the very first set of codes and constructs a theoretical proposition that
will be tested against a second set of data.

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A set of questions is used as a guidance for initial coding, as shown in Figure 3-3.

Figure 3-3 Guiding Questions “Initial Coding” (Charmaz 2014: 116)

The focused coding takes the process a step further. It involves the use of initial codes
and compares them with a new set of data. During this stage, more data is added and
constant comparison reveals a stronger and more robust set of codes. Codes are grouped
into categories and with a systematic process, categories acquire properties and
dimensions. An additional set of questions are used as a guidance for focused coding, as
shown in Figure 3-4.

Figure 3-4 Guiding Questions “Focused Coding” (Charmaz 2014: 141)

Focused coding refines the coding process and identifies additional gaps in data.

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Focused codes have an analytical power and contribute effectively in the categorisation
process. Finally, theoretical coding can be used as a more ‘sophisticated level of coding
that follows the codes selected during the focused coding’ (Charmaz 2014: 150).
Theoretical coding in the constructivist approach refers to the merging of concepts into
groups as the analysis proceeds and not as an end point of the analysis (Cohen, Manion
and Morrison 2018: 716). Categorisation, therefore, is a core function of the coding
process. It allows the researcher to create hierarchies of codes and make connections
between them. A core category can be identified as part of the process. The core
category must be central to the category system integrating the other categories. The
core category also has the greatest explanatory power (Cohen, Manion and Morrison
2018).

3.2.3.1 The Use of Qualitative Data Analysis (QDA) Software

A qualitative enquiry based on Grounded Theory is a complex and iterative experience

for the researcher. Therefore, the use of QDA software provides multiple benefits in the
coding process. One of the key functions is the ability to search large sets of multiple data
types and create codes that link to related passages making the filling process highly
effective. In addition, memo writing can be facilitated effectively with notes and data
excerpts that are linked to specific codes and related passages. However, there is criticism
for the extensive use of QDA software in the sense that it shouldn’t distance the researcher
from data and ‘seize’ the analysis (Butler-Kisber 2010: 43).

This research is using NVIVO 12, one of the software tools available on the market
(others include ATLAS ti, Dedoose, Transana etc.). NVIVO 12 has been developed by
QSR International, a qualitative research developer. The software operates under a
licensing model18 and is compatible with multiple data set types supporting several
functions. A major advantage of NVIVO 12 is the ability to use advanced data
management, query and visualisation tools. NVIVO 12 supports a wide range of data
sources and is designed to facilitate qualitative techniques (Flick 2014). Table 3-5
identifies a list of NVivo 12 features with a short explanation of how they were used in
this research.

18
Research students at Coventry University have access to NVIVO 12 via the application Appsanywhere.

[74]
 Table 3-5 NVIVO 12 Features (NVIVO 2019)

Features Description
Data Research material in the form of extant documents and interview scripts
was imported creating a diverse database.
Coding Sources in the database were investigated for emerging patterns and
ideas based on Grounded Theory coding techniques and the research
inquiry. From the inquiry process several codes were revealed and
grouped with the use of the ‘Nodes19’ function.
Query Different query tools like ‘Text Search Query’, ‘Word Frequency
Query’ and ‘Coding Query’ assisted the effectiveness of the coding
process highlighting links between the different Data Sets. .
Cases This particular function was used as a virtual space where research
subject areas were explored to facilitate the iterative nature of the coding
process.
Case Classification Case classification was used to record descriptive information about the
different cases.
Notes With the use of notes the researcher was able to link different comments,
thoughts and observations to specific content in a particular source.
Visualisation Different tools were used for displaying outcomes in a more creative
way generating useful visualisations that explored and compared
different nodes or cases.

To assist researchers, NVIVO 12 training facilitates an extensive range of self-help

resources like online tutorials and support guidebooks. In this way, researchers are able
to increase their proficiency with the software and the available tools. However, it has
been recorded by a number of doctoral researchers that the software is highly
complicated, time consuming and requires a very good command of technology (Salmona
and Kaczynski 2016).

In this research study, the use of NVIVO 12 had a positive impact on the efficiency and
the effectiveness of the coding process. The software was used to store and organise
several forms of data and was also used for the effective categorisation and analysis of
the different codes. A step by step process was adopted as shown in Figure 3-5 in order
to conduct a more structured approach when using the software in qualitative research.

19
NVivo is using ‘Nodes’ to collect content across different sources and to group related material together.

[75]
 Feedback for new enquiry

Import and Explore Code and Query Visualise Data Record Insights in
Data Different Data Sets Outcomes Memos

Figure 3-5 The Use of NVIVO in this Study

In this study, the researcher used NVIVO 12 to create a sustainability project under the
name ‘Airline Sustainability’. Different sets of data were gathered and imported
according to the different research tasks. With the use of the different tools offered by
NVIVO 12, connections between the different categories revealed new paths of
investigation. An overall view of how the sustainability project was structured is shown
in Figure 3-6.

Figure 3-6 The Airline Sustainability Project in NVIVO 12

In summary, the use of NVIVO 12 enabled the researcher to explore rich data sets and
organise the coding process. The researcher used the software application as a guidance

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tool. The interpretation of data in a rigorous manner was soleley guided by the key
principles of the Grounded Theory Methodology and will be discussed in the following
sections. The researcher made every effort to review all NVivo queries thourougly to
ensure that data was treated in a consistent way.

3.2.4 Constant Comparison

The coding method applied in Grounded Theory is based on the principle of ‘constant
comparison’. Concurrent data collection and analysis increase the need to compare the
new and diverse data with existing data to reveal new emergent categories until Grounded
Theory is fully integrated (Birks and Mills 2015: 11; Cohen, Manion and Morrison 2018).

3.2.5 Memoing

Memo writing is a fundamental act of quality control in Grounded Theory and serves
many different purposes, starting with analysing data, drafting codes, comparing and
linking results and reflecting thoughts and discussions during the entire study. Writing
as well as reviewing memos becomes very crucial at the final stage of coding and during
theory development (Charmaz 2014). With the systematic use of memos, the researcher
is looking back to recorded thoughts, feelings and ideas in relation to the study, while
reflecting these views to document its position in the analysis stage.

3.2.6 Diagraming

Diagrams give visual portrayal of categories and their connections. As the process of
Grounded Theory is complex, diagrams become the means of visualising the different
stages of coding, the memoing process or the final framework of the study (Corbin and
Strauss 2015, Charmaz 2014: 218).

3.2.7 Theoretical Sampling

Theoretical sampling helps to elaborate and refine theoretical categories and is therefore
an evaluation tool that helps to check, qualify and elaborate the boundaries as well as the
relations among categories (Charmaz 2014: 199, 205, 212).

3.2.8 Theoretical Sensitivity

Theoretical sensitivity refers to the researcher’s ability to extract from data elements that
can contribute in theory building (Birks and Mills 2015). It refers to those qualities that

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enhance sensitivity and increase the ability to perceive and notice the important parts of
data. Sensitivities can be developed from studying relevant literature, from a researcher’s
professional experience and direct interaction with data or even from maintaining a
critical attitude to possible explanations (Cohen, Manion and Morrison 2018).

3.2.9 Saturation

Theory building occurs when categories are ‘saturated’, in other words when the
gathering of data provides no new insights to the study. Although one cannot rule out the
possibility of identifying a new set of data that refutes existing categories, saturation also
occurs when the presented theory can explain the collected data effectively (Cohen,
Manion and Morrison 2018).

3.2.10 Theory Building and Theory Evaluation

Figure 3-7 presents the factors that justify integration and Grounded Theory building.
The discovery of patterns that demonstrate analytic precision and are insightful results
in theory that justifies a scheme associated with a phenomenon (Charmaz 2014: 213;
Birks and Mills 2015: 13).

Figure 3-7 Necessary Factors for Integration (Birks and Mills 2015: 110)

In addition, as part of theory evaluation grounded theorists suggest different evaluation

criteria to ‘validate theory’ and ensure that successive interpretations in the qualitative

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data analysis have taken place. Theory reflects effectively all data sets used in this
process. The following criteria were selected for the current research, as shown in Table
3-6.

Table 3-6 Evaluation Criteria for Grounded Theory Validation (Cohen, Manion and Morrison 2018: 720-
721).

Glaser and Strauss (1967: 237,
245)
- Closeness of the fit between
theory and data
- Theory makes sense to people
working in the field
- Ability of theory to be general
to a multitude of diverse daily
situations
- Enable the person who uses it
to have enough control to make
its application worth trying.
Strauss and Corbin (1994: 252-6) Charmaz (2006: 182-183)
- What is the fit of the theory to - Credibility
literature? - Originality
- Relevance and utility of theory - Resonance
for the participants - Usefulness
- Were concepts generated and
systematically related?
- Were there many conceptual
linkages and were the categories
well developed?

The following section presents how the researcher applied the principles of Grounded
Theory to achieve ‘theory building’.

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3.3 The Application of Grounded Theory in the Research Study

Research literature suggested that Grounded Theory was appropriate and valuable for this
type of study. Figure 3-8 demonstrates the application of Grounded Theory in this study
and the steps that followed the development of the Conceptual Framework.

Research Problem
How Airlines can sustain
equity over time in a
Liberalised Environment

Data Set I
Early Stage Literature Outcome 7 Thematic
Pilot Interviews Units
Study of Extant Documents

Constant Comparison

Data Set II
Published Interviews Outcome 5 Outcome 3
CSR Reports Categories Additional Categories

Constant comparison
Constant Comparison

Core Category Development

Data Set III
Interviews with Aviation Professionals

Core Category
Sustainability
Drivers

Su1 Su2 Su3 Su4 Su5 Su6 Su7 Su8

Theoretical Categories
Abstract definitions and
Conceptualise in the Literature

Saturation – Final Outcome

Sustainability
Construct
(Foundation of
the Conceptual
Framework

Figure 3-8 Application of Grounded Theory

How airlines become more sustainable in a liberalised environment is a principal concern

for the development of the entire CAT system. With the use of constructivist grounded
theory the researcher was able to become more engaged with the operation of the CAT
system supporting theory generation from rich and diverse data sources. However, since
the research process in Grounded Theory ‘is not linear’ (Katerinakis 2019: 64; Martin

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and Turner 1986: 149-151), the following sections provide useful information about the
three data sets used in this research and the implementation of the coding process.

3.3.1 Data Set I and the Application of Purposive Sampling

To begin with, Grounded Theory guided the researcher in collecting rich data from a
diverse range of sources. The process of generating data was iterative and meant to
support constant comparison. Table 3-7 portrays the first set of data that was explored in
the research journey. Purposive sampling included early stage literature review,
observations from major aviation events and the use of extant documents. The key
outcome of this process was the construction of the “Seven (7) Thematic Units” that
identify main Areas of Concern (AoC) for the sustainability of the CAT system.

Table 3-7 Data Set I

Early stage Academic material from reputable scholars in the area of

literature Liberalisation, Sustainability, Safety, Strategy, Finance and
Economics.
Generic Literature on Sustainability.

Extant ICAO Working Papers (WPs) from the following events:

Purposive
documents - 42 WPs from Worldwide Air Transport Conference 5
Sampling
(120 WPs) (ATConf/ 5)
- 49 WPs from Worldwide Air Transport Conference 6
(ATConf/6)
- 29 WPs from ICAO Assembly -39 Session (A39)

Pilot Four pilot interviews with aviation professionals

Interviews

3.3.1.1 Early Stage Literature

The early stage literature that was used to draft the original thesis proposal was expanded
to inform the researcher about the current status of the aviation industry and the progress
made in the area of liberalisation. The early stage literature identified numerous Areas
of Concern (AoC). The term AoC defines those challenges that affect negatively the
sustainability of the CAT system. The term AoC will be used as a comparative term and
a common denominator in the process that will follow.

Given the complexity of the aviation industry and the wide spectrum that the concept of
sustainability covers, it was evident that the role of the early stage review was to initiate

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multiple queries in the sustainability domain. As expected, multiple queries led to the
conclusion that airline sustainability was a concept subject to multiple interpretations, full
of challenges and more questions than answers. Due to the iterative nature of Grounded
Theory, the researcher was able to question constantly the sustainability concepts in
additional searches following completion of the early stage literature.

3.3.1.2 Pilot Interviews

The researcher had four pilot interviews, as shown in Table 3-8, and the outcome of those
interviews informed that the questionnaire should be re-drafted as the questions did not
provide any new insights as originally anticipated.

Table 3-8 Pilot Interviewee Information

Number of Participants’ background in the CAT system Industry

Participants (P) Experience
Airline Senior and Middle Management P01>10 years
Experience P02>15 years
4
P03>20 years
P04>20 years

The most useful outcome of the pilot interviews was the idea to look for published data
and develop a top down approach.

3.3.1.3 The Study of Extant Documents

Early stage literature revealed that airlines play a pivotal role for the sustainability of the
entire transport system. As a result, the researcher decided to open up the research to
include a ‘top down’ approach. The opportunity was provided when the researcher
participated in an ICAO Conference devoted to the sustainability of the CAT system.
During the conference proceedings, the researcher had the opportunity to review a number
of Working Papers (WPs) that revealed many common Areas of Concern (AoC) with the
early stage literature study. Whilst recalling field notes, it became apparent that those
WPs could provide additional information from a different perspective in the
sustainability discussion. With this in mind, a study on ICAO extant documents was
initiated. According to Charmaz (2014), extant documents serve a particular purpose and
give imperative bits of knowledge on specific perspectives and views. In a qualitative
study the focus shifts towards ‘what the documents do’ rather than ‘what they cover’

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(Charmaz 2014: 46). The sample for this study included Working Papers (WPs)
submitted to the International Civil Aviation Organisation (ICAO) that provide an insight
into the liberalisation process but also a top view approach to the sustainability of the
entire CAT system. The definition of WPs states that they are ‘brief, action-oriented and
concise’ documents submitted by States or organisations to specific proceedings
following a predefined template quite strict in terms of their length and context (ICAO
2013c). In this form of research, WPs were treated as sources that provide diverse
information in terms of their purpose, their identity and the meanings (Athousaki, Hooper
and Lykotrafiti 2016).

The study of the extant documents was the first part of the initial coding process. Coding
seemed more appropriate than content analysis. This is because the inductive nature of
coding allowed for a more systematic approach in the data analysis of the extant
documents. With the use of the ‘elaborative coding’ technique, the study of the extant
documents allowed the researcher to identify Areas of Concern (AoCs) for the CAT
system, as shown in Figure 3-9.

Making Text Manageable Hearing What Was Said

Step 1 Step 2 Step 3 Step 4

Group related
Organise themes in
passages and organise
Address research coherent categories.
Select relevant text repeating ideas.
concerns (include old and new
(include old and new
constructs)
constructs)

Developing Theory

Step 5 Step 6

Grouping themes into Create a theoretical

units narrative

Figure 3-9 Elaborative Coding Technique (Auerbach and Silverstein 2003: 99)

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Elaborative coding (Auerbach and Silverstein 2003: 99) assisted the research as follows:

Making text manageable:

First, managing the text was an important step for this research, as the WPs were initially
more than 200 in number. The researcher made a selection of the papers that were more
relevant to the research concerns and that limited the WPs number to 120.

- Step1: Research concerns at the initial stage included the following questions: how
does the sustainability of the CAT system affect the sustainability of the airline
industry? What can the CAT system reveal about factors that contribute to airline
sustainability?
- Step 2: The relevant text was identified as part of the ‘top down’ approach, i.e. looking
at how the CAT system understands the sustainability concept. The text consisted of
Working Papers (WPs) shown in Table 3-9 published in 2003, 2013 and 2016.

Table 3-9 Extant Documents20

Number of Working Papers

Event Date
Analysed
ATConf/5 24 - 28 March 2003 42

ATConf6 8 - 22 March 2013 49

27 September – 06 October
39th ICAO Assembly 29
2016

Exclusion criteria applied for WPs published in the relevant conferences and the
Assembly based on the value they had in the sustainability discussion.

Hearing what was said:

Once the relevant text was identified, it was important to search for patterns and realise
the potential of the documents.

- Step 3 and Step 4: Related passages revealed patterns in core areas involving the
regulatory framework, the context of liberalisation, the supply chain, the environment,
safety, security, passenger rights and passenger value. Themes have been grouped in

20
Refer to Appendix B for database on extant documents.

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 order to address relatable AoC. A comparison between early stage literature findings
and current coding outcomes resulted in the development of seven thematic units.

Developing theory

Lastly, the researcher had in place the first outcome of this research and tried to develop
valid definitions that could be used for constant comparison in the next stage of the
research.

- Step 5 and Step 6: In these steps the researcher provided a definition for every unit
and created the narrative of the seven thematic units that flow from the extant
documents. Chapter four (4) provides insights into the analysis of the extant
documents and the outcomes of the seven thematic units.

The first set of useful information in this research came with the results of purposive
sampling. Purposive sampling ended with an outcome21 of ‘Seven (7) thematic units’
and interesting observations about the CAT system. The seven thematic units provided
an overview of areas that challenge the sustainability of the CAT system, and are further
discussed in Chapter four (4). However, despite being holistic, the seven thematic units
only represent one side of the CAT system. They are still missing the participants’
perspective.

3.3.2 Data Set II and the Application of Initial and Focused Coding

Despite the usefulness of the developed thematic units, additional data - more focused on
the airline industry – were required in order to develop a ‘set of codes’ with more
analytical power and to further steer the coding process. Grounded Theory shows a
significant preference to the participant’s views. In this study, airlines were considered to
be the core participants. Consequently, an additional data set was selected to include their
perspective, as shown in Table 3-10.

21
The set of codes and the Seven Thematic Units are discussed in detail in Chapter four (4).

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 Table 3-10 Data Set II “Initial and Focused Coding Data 22”

Published interviews from airline executives

Year:2015-2018
Total Number of Interviews: 20

Published Airline Corporate Social and Responsibility Reports

Year:2017
Total Number of Reports: 20

At this stage, the researcher followed Grounded Theory process steps to coding for the
development of conceptual categories that were used to develop the
‘Core Category’ or ‘The Sustainability Business Drivers (Su Business Drivers)’.

In this study, a Core Category was constructed following a coding approach based on
core principles of Grounded Theory mainly from a constructivist point of view. In the
following paragraphs the researcher provides an overview of how the coding system
worked in order to retrieve the Core Category.

The first construct (i.e. Purposive Sampling) of this research methodology produced the
‘seven (7) thematic units’ that were more descriptive and closer to a system’s
perspective than from a participant’s perspective. As a result, the researcher decided to
explore additional data that is closer to the airline industry in order to introduce the initial
coding process. Following Charmaz’ (2014) line of questioning, focus was given to data
that uncovers AoC that are airline specific and move beyond literature.

The ideal scenario would have been to initiate CEO interviews that could unveil AoC
from a participant’s perspective. At first, the researcher attended high level events and
had the ability to observe a number of executives from core areas of the CAT system
discussing systemic and industry specific AoC. Airline executives were part of this
discussion.

The insights were useful and diary observations from the ATConf6 in 2013 and from the
second Intentional Air Transport Symposium in IATS 2014 stated:

22
Refer to Appendix C for Data Set II, for Interviews refer to Appendix C.1 and for CSR reports to C.2.

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 “There are common areas that dominate the discussion on sustainability (i.e. in the
context of equity over time) in the airline industry. Popular areas are: how to improve
financial performance, how to build a better value proposition for the travelling
public and how to overcome regulatory difficulties or anomalies. In this last part
among the popular subjects are: slot allocation, airport charges and competition
rules.”

During the different events, the researcher had the opportunity to interact with airline
executives. However, it became quite obvious that contacting executives at a CEO level
from different parts of the world would have been a difficult and perhaps pointless task,
as corporate strategies and their personal standpoints were available in official reports
and the media. As a result, and in an effort to become more innovative with data
collection, the researcher looked for published interviews that could potentially identify
AoC with implicit meanings for airlines that operate in a liberalised environment.
Consequently, initial coding started with a selection of published interviews for
identifying different areas that involve similar concerns to the Airline Sustainability
Construct.

The following sections describe how the researcher thought the coding process identified
the “the Core Category”.

3.3.2.1 Initial Coding

The initial coding process included the analysis of published interviews. The analysis
included interviews published between 2015 and 2018. A timeframe of three years
seemed reasonable to manage and analyse. For consistency purposes, the researcher
decided to use published interviews exclusively from aviation media. Aviation media is
a source of data that is considered part of the CAT system and therefore interview
questions are both relevant and interesting to the study. Three aviation media23 were
selected, namely Anna Aero, Air Transport News and FlightGlobal24.

23
Refer to Appendix D for a brief profile of the aviation media.
24
The company has been rebranded as Cirium in 2019.

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With this in mind, the researcher selected twenty (20) interviews, mainly with airline
Chief Executive Officers (CEOs) from different geographic regions, as shown in Table
3-11.

Table 3-11 Published Interviews from Aviation Media

Aviation Media Airlines

Anna Aero Adria – Aeroflot – Monarch – WoW – Emirates- Ryanair –NOK AIR-
Air Transport News (ATN) Norwegian – Spirit – British Airways – FlYBE- KLM- Finair – Air
Fightglobal Baltic – Pegasus – American Airlines – Jet Star – Volotea – Qatar
Airways- Scoot

A database was developed in order to manage the data effectively. The process was
lengthy but a number of very interesting questions appeared for this set of data, as shown
below:

(1) Are there key differences in CEO views over the three years or do they address
similar problems?

(2) Are there any patterns that can be observed regarding the sustainability of
airlines regardless of the size or the business model of the airline?

(3) Do CEOs think alike when it comes to challenges?

The researcher applied a method of coding that is commonly used at this stage on
Grounded Theory. ‘Line by line’ coding is based on coding with gerunds, and Charmaz
(2014: 121) states that it ‘is a heuristic device to bring the researcher into the data’,
assisting in the discovery of implicit concerns. This time the researcher coded for actions
and not for topics, as this is the fundamental difference in the application of coding in
Grounded Theory (Charmaz 2014). With the use of ‘line by line’ coding a rich set of
codes with analytical power were developed and used to build a narrative in the
sustainability discussion. The following passage shows an example of a selected code
derived from the published interviews:

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 “Employing younger fleets”. This is a code that embraces in the given interviews two
attributes, cost advantage and safety standards. However, if this code is viewed in
the wider context of sustainability it also encompasses attributes relatable to
customer satisfaction, supplier loyalty and environmental performance improvement.
A code like this could be grouped to raise a category that could contribute to a more
sustainable path for airlines that operate in a liberalised environment.

The full set of codes derived from the published interviews are further discussed in
Chapter four (4).

3.3.2.2 Focused Coding

Focused coding, in this particular research, concentrated in raising initial codes with a
higher analytical meaning and a more theoretical reach and direction to focused codes
(Charmaz 2014: 141). The following step was to group the codes based on patterns
around different areas that involve similar concerns for ‘equity over time’. In this
research, during focused coding and by complementing the initial coding approach, five
(5) conceptual categories were constructed, as follows:

- Economic Footprint
- Customer value proposition
- Regulatory requirements
- Labour relations
- Ethical and Social responsibilities

As Charmaz (2014: 19) suggests ‘certain codes crystallise meanings and actions across
the data’. Grouping or categorising the focused codes in conceptual categories with
abstract power is a significant step in theory building. A grouping example for the
proposed category ‘Economic Footprint’ is shown at Table 3-12.

Table 3-12 Categorising Example

Proposed Category Codes that relate to an airline’s financial health and performance
Economic Footprint Understanding seasonality; optimising network; minimising
unprofitable flying; employing younger fleets; balancing CASK, Cash
and Capacity; managing costs for better profits; being in control of
growth; dealing with uncertainty; being mindful of partnership models.

Next, the researcher compared the five (5) proposed categories (i.e. the Airline’s view)

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identified from focused coding with the seven (7) thematic units (i.e. the Regulatory
view) that were in turn identified from purposive sampling. This comparison recognised
similarities but also identified a gap. Figure 3-10 presents the gap between the two
coding outcomes.

Thematic Units Focused Categories

Regulatory Harmonisation Economic Footprint

Purposeful Liberalisation Customer Value Proposition

Supply Chain
Interconectedness Regulatory Requirements

Safety and Security

Reponsibilities Labour Relations

Customer Value Protection Social Responsibility

Social Well Being

Environmental Awareness
and Soft Spots

Figure 3-10 Gap Between Thematic Units and Focused Categories

Despite the fact that focused coding revealed five (5) strong focused categories which
were relevant to the sustainability discussion, the seven (7) thematic units that emerged
earlier suggested that the role of suppliers and the environment is indeed pivotal for
‘equity over time’. Therefore, the possibility to create new focused categories had to be
further investigated in an effort to draw a full picture in the sustainability. In addition,
Corporate and Social Responsibility Reports published in 2017 from airlines that operate
in different parts of the world were also analysed to enrich the five (5) constructed
categories and to assist in the development of additional focused categories. This is
shown in Table 3-13:

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 Table 3-13 CSR Reports

Airlines

Air Canada, Air France KLM, American Airlines, ANA, Cathay Pacific,
China Airlines, China Southern Airlines, Delta Air Lines, Emirates,
Etihad Aviation Group, IAG, Japan Airlines, LATAM Airlines Group,
Lufthansa Group, Norwegian Air Shuttle, Ryanair, SAS, Singapore
Airlines, Turkish Airlines, Virgin Atlantic.

During this process of secondary data investigation, a new set of codes was constructed
adding another three (3) focused categories. Figure 3-11 shows the researcher’s ‘eight
(8) focused Categories’ revealed from the initial and focused coding process.

Labour Relations Ethical and

and Productivity (LRP) Social Responsibility
(ESR)

Economic Footprint Supply Chain

(ECO FTP) Interdependencies
Core Category (SCI)
Su Business
Drivers

Customer Value
Proposition
Consumer Protection
(CVP)
(CON PTC)

Regulatory Environmental Conformity

Requirements (ENV)
(REG RQT)

Figure 3-11 The Researcher’s Eight (8) Focused Categories

As a result, and by concluding the focused coding process, the research produced:

‒ Eight (8) focused categories that act as catalysts to the sustainability of the airline
industry in a liberalised environment.
‒ A higher concept with a theoretical understanding that integrates the eight (8)
categories. The higher concept is a core category that allows the focused
categories to advance in becoming sustainability drivers for airlines that operate
in a liberalised environment.

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 ‒ Two emerged hypotheses to test:

(a) Several impediments to sustainability create a threat to ‘equity over time’

in the era of liberalization (H-1).

(b) A Conceptual Framework that generates a holistic approach to

sustainability and creates the foundation for the establishment of a
Management System for Sustainability could improve airlines’ ‘equity over
time’ in a liberalised environment (H-2).

Hypotheses emerged from collecting data following the iterative nature of the research
process and were tested with the use of a qualitative approach. The role of hypothesis in
Grounded Theory differs from other methodological approaches. A hypothesis in
Grounded Theory emerges from the data analysis and has the role of an inference that
needs to be tested through the use of additional data (Charmaz 2014: 201). The role of
the two emerged hypotheses in this study was to guide and further develop the research
outcomes.

3.3.3 Data Set III and Theory Building

In order to validate the outcomes of the focused coding process, primary data collection
and analysis was also deemed necessary. Consequently, twenty (20) interviews aiming to
test the eight (8) focused categories and the emerged hypothesis in the eyes of aviation
professionals took place between March 2018 and April 2019.

Despite the fact that Grounded Theory suggests the implementation of in-depth
interviews that researcher decided to adopt a hybrid type that is closer to an open-ended
and semi-structured approach. Semi-structured interviews can be used as a way to create
qualitative data on user beliefs and practices. The research interview template consisted
of five questions. The format of the specific interview allowed the interviewees to express
their thoughts openly in a way that new ideas and insights could emerge, making the
interview relevant and resourceful.

The questionnaire25 was addressed to aviation professionals from a wide range of the
CAT system to support the holistic view of the current research. The participants (P)
asked to provide their opinion anonymously and were given the opportunity to withdraw

25
Refer to Appendix E for the Interview Questionnaire.

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from the research any time they wished.

The interviewees’ opinions were based on their professional experience and their own
preconceptions. The researcher did not assume their views as being those of the
companies for whom they worked at the time of the research. However, their professional
background and their relation to the airline industry was considered in the interpretation
of the results. Where appropriate the researcher asked for clarifications or revisited the
findings of certain interviews to obtain a better picture. Table 3-14 presents interview
information relevant to the research. Since the participant list had to remain anonymous,
every participant was allocated a participant number.

Table 3-14 Data Set III “Interviewee Information”

Number of Participants’ background in the CAT system Industry

Participants (P) Experience
Regulatory Authorities P5>5 years
3 (Senior and middle management level) P10>5 years
P15>20 years
Airline Strategic Alliances P3>25 years
1
(Executive level)
International organisations P17 >20 years
1
(Senior level)
Airlines senior and middle management P4 >5 years
(operations, marketing, data analysts) P9>20 years
5 P13>5 years
P19>15 years
P20>10 years
Airline consultants/senior trainers P1>10 years
3 P2>25 years
P18>25 years
Academics with industry experience P8>5 years
(airport – airlines – regulatory authorities – tourism P11>20 years
5 authorities) P12>20 years
P14>15 years
P16>15 years
Airports P6>5 years
2
(middle management) P7>5 years
Total Number: 20 Participants

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The results of the interview process can be found in Chapter four (4). The application of
theoretical sampling included the saturation of data that occurred with the use of academic
literature and the findings of the primary data analysis.

That completed the final stage of the Grounded Theory process.

The final outcome was the ‘Airline Sustainability Construct’ that consisted of:

(a) The Sustainability Business Drivers (Su Business Drivers) that review AoC for
airlines in a more holistic and systematic way.
(b) A Conceptual Framework that complements the Su Business Drivers and
generates a holistic approach to sustainability. It also creates the foundations for
the establishment of a Management System for Sustainability that could improve
airlines’ ‘equity over time’ in a liberalised environment. The Conceptual
Framework is based on a continuous improvement and systems thinking
approach. The researcher selected the PDCA cycle to guide the framework’s
design. As shown in Figure 3-12, the PDCA Cycle advocates a logic of
continuous improvement and through a four-step reasoning supports the
development of operational and strategic planning, puts strategy in action,
measures the outcome, addresses performance gaps and, suggests improvements
(Moen and Norman 2010; Pawliczek and Piszczur 2013).

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 Suggested Improvements

PDCA
Framework

Figure 3-12 Plan-Do-Check-Act (PDCA) Principles (Moen and Norman 2010, Pawliczek and Piszczur
2013, Pietrzak and Paliszkiewicz 2015).

The PDCA Cycle is both iterative and conceptual and therefore follows the reasoning of
this research. It is also a well-established model that has been used to facilitate
improvement in strategic management.

3.3.4 Validity and Reliability

A Grounded Theory journey is a challenging experience. It requires a set of soft skills

that allow the researcher to be more innovative and flexible. However, rigour and
integrity are also areas that require special attention in a qualitative study. From a
reliability perspective, the three sets of data used in this research came from sources with
an in-depth knowledge about the issues and Areas of Concerns (AoC) affecting the airline

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industry. Furthermore, the researcher made an effort to attend significant events26 to
observe main stakeholders of the CAT system in sustainability debates. In terms of
validity, the literature review sets criteria for the proposed solution while Table 3-15
presents additional validity criteria from a grounded theory approach following the views
of Charmaz (2014) that presents the constructivist approach.

Table 3-15 Constructivist Criteria

Charmaz (2014: 337-338)

- Credibility (Has your research achieved intimate familiarity with the topic? Are there strong
logical links between the gathered data and your argument and analysis? Etc.)
- Originality (Are your categories fresh? Do they offer new insights? Does your analysis provide
a new conceptual rendering of the data? Etc.)
- Resonance (Do the categories portray the fullness of the studied experience? Does the grounded
theory make sense to your participants? Etc.)
- Usefulness (Do your analytic categories suggest any generic processes? Can the analysis spark
further research in other substantive areas? How does you work contribute to knowledge?) Etc.)

Table 3-16 outlines the methods used for validity purposes in this research and further
discussed in Chapter six (6). Three different methods were used in an effort to present
evidence for the validity of the study. The first method was based on two sets of criteria.
The first set flows from the literature review and the second from Grounded Theory
validation reasoning. The second method was based on validation interviews from high
level aviation professionals and, the third method was based on the use of a case study.

Table 3-16 Validation Methods Used for the Research

Methods
Criteria Set
- Literature Criteria vs Research Outcomes
- Criteria for Grounded Theory Studies (Charmaz 2014: 337) vs Research Outcomes
Four (4) validation interviews with high level experts that confirmed that the presented Conceptual
Framework meets the objective of this research.
A Case Study that focused on the usability of the Conceptual Framework for the airline industry and
demonstrates how the Conceptual Framework integrates a systems thinking approach.

26
Refer to Appendix F for events list.

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3.4 Chapter Summary

The chapter explained and justified the principal methodological approach. The research
design was exploratory and interpretive in nature. Grounded Theory was selected to
guide the research methodology. A constructivist route seemed more appropriate to
facilitate data gathering and the analysis of the results. The research data was drawn
from diverse sources: extant documents, published interviews from airline senior
executives, Corporate Social Responsibility (CSR) reports, observations of key aviation
events, academic literature and interviews with aviation professionals.

Among the key steps followed as part of the constructivist Grounded Theory application
were: purposive sampling to identify initial themes; concurrent data collection and data
analysis to address the gaps in data and to discover new insights; inductive construction
and co-construction of abstract explanatory categories; constant comparison to refine
categories; the application of theoretical sensitivity and saturation; and the theoretical
framework that integrates the constructed categories (Cohen, Manion and Morrison
2018).

The researcher made an effort to approach the subject of airline sustainability in a more
inclusive way. Three sets of data used in this research came from sources with an in-
depth knowledge about the issues and Areas of Concerns (AoC) affecting the airline
industry. Following a coding approach and with the use of QDA software (NVIVO 12)
that assisted the process without dominating the analysis, the selected coding processes
were explained and the final outcome was tested in the eyes of aviation professionals.
Finally, the chapter concluded with the need to validate the proposed solution with the
use of criteria that emerged from the literature and additional criteria that flow from
Grounded Theory reasoning.

In the following chapter, the study presents the findings from the three sets of data that
resulted in the development of the holistic approach to the sustainability problem.

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 Chapter Four: Research Results, Analysis and Discussion
This chapter presents the outcomes of the Grounded Theory approach, discusses the
results from the three different sets of data (i.e. Data Set I, Data Set II and Data Set III)
and introduces the ‘Airline Sustainability Construct’ concept. In this research study, the
first set of data explored different AoC in the wider CAT system with a focus on the study
of ICAO Working Papers (WPs) from different air transport conferences. The study
identified a set of codes that created seven (7) thematic units that revealed interesting
insights for the sustainability of the CAT system and inform the airline industry about
AoC from a systems perspective. Next, it was important to shift the research focus to the
perspective of the participants. Airlines that operate in a liberalised environment were
considered as the key participants of this research; therefore, it was imperative to explore
their views and perspectives.

Consequently, the second set of data was used to identify AoC from an airline’s view.
Published interviews and airline CSR reports were selected for this purpose. After
analysing the results using constructivist Grounded Theory (i.e. initial and focused
coding), eight (8) focused categories emerged to build a proposed core category (i.e. Su
Business Drivers). In order to test the focused categories, the third set of data was
engaged. The results from the third set of data were based on twenty (20) semi-structured
interviews with industry professionals. The analysis of data confirmed the significance of
the eight (8) categories to airline sustainability. It argued that liberalisation is a threat for
sustainability, identified impediments in the liberalised environment and confirmed the
view of the CAT system used in this research. The conclusion was that a Conceptual
Framework based on a total system approach and continuous improvement processes can
provide sustainable solutions for individual airlines operating in a liberalised
environment.

Saturation (i.e. no new insights in terms of data) occurred with the testing of the eight (8)
focused categories and the integration of the sustainability literature. The final outcome
of this chapter is the ‘Airline Sustainability Construct’, a concept that engages airlines in
a systematic review of their main AoC with the use of Su Business Drivers and identifies
the characteristics of the Conceptual Framework designed to improve ‘equity over time’
for airlines that operate in a liberalised environment.

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Following is the first section with the results of Data Set I.

4.1 Results of Data Set I: The Seven Thematic Units

The first set of data consisted of the early stage literature, four pilot interviews and the
study of extant documents. The outcome of the early stage literature allowed for a better
understanding of the concepts of liberalisation and sustainability. The literature informed
about different Areas of Concern (AoC) that existed but also questioned the current
sustainability approach by the industry. Next, the pilot interviews were used to create a
primary data inquiry that addressed the links between airline performance, liberalisation
and sustainability. Four highly experienced aviation professionals engaged in a semi-
structured interview process. The interview process highlighted many known AoC for
the airline industry and also guided the researcher to take a top down approach and look
for published data. One of the key suggestions was to review Working Papers27 (WPs)
from ICAO events in order to examine in more detail manner how the regulatory system
affected the performance of airlines in a liberalised environment. As a result, the
researcher engaged in the study of the extant documents.

4.1.1 The Study of the Extant Documents

According to Charmaz (2014: 48), extant documents as an independent source of data are
created for a specific purpose and provide important insights on particular views and
discourses. In Grounded Theory, documents have the potential of theorising and
therefore can be regarded as an important source of data that needs to be used with the
focus on “what they do” rather than on “what they cover” (Charmaz 2014: 46). The set
of data that falls in this category is a set of ICAO Working Papers (WPs) submitted to
three core ICAO events namely, Worldwide Air Transport Conference 5 (ATConf/5),
Worldwide Air Transport Conference 6 (ATConf/6) and the 39th ICAO Assembly (A/39)
. Working Papers (WPs) are submitted by ICAO Member States or organisations and
used as the basis of discussion in relative meetings/conferences. WPs address different
Areas of Concern (AoC) for the air transport industry and present the views of their
writers. WPs are used to reinforce the dialogue between Member States but also to

27
In principle, ICAO WPs are “brief, action-oriented and concise” documents that follow a specific
template, quite strict in terms of their length and context (ICAO 2013c). WPs provide information and
invite action (ICAO 2004: 3.1-2).

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introduce concerns or initiate discussion around proposed solutions. The motivation for
selecting WPs from the particular conferences and the ICAO Assembly has its roots in
the nature of the conferences and their strong links with the development of the CAT
system and the liberalisation process worldwide. Consequently, the following section
presents a brief overview of the selected WPs, the timeline of the Worldwide Air
Transport Conferences (ATConf), the number of the WPs analysed in this research, and
the AoC identified were grouped in key thematic units. The seven thematic units
identified from the research also constitute the first outcome of the Grounded Theory
approach.

4.1.1.1 The History of ICAO Worldwide Air Transport Conferences

The Air Transport Conferences under the auspices of ICAO emerged as a “problem
addressed” mechanism during the 21st session of the ICAO assembly in 1974 (ICAO
Postal History n.d.). A brief timeline of all the conferences that took place until today is
shown at Table 4-1.

Table 4-1 Timeline of World-Wide Air Transport Conferences (ICAO Postal History n.d.)

Attendance
# Dates Contracting International Delegates-Advisers-
States Organizations Observers
st
1 13-26 April 1977 97 11 N/A
12-28 February
2nd 101 9 430
1980
22 October -
3rd 93 11 402
7 November 1985
Colloquium 6 -10 April 1992 101 19 500
International Air Transport Regulation – Present and Future
23 November -
4th (ATConf/4) 137 28 808
6 December 1994
Challenges and Opportunities of Liberalization
th (ATConf/5)
5 24 - 28 March 2003 145 29 800
Sustainability of Air Transport
88 observer
6th (ATConf/6) 18 - 22 March 2013 131 1100
delegations

The ICAO hosted the first conference in an effort to introduce a high level dialogue about

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the status of economic regulation of the industry (ICAO Postal History n.d). The
Conference took place in April 1977 in Montreal and was considered a significant
milestone towards developing a universal approach on formulating aviation strategies at
a multilateral level through collective discussions (Athousaki, Hooper and Lykotrafiti
2016, ICAO Postal History n.d.). ICAO hosted the 4th Conference in 1994 and renamed
all the Conferences from that time onwards as ‘World-Wide Air Transport Conferences’
(ATConf). During ATConf/4 the States acknowledged that liberalisation was due to
strengthen internationally. However, despite the efforts made, “a global multilateral
agreement for the exchange of traffic rights” was not viewed as a preferred approach and,
as a result, States chose to design their own path to liberalisation and to commit in this
effort at their own pace (Hooper 2014: 18). This was a decision that acted as a catalyst
for the economic liberalisation of the CAT industry. Different States that embraced the
idea of liberalisation and committed to this cause with robust national strategies made
valuable investments and regulatory improvements and became the dominant players in
the CAT system (Athousaki, Hooper and Lykotrafiti 2016).

In 2003, the firth World-Wide Air Transport Conference (ATConf/5) convened in

Montreal. The core objective, namely, was to design a framework for economic
liberalization where “international air transport may develop and flourish in a stable,
efficient and economical manner without compromising safety and security and while
respecting social and labour standards” (ICAO Postal History n.d). ATConf/5 clearly
identified the motivation and the potential for advancing liberalisation on a global scale.
The conference also revealed AoC for the CAT system and discussions that had to take
place between the Member States and the industry about facilitating the liberalisation
process more effectively (ICAO 2003b). In 2013, ATConf/6 convened, addressing as its
core theme the “Sustainability of Air Transport.” The conference focused on the impact
of liberalisation and the imbalances caused by the fact that regions adopted at a different
pace creating many asymmetries in the CAT system (ICAO 2013a). This was a direct
consequence of the preference towards a customised as opposed to a multilateral approach
chosen by the States in 1994.

4.1.2 The Analysis and Discussion of the ICAO Working Papers

The selection and analysis of the extant documents is based on the elaborative coding

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approach as discussed in Chapter two (2). In brief, the elaborative coding approach
encompasses three stages and six steps. The process produced seven (7) thematic units
that play a pivotal role in enhancing an efficient and sustainable development in the CAT
system. Figure 4-1 shows the coding approach followed for revealing the seven (7)
thematic units.

Making Text Manageable Hearing What Was Said

Areas of Concern Inclusion criteria A set of 51 codes

145 related
(AoC) for Aviation produced a result of forming
passages
Sustainability 120 WPs 7 Thematic Units

Developing Theory
Definition of 7 thematic units and
recognitions of their role to the
sustainability of the airline
industry in the wider context of
Environmental Awareness and Soft Spots
the CAT System
Thematic Units
Regulatory Harmonisation
Purposeful Liberalisation
Supply Chain Interconectedness
Safety and Security Responsibilities
Customer Value Protection
Social Well Being

Figure 4-1 The Coding Approach for Delivering the 7 Thematic Units

Stage I “Making Text Manageable”

The researcher was a participant with an observer status at ATConf6 and had the ability
to draft useful memos about the current status of the CAT system and concerns raised for
the future of the air transport industry. During the conference, ICAO Member States and
the industry engaged in a high level dialogue about the sustainability of the CAT system.
Concerns and suggested solutions concentrated around the economic development of the
industry, the liberalisation process and the prospects of further liberalisation.

Recorded observations, as shown in Table 4-2 from the researcher’s diary unveil how and
why the researcher looked in the direction of WPs for data that uncovers useful concepts.

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 Table 4-2 Recorded Observations from ATConf/6

20/03/2013

It is obvious that the airline industry, as a principle actor of the CAT system, can
benefit or lose from proposed solutions in addressing global sustainability concerns
from a state perspective. However, starting the research with a top view approach is
an idea that can leverage the holistic perspective and uncover concepts that move
beyond the financial, safety, and operational dimensions that are popular among
airline industry professionals.

The researcher felt that a set of WPs that discuss AoC and suggested solutions could be
analysed in the context of this research to provide insights as to how States perceive
sustainability in the first place. Furthermore, concluding notes, as shown in Table 4-3,
advanced the view of looking at additional WPs from previous conferences of this type,
for similarities or patterns of thinking with regards to Liberalisation and Sustainability.

Table 4-3 Concluding Notes from ATConf/6

22/03/2013

At least 40 WPs present very interesting views for airlines and should be further
investigated. However, it is important to understand the nature of worldwide
conferences. It seems that States and the industry have different interpretations for
sustainability. Airlines especially look very defensive when it comes to economic
views. Check WPs from ATConf5 and await WPs from the ICAO Assembly.

Following the iterative process of Grounded Theory, the research on extant documents
included WPs from ATConf/5 and ATConf/6, and from the 39th ICAO Assembly, as
shown in Table 4-4. All three events included a wide range of WPs for review. However,
inclusion and exclusion criteria applied in order to decide the number of WPs that would
finally be reviewed:
- Inclusion criteria: WPs with a focus on the effects of liberalisation on the airline
industry; WPs covering AoC for the sustainability of the CAT system; WP from
ICAO Secretariat; WP from States that exercise liberalisation policies; WP from
industry representatives.

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 - Exclusion criteria: WPs with similar contents; WPs with little contribution to
liberalisation or sustainability discussion; WPs from States that follow
protectionist trends.

As a result, the selection process concluded with WPs from the ICAO Secretariat and
Member States that exercised liberalisation policies in aviation and relevant industry
bodies.

Table 4-4 Extant Documents

Number of Working Papers

Event Date
Analysed
ATConf/5 24 - 28 March 2003 42
ATConf/6 8 - 22 March 2013 49
27 September –
39th ICAO Assembly 29
06 October 2016

By analysing a comprehensive set of several ICAO Working Papers (WPs) the

researcher’s intent was to identify Areas of Concern (AoC) using a top down approach
with the aim to incorporate socio, economic and ecological areas. Following a systems
thinking approach the researcher considered that principle actors in the CAT system (i.e.
States, regulators, airlines and the wider value chain) are ‘agents in interconnected social,
economic and ecological systems’ (Williams et al 2017: 872). Therefore, recognition of
those areas is critical for achieving a sustainable path. Airlines, as part of this system,
could benefit from acknowledging where attention is to be given by those who draft the
rules of the CAT system. However, in order to investigate those areas the researcher had
to analyse the chosen set of WPs.

Stage II: “Hearing What Was Said”

In this stage the researcher investigated 145 related passages that revealed a set of fifty-
one (51) codes. Related passages were selected and investigated based on the following
criteria:

- Passages that reveal AoC for the sustainability of the CAT system.

- Passages with high relevance to an airline’s financial, economic and operational

performance.

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 - Passages with high relevance to the sustainability of the airline industry in the
context of liberalisation.

- Passages with relevance to environmental issues.

- Passages with relevance to customer value.

- Passages with relevance to society.

Stage III Developing the Thematic Units

The final step in this process was to group the fifty-one (51) codes with the aim to identify
thematic units that could investigate important areas for the sustainability of airlines. The
coding approach concentrated mainly on the content of the passages and therefore the
study produced lower level codes. However, when grouped for patterns, the derived set
of codes formed a set of seven (7) thematic units that revealed very interesting insights
for the sustainability of the CAT system and the sustainability of the airline industry.
Table 4-5 illustrates the thematic units with their assigned codes. The thematic units
embrace a triple bottom line approach as the identified codes raise concerns at a financial,
social and ecological level.

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 Table 4-5 Theme Identification and Grouping as an Outcome of Elaborative Coding

Thematic units were defined as follows:

Regulatory Harmonisation emerged from grouping codes that illustrated the need to

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further modernise the air transport system and can outline additional compatible
regulatory approaches in different domains of the CAT system. Grouping of codes
identified several AoC that are also highly relevant to the airline industry, including the
diversity of policies across the regulatory air transport system (i.e. taxation systems, visa
regimes), the high level of government intervention in commercial activities, the lack of
transparency in competition rules, unilateral decisions from States that impact negatively
on aviation communities and additional costs from regulatory oversight functions.

Supply Chain Interconnectedness emerged from codes that illustrated infrastructure

gaps, inability of the supply chain to cope with high volumes of traffic and codes that
identified threats to the organisational and operational capabilities of the supply chain.
Grouping of codes outlined the interconnectedness of the supply chain in the CAT system
in which the airline industry is not only a core actor but the actor that creates positive
externalities for the entire supply chain. Therefore, AoC such as infrastructure gaps due
to limited access to private or public funding, inadequate infrastructure management, low
quality of air navigation services performance, ground handling inefficiencies, unsuitable
leasing practices, restrictions on early benefits of new technologies and increased user
charges across the supply chain explain numerous operational shortfalls from an airline
perspective. A few of the areas that could be addressed in this discussion are delays and
cancelations, poor On-Time-Performance (OTP), and limitations on capacity planning.

Purposeful Liberalisation emerged from codes that suggested differences in the

implementation of the liberalisation process between the States, questioning areas like the
level playing field and available resources that guarantee an appropriate order in the CAT
System. Grouping of codes outlined AoC that relate to the concept of fair competition
from a state’s perspective, an airline’s perception on the concept of Level Playing Field,
the asymmetries in traffic growth in the CAT system and the negative externalities from
a liberalisation process that is not managed effectively and efficiently. Those AoC are
very relevant for an airline’s performance and profitability because an airline with
available resources has the ability to pursue travel growth and increase the momentum of
liberalisation. However, if the CAT system is unable to cope with expansion due to
operational limitations a number of negative externalities may occur (i.e. delays,
cancelations, safety and security incidents).

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Safety and Security Responsibilities emerged from codes that examined the
understanding of safety and security implications of commercialization from actors in the
CAT system. Grouping of codes outlined AoC like the need to discover safety and
security gaps in the wider value chain, the ability to examine database storage and security
concerns, the increased costs from security facilitation, the implications from inadequate
safety and security audits, external threats and impact on consumer confidence and the
need for improved safety systems for capacity building. Airlines consider safety as their
number one priority. As a result, disruptions in passenger flow due to safety and security
issues is an area that strongly affects an airline’s performance and reputation.

Environmental Awareness and Soft Spots emerged from codes that acknowledge
CAT’s impact on the environment and the adverse effects this might have on the
development of the industry. Grouping of codes outlined AoC that relate to the
environmental impact of increased air transport activities (i.e. noise, CO2 emissions,
waste and energy), the need for universal cooperation for an effective mitigation plan, the
challenges of increased costs from environmental charges and taxation and the
implications of climate change. The airline industry will have to share the burden of costs
to fully engage in the mitigation plan as well as to cope with uncertainty caused by severe
weather conditions due to climate change.

Customer Value and Protection emerged from codes that examined the compatibility
of consumer protection regimes worldwide and the quality of the traveling experience.
Grouping of codes outlined AoC that relate to the assurance and quality of air service, the
propensity to fly, deceptive advertising, passenger complaints, compensations and,
consumer protection. In an open competition system like the liberalised environment
airlines can generate demand with lower airfares but can also create delays and
cancelations due to poor OTP or lack of resources. This is an area that generates
passenger complaints and entitlement for compensation and liabilities.

Social Well Being emerged from codes that addressed a variety of factors the CAT
system should manage more effectively to safeguard the well-being of the passengers,
CAT employees and local societies. Grouping of codes outlined AoC that relate to the
additional development of the human and technical resources, employability
opportunities from CAT activities (i.e. direct – indirect - induced), employability needs

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from CAT activities (i.e. direct – indirect - induced), scepticism of expanded tourism
activities, social implications of flight disruptions (delays, cancelations), environmental
sensitivity and health and safety hazards. Airlines tend to maintain close cooperation
with local societies and their workforce. However, managing expectations at an
employee and social level in a competitive environment is important for workforce
motivation but it can be also prove costly and challenging.

The results of this coding process provide a holistic view and informs the airline industry
about AoC that emerge from a systems perspective. At this stage the seven thematic units
address areas that run across the three sustainability pillars - social, economic and
environmental – and can therefore build a sustainability narrative for the CAT system.

Nevertheless, can this narrative effectively inform the sustainability inquiry of the airline
industry? To answer this question the seven (7) thematic units were utilised as a constant
comparison mechanism to support additional coding leading to the development of a more
abstract construct.

4.2 Results of Data Set II: The Analysis of Published Interviews and CSR Reports

As discussed in Chapter two (2), the participant’s perspective is pivotal in Grounded

Theory. Individual airlines were considered as the participants in this research study.
Subsequently, an additional set of data was selected in order to investigate AoC solely
from the side of the airline industry. A set of published interviews involving airline CEOs
were analysed with the method of initial coding as discussed in Chapter two. The sample
involved airlines that operate in liberalised markets and are located in different
geographic regions. Three reputable aviation media, with more than twenty years of
presence in the aviation sector, were selected for this purpose. Despite the fact that
questions differed, the interview analysis was able to identify ongoing challenges that act
as a barrier to the sustainable path of the relevant airlines.

The published interviews selected for this process took place between March 2015 and
September 2018. A total of twenty (20) interviews were analysed following Charmaz’s
(2014) approach to initial coding. Line by line coding was used, as per discussion in the
research design chapter. This type of coding differed from the coding that took place in
the previous sections. Interview transcripts were coded for action and not for content, as
in the case of the extant documents. Emphasis was given to “what was said “and not to

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“who said what”. In addition, the process was kept open-ended, according to the original
Grounded Theory approach by Glaser (1978, 1992). Furthermore, the researcher’s
professional background in the airline industry accounted for the view that past influences
can affect the way data is examined (Charmaz 2014: 117).

A sample of the most interesting codes is presented in Table 4-6 and, as per the original
Grounded Theory approach, coding with gerunds resulted in defining implicit meanings
and actions. The outcome of the initial coding was the creation of codes that unfolded
directions for additional exploration and comparisons (Charmaz 2014: 121).

Table 4-6 Initial Coding Examples

Managing Success while being in control of growth.

Improving Customer Service.
Benefiting consumers with low prices and more travel options.
Understanding and addressing seasonality effects.
Removing taxes i.e Air Passenger Duty (APD).
Dealing with size and complexity.
Understanding the complexity of processes.
Responding effectively to shareholders’ expectations.
Meeting employees’ hopes.
Optimising network.
Driving profitability.
Reducing capacity to much demand in a more efficient way.
Bringing capacity discipline to operations.
Reducing unprofitable flying.
Being mindful with partnership models.
Working for a better result collectively.
Engaging in partnerships for the sake of building a relationship rather than a profitable outcome.
Being profitable during the good and the bad days.
Building trust in the organisation.
Increasing remuneration.
Making company culture a competitive advantage.
Relying on network structure for a competitive advantage.
Relying on managing costs for better profits.
Harmonising seat configurations across narrow body fleets.
Paying standard wages.
Developing the customer experience.

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 Responding to customer needs.
Losing or winning customer base to other business models.
Enhancing customer confidence and loyalty.
Improving the regulatory environments.
Promoting innovation.
Developing clear long-term goals.
Diluting brand’s position.
Improving safety.
Coping with costly IT systems.
Identifying new sources of revenue.
Dealing with uncertainty.
Engaging in a more dynamic way of network planning (opening and closing routes).
Using the social media and digital technology to enhance the customer experience.
Searching for solutions in the pilot shortage problem.
Focusing on CASK, Cash and Capacity.
Being mindful of currency fluctuations.
Replacing lost routes with new destinations.
Applying a data driven approach in identifying potential routes.
Narrowing the gap of customer complaints.
Employing a younger fleet as a cost advantage.
Enduring rising labour and infrastructure costs alongside fuel.
Benefiting from wider trends within the industry.
Forcing a rapid network restructure from Airspace blockade.

When looking at codes with an effort to identify patterns around AoC for the airlines, the
current set provides useful information. Patterns and trends were revealed and grouping
took place with codes that have become more focused. According to the coding analysis,
CEO interviews identified areas that were grouped in five (5) categories. Table 4-7 shows
the constructed categories and the relevant codes presented this time in their analytical
form.

Table 4-7 Constructed Categories from the Published Interview Process

Economic Footprint Customer Value Regulatory

Proposition Requirements
Uncontrollable Growth. Limited consumer options. Regulatory complexity.
Seasonality deficiencies. Meaningless partnerships. Regulatory
Unprofitable flying. Commoditisation. misconceptions.

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 Shareholders intentions. Diluting brands. “Safety first” concern.
Network optimisation shortfalls. Lost loyalty. Airspace blockade and
Size and complexity limitations. network restructure.
Costly systems. Infrastructure
CASK, Cash and Capacity defects. deficiencies.
Fuel fear.
Revenue remodelling.
Partnership tensions.
Labour Relations and Productivity Ethical and Social Responsibility
Labour anxieties. Voice of trust.
Reasonable disagreements. Diversity of corporate culture.
Standard wages. Complaints control.
Pilot shortages.

The five categories acknowledged AoC from different domains i.e the economic, social,
labour, customer and the regulatory. Codes on the five categories have analytical power
as they identify barriers and also explain how they can become a threat for the sustainable
development of an airline. Table 4-8 provides relevant examples from the coding list.

Table 4-8 Examples from the Coding List

Uncontrollable Growth - The code investigates how an airline can mismanage success
and jeopardise existence in the liberalised environment. Expansion plans that are
based on scarce resources (i.e. funding, labour and infrastructure) and are subject to
external factors beyond a company’s control,

Labour anxieties – The code investigates how labour relations can disrupt operations,
the quality of service and employee-management relationship.

Voice of trust - The code investigates how an airline builds or fails to build trust with
its target audience, employees, society, passengers, regulatory bodies and the supply
chain.

Meaningless Partnerships- The code investigates the shortfalls of airline strategic

partnerships in leveraging the passenger experience.

Safety First Concern- The code investigates airline safety issues and their connection
to competitiveness and the external environment.

When comparing Tables 4-5 and Table 4-7, trends and patterns can be identified and as a
result codes can be advanced in terms of analytical power. In addition, the process also

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identified gaps between the existing categories and thematic units, as already discussed
in Chapter two (2). The supply chain relationships and the environment have not been
distinguished from the published interviews. Therefore, to cover the gap another set of
data from the participant’s view, (i.e. airlines) was analysed. Twenty (20) airline CSR
reports were analysed with the method of focused coding. The reports were published
for the year 2017. The airlines were selected to represent different geographic regions
and included key market leaders and airlines with strong CSR initiatives.

The analysis revealed three new categories raising the total number to eight (8). Table 4-
9 provides the outcome of the CSR coding process.

Table 4-9 CSR Coding Results

Constant comparison between the CRS results shown in Table 4-9 and the published
interviews shown in Table 4-7 led to the identification of a potential core category for this
research.

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4.3 The Identification and Development of the Core Category

The identification of a potential ‘core category’ was a difficult task. The examined data
sets (i.e. Data Set I and Date Set II), with the use of a constant comparative method
following the Grounded Theory methodology described in Chapter two (2) identified
relevant AoC for the sustainability of airlines. However, it was not clear how these areas
could be synthesised to inform a solution to the sustainability problem. For this reason,
the researcher decided to explore the theory of sustainability from the viewpoint of those
who practise sustainability at an executive level. As a result, the researcher completed a
course with the University of Cambridge Institute for Sustainability Leadership in
Business Sustainability Management28. This action was also taken in order to increase
theoretical sensitivity29 in the current study. As theory suggests, theoretical sensitivity
can be developed with the use of different means such as inspiring literature, professional
and personal experience and maintaining a critical view of the existing data (Cohen,
Manion and Morrison 2018: 720).

The course examined business sustainability from a holistic perspective and concentrated
on business sustainability management. The course covered the domains described in
Figure 4-2 and the material obtained along with the assessment process informed this
research in four key areas: the late stage literature review with more advanced topics in
the sustainability domain; the core category with the interpretation of concepts in the
context of a sustainability; the development of the Conceptual Framework with
contemporary tools and sustainability practices; and, the sustainability case study with
valuable insights for analysis.

28
Refer to Appendix G for relevant Certificates.
29
Theoretical sensitivity refers to the ability of the researcher to perceive important data insights that
contribute to theory building (Cohen, Manion and Morrison 2018: 720).

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 University of Cambridge Institute for Sustainability and Leadership
2018 Programme of Study on Business Sustainability Management

What are the

M1_Sustainability challenges and
Challenges and opportunities facing
Opportunities your business
Literature
Review

Rewiring your What is the business

case for sustainability
business approach
M2_The Business for your organisation
Case Study Case and Leadership
Business for Action
Sustainability Literature
Review
Management All business are
situated within the
regulatory
M3_Regulatory
M7_Collaboration and environment. How is
Environment and yours impacted?
Partnerships
international policy

*Levers of Change
Conceptual
Framework

M6_Communication M4_Production and

and Marketing Consumption

M5_Design
Technology and
planning for
sustainability

Figure 4-2 A Model of the Structure of the Business Sustainability Management Course, as adopted by
CISL Course Syllabus (CISL 2018i)

Overall, the concepts of leadership, sustainable production and consumption, technology

and planning for sustainability, collaboration and partnerships for sustainable
development and sustainability marketing form a new way of thinking in management,
according to CISL.

The course introduced new areas of inquiry such as the Levers of Change (i.e. five key
areas where companies need to focus their business strategies) and concluded with the
need to align the business approach with sustainable development. With the new mind-
set in place, the researcher reviewed the emerged codes and considered the construction
of a potential core category under the name ‘Sustainability Business Drivers’ (Su
Business Drivers).

The potential core category, Su Business Drivers, took the form of a sustainability concept
consisting of eight focused categories. As shown in Figure 4-3, the potential core category

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is central to the category system and to sustainability. It aims to provide a principle
solution and integrates the greatest number of codes (Cohen, Manion and Morrison 2018).
Overall, the research study to this point identified a potential core category which
accounted for most of the data and also had the greatest explanatory power among the
other categories.

Labour Relations Ethical and

and Productivity (LRP) Social Responsibility
(ESR)

Economic Footprint Supply Chain

(ECO FTP) Interdependencies
Core Category (SCI)
Su Business
Drivers

Customer Value
Proposition
Consumer Protection
(CVP)
(CON PTC)

Regulatory Environmental Conformity

Requirements (ENV)
(REG RQT)

Figure 4-3 Core Category ‘Su Business Drivers’

The eight (8) focused categories were defined as follows:

- Economic Footprint (ECO FTP): A category that refers to an airline’s economic

footprint and could be viewed as all the spending, the employment and earnings
in a region that are related to all economic activity by that airline.
- Customer Value Proposition (CVP): A category that refers to all the benefits an
airline promises to offer to its travelling public in return for a ticket payment.
- Labour Relations and Productivity (LRP): A category that refers to the quality
of labour relations and productive performance of an airline.
- Regulatory Requirements (REG RQT): A category that refers to the need for
regulatory uniformity and compliance with license, safety and security,
maintenance standards and flight training requirements as well as the
dissemination of best practices in this area by airlines and their key stakeholders.

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 - Supply Chain Interdependencies (SCI): A category that refers to the pivotal
role that airlines play in the aviation value chain.
- Consumer Protection (CON PTC): A category that refers to airlines protecting
the rights of the passengers while they exchange truthful and transparent
information in the marketplace.
- Environmental Conformity (ENV): A category that refers to airline actions
resulting in strong and constant improvement of ICAO’s environmental goals.
- Ethical and Social Responsibility (ESR): A category that refers to airlines
conducting business in an honest and lawful way while embedding business
practices that contribute positively to social welfare.

In addition to the developed focused categories, the coding process along with the
literature inquiry allowed for the following hypotheses to emerge:

(a) Several impediments to sustainability create a threat to ‘equity over time’ in the era of
liberalization (H-1).
(b) A Conceptual Framework that generates a holistic approach to sustainability and
creates the foundation for the establishment of a Management System for Sustainability
could improve airlines’ ‘equity over time’ in a liberalised environment (H-2).

In order to test the outcomes of the coding process a third set of data had to engage with
the research process.

4.4 Results of Date Set III: Testing the Core Category and the Saturation Process

The new set of data that was analysed was the results of twenty (20) semi-structured
interviews with aviation professionals from the wider CAT system. The interview
process was designed to:

- Discuss and test the eight focused categories, their perceived definition and look
for any additional emerging category.
- Critique the holistic view of the CAT system.
- Identify impediments for the sustainability of airlines in a liberalised environment
and test (H-1).
- Examine views with regards to the development of a Conceptual Framework that
generates a systemic approach to the sustainable development of airlines that
operate in a liberalised environment and creates the foundation for the

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 establishment of a Sustainability Management System (SuMS) in line with
continuous improvement standards. In addition, test (H-2).
- Identify if there are any similar frameworks available to Commercial Air
Transport today and thus verify the knowledge gap.

The results presented below act as a supporting mechanism to the development of the
sustainability construct concept and the saturation process that follows the constructivist
Grounded Theory paradigm.

4.4.1 Outcomes of the Interview Process

- The interview outcomes were very resourceful and suggested that professionals
found the context of this research relevant and valuable. All five questions were answered
by all the participants and the research outcome was regarded as a valuable addition to
the formation of the final construct. The interviewee background was discussed in
Chapter two (2); Table 4-10 provides summarised information for recap purposes.

Table 4-10 Summarised Information

Participants’ background in the CAT system Number of Participants

Regulatory Authorities 3
Airline Strategic Alliances 1
International organisations 1
Airlines 5
Airline Consultants/Senior Trainers 3
Academics with industry experience 5
Airports 2
Total number of Participants 20

The following sections outline how the interview process informed this research study.

Outcome of Question One

The purpose of question one was to test the selected categories and to validate that the
coding process revealed the ‘complete’ set of drivers for the sustainability of airlines in a
liberalised environment. The question emphasised the positive role of the liberalisation
process both on an economic and social level. The participants overall (20 participants)
demonstrated full agreement for the positive role of liberalisation in the development of
the airline industry. This shows that there is still positive momentum for the liberalisation

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process in their eyes.

In the second part of the question, interviewees were asked to choose categories that were
in their opinion vital for the sustainable development of airlines. Figure 4-4 provides the
results per category.

Participants Per Category

ETHICAL AND SOCIAL RESPONSIBILITY 20

ENVIRONMENTAL CONFORMITY 17

CONSUMER PROTECTION 15

SUPPLY CHAIN INTERDEPENDENCIES 16

REGULATORY REQUIREMENTS 20

LABOUR RELATIONS AND PRODUCTIVITY 16

CUSTOMER VALUE PROPOSITION 17

ECONOMIC FOOTPRINT 20

0 5 10 15 20 25

Figure 4-4 Participant Results per Category

More specifically, the majority of participants, fifteen (15), responded that all categories
are vital for the sustainable development of airlines while four (4) acknowledged five (5)
categories and only one participant (1) acknowledged only three (3). The categories with
the highest acceptance were: Economic Footprint, Regulatory Requirements and Ethical
and Social Responsibility. The category with the least acceptance was that of Consumer
Protection followed by labour relations and supply chain interdependencies. More
specifically, the participants from the airline industry were among the ones that didn’t
select the entire set of categories while the participants from the regulatory side and
academics were among those who selected all the categories.

The second part of the question included the option to add an additional category. In this
option nineteen (19) of the twenty (20) interviewees responded that the suggested set of
categories is sufficient. Only one participant suggested ‘use of data’ as a separate
category. However, the researcher provided the clarification that use of data was to be
considered as a property of a selected category and not as a category. Overall, the

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outcome of the first question suggested that the focused categories had a wider acceptance
in the eyes of aviation professionals and could be considered as business drivers for
sustainable development.

Outcome of Second Question

The purpose of the second question was to confirm the vision that the CAT system could
be viewed holistically and most importantly through the lenses of five (5) key groups. In
the CAT system, these groups interlink with each other but with different interests.
However, their common goal is the sustainable development of Commercial Air
Transport. The schematic was originally developed with valuable information from a
range of sources including ICAO (2004), Tretheway and Markhvida (2014) and ATAG
(2018b).

With regards to the presentation of the CAT system in the relevant schematic, all twenty
(20) participants accepted that the schematic presents a holistic view. They also accepted
the view of the five key groups that interlink and the idea of the different interests. Most
of the participants, seventeen (17) out of twenty (20) accepted the schematic without
asking to amend it. However, there were three very interesting comments that are
included in the amended version in Figure 4-5. Participant P6 suggested to group the
wider value chain with a focus on the airline industry. P20 suggested to make the original
‘customer groups’ more inclusive to include passengers and local societies. P8 suggested
to add academia and training organizations in the value chain.

As a result of the feedback, the schematic was amended as shown in Figure 4-5:

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 Actors of the International Commercial Air
Transport (CAT) System
Non Governmental Industry
Driven Organisations
Regional Associations (A4A, Environmental
A4E, ERA, ALTA, AFRAA, Associations (ISCA,
AACO etc) Greenpeace, WWF etc.)

Intergovernmental Organisations Commercial Air Transport Industry

Global Associations Cross Industry

and Regulatory Bodies

(IATA, IBAC TIACA
ACI etc)
Groups (ATAG FSF
etc)
Wider Value Chain
Airline Suppliers
International and national organisations

linkages
linkages linkages Aircraft Infrastructure (Flight services, fuel

linkages
responsible for creating standards and operating manufacturers and Providers (Airports, suppliers and
suppliers ASNPs, aviation sustainable fuel,
procedures and regulations across all the (airframe, engine communication ground handlers,
interested parties of the commercial air transport and componentS) providers) MROs, Caterers, fuel
suppliers)
industry.
linkages linkages

Aircraft Financing Systems solutions

ICAO – UN organ and Worldwide Related Publics (Lessors, credit (Sabre KALE)
Intergovernmental Organisation (Passengers – Local Societies) agencies and other
firms used as sources
of capital)
Airlines
Media, consulting
Users of the commercial air (Stand alone –
agencies and intelligence
States and national and transport product (individuals and Airline Groups – web based portals
international regulatory bodies (i.e. businesses ) and local societies Airline Financing and Alliances)
Civil Aviation Authorities EASA, Support (insurers,
Credit Card companies Training Organisations

linkages
FAA, UKCAA, etc.) and Banks) Academic Institutions
linkages Research Centres

Regional Intergovernmental Civil

Aviation Organisations (AFCAC, Firms responsible for Firms responsible for
ECAC, LACAC, ACAC) the distribution of the the distribution of the
linkages linkages airline product – airline product – Cargo
Workforce in Aviation Passenger related related (Freight
(GDS, travel agents, forwarders, Cargo
Other intergovernmental travel integrators) integrators)
organisations interested in Air Aviation Employees (pilots,
engineers, cabin crew,
Transport (other UN organs, management etc. )
Tourism authorities etc.)
Organisations And unions
supporting the interests of the
labour force.

Figure 4-5 Actors of the CAT System as Constructed by the Interview Process and Academic Literature (ATAG 2018b, IATA 2013, ICAO 2004 and Tretheway and
Markhvida 2014)

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Outcome of Third Question

The purpose of question three was to find out whether the liberalised environment posed
a threat for airlines and also to identify key impediments to airline sustainability.

Opinions varied as to whether airlines operating in a liberalised environment are facing

difficulties to sustain their “equity over time”. Twelve (12) out of the twenty (20)
participants agreed with the statement while the other eight (8) considered that it might
be a challenge for airlines to capture the full potential of the liberalization process due to
complex and high cost structures. However, all participants agreed that there are
impediments for airlines that operate in a liberalised environment. Perceptions also
differed on how airlines can manage the challenges effectively. Table 4-11 provides the
results and the reasoning behind the answers.

Table 4-11 Results for Sustaining Equity over Time in a Liberalised Environment

Results Reasoning
Agree Participants acknowledged the
challenges created by the
environment and consider that
the way the liberalised
framework works today creates
numerous systemic problems to
‘equity over time’ for airlines.
Disagree Participants disagreed due to
their belief that airlines with cash
flow and strong leadership can
sustain their ‘equity over time’.
Neither Participants were impartial to the
Agree nor statement. Opinions varied; four
Disagree participants believed that the
external environment can largely
determine the outcome of ‘equity
over time’, and two stated that it
depends on the regulatory
system.

With regards to the second part of the question, all twenty (20) participants contributed
in the development of a diverse list of impediments for the sustainability of airlines. The

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world cloud in Figure 4-6 includes the key findings.

Participants recognised multiple impediments for the sustainability of the airline industry.
These impediments create difficulties across the three main sustainability pillars (i.e.
environmental, societal and economic). Most of the impediments have also been
acknowledged in the literature review, the study of the extant documents and the
published interviews.

Figure 4-6 Impediments to Sustainability

This outcome confirms a set of impediments that also include multiple AoC for the
business sustainability of the airline industry. Those AoC can inform the focused
categories in terms of characteristics or properties, as they are called in Grounded Theory.

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Outcome Question 4

The purpose of this question was to examine the view of the participants for the
development of a Conceptual Framework for sustainability.

The outcome was very positive. All twenty (20) participants commented positively on
the idea. There were also enthusiastic views calling this effort inspiring and innovative.
Nonetheless, there were also insights about the expectations as to the development of the
Conceptual Framework. Figure 4-7 demonstrates the key words used by the participants
to describe their expectation from the development the Conceptual Framework. .

Figure 4-7 In-Vivo30 Words Cloud

The strongest word on the cloud is ‘cost-effective’. The cost element was expected to be
addressed by industry professionals. It also confirms the concerns raised from the CEO

30
The cloud consists of ‘in-vivo’ words which are the actual words used by interviewees.

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interviews at an earlier stage. The cost structure is one of the main challenges and the
airline industry is very sensitive to actions that add more cost. Other key words that stand
out include leadership, monitoring, practical, holistic and innovative. Most of the
aviation professionals acknowledged that airline leadership needs to embrace
sustainability efforts and practice change. They also mentioned that the Conceptual
Framework has to contribute to the success of the company and should be based on
processes that include risk-based thinking

Outcome Question 5

The main purpose of question five was to confirm the knowledge gap. The question
examined whether there was a framework available to the airline industry in the context
of this research.

The results confirmed that none of the twenty (20) participants was
aware of a Conceptual Framework of this kind.

The results of the interview process highlighted a wider concern among the aviation
professionals about the sustainability of airlines and concluded by accepting a new
approach to airline sustainability.

Following on from this, it was important to achieve ‘saturation’ in terms of the core
category and its eight focused categories.

4.4.2 The Saturation Process

In Grounded Theory, saturation occurs when data gathering provides no new insights
(Charmaz 2014). In order to achieve saturation in this study two important steps took
place. The first step was to test the abstract definitions of the focused categories (i.e Su
Business Drivers). Concept testing took place in the interview process with aviation
professionals. The outcomes validated the eight categories and provided useful
information for the further development of their abstract definitions. In addition, the
interview process revealed that a Conceptual Framework was also needed to provide a
complete sustainability construct. Thus, the researcher concentrated on building a
Conceptual Framework based on the information retrieved from the three (3) data sets
and late stage literature used to enhance the theoretical sensitivity. Evidence of the late

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stage literature unfold in section 4.5 and in Chapter five (5).

In addition, the two hypotheses were tested in the interview process, as interview
participants were asked in three different questions to explore the wider meaning of the
emerged hypotheses and justify their view. In addition, the late stage literature search
in the area of Business Sustainability Management confirmed the significance of the
emerged hypotheses as an outcome of this research. As the role of the hypotheses was
more exploratory no additional testing was deemed necessary by the researcher.

The saturation process was completed with the triangulation consisting of four cycles of
interpretation, taking place with the use of multiple types of data sources. Thus, this form
of triangulation allowed the researcher to form the final outcome of this research, the
‘Airline Sustainability Construct’.

4.5 The Airline Sustainability Construct

Successive interpretations in the qualitative data analysis process resulted in developing

a sustainability construct that engage airlines in a systematic review of their main AoC
and inform decision making in an effort to enhance ‘equity over time’. The airline
sustainability construct looks to explore how airlines can become more sustainable in a
liberalised environment. The construct embraces key concepts that have been used in
sustainability literature in order to understand sustainability from a systems thinking view
(Williams et al 2017). It has also been influenced by the research work of CISL in the
areas of sustainability leadership and planning. The airline sustainability construct shown
in Figure 4-8, consists of:

- The eight focused categories with their properties (i.e. areas of focus) and
dimensions, forming the Sustainability Business Drivers (Su Business Drivers)
concept. The concept is pivotal for the sustainability of airlines in a liberalised
environment. It increases awareness of AoC, informs the decision making process
about the complexity of a specific challenge and initiates an inquiry process for
sustainable solutions.
- The Conceptual Framework designed to utilise the Su Business drivers and
implement a systems thinking approach to airline sustainability.

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The Sustainability Construct
High Level Synthesis

Researcher's
Conceptual Framework

PLAN

DO

Feedback Feedback
CHECK
Feedback

ACT

Labour Relations
Ethical and
and Productivity
Social Responsibility

Economic Footprint Su Business Supply Chain

Drivers Interdependencies

Customer
Value
Proposition Consumer Protection

Regulatory Environmental
Requirements Conformity

Figure 4-8 High Level Synthesis of the Sustainability Construct

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 4.5.1 The Sustainability Business Drivers Concept

The Su Business Drivers have been developed in an effort to review AoC for airlines that
operate in a liberalised environment in a more systematic and holistic way. With the use
of diagramming, the researcher was able to look for connections and identify factors
(properties – dimensions) that add power, scope and direction in the selected drivers
(Charmaz 2014: 218). The research identified 27 properties along with indicative
dimensions, as shown in Figure 4-9. Properties emerged from the content analysis of
coding results (i.e. Tables 4-5, 4-7, 4-9 and Figure 4-5) and the sustainability literature
(i.e. Figure 4-2 and additional sustainability bibliography). Properties added scope and
focus to the Su Business Drivers. Dimensions, on the other hand, were used to increase
the power of the properties.

The proposed dimensions are not prescriptive and are more generic in nature following
the integrated reporting example. They flow from interpretations of the sustainability
literature and mainly refer to what it is needed to be measured. The literature states that
non-financial metrics can be included when they create value for the business, with the
aim to better communicate a holistic approach (Burke and Clark 2016). The current
approach includes 2, 3 or even 4 different factors in the given dimensions for adding more
options for exploration of the given property.

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 Strong
Medium High
Weak Medium
Low Researcher's Increasing
Decreasing High
Conceptual Framework Medium
Low

Disruptive
Union Passive
High Human Actions
Medium
Low
Capital
Shortages Voice of
In control Transparent
Out of control Trust
Deceptive
Labour Relations
and Productivity Ethical and
(LRP)
Social Responsibility Linear
Increasing
ESR Circular
Decreasing

Economic Footprint Supply Chain

Standard Sustainability Procurement
(ECO FTP) Interdependencies
Innovative Business Standards
(SCI)
Drivers
High quality
Standard Medium quality
Innovative In control Low quality
Customer Value Out of control
Proposition
(CVP)
Consumer Protection
(CON PTC) High
Medium
Seamless Low
Regulatory Strong
Standard
Effective Requirements Environmental Conformity Medium

Compensation
Ineffective (ENV) Weak

Payments
(REG RQT)
Regulatory faults
High
and
High Medium
misconceptions Increasing
Medium Low Decreasing
Low Strong Greenwashing
Medium Increasing
Weak Increasing Decreasing
High Decreasing
Increasing Medium Focused Categories
Decreasing Low Properties
Dimensions

Figure 4-9 The Su Business Drivers as Part of the Sustainability Construct

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Table 4-12 provides a brief description for every property and dimension of the Su
Business Drivers.

Table 4-12 Properties and Dimensions of the Su Business Drivers

Economic Footprint
Properties Dimensions-Explanation
Growth Control refers to expansion plans In control – expand sustainably.
and the ability of an airline to grow Out of control - expand compromising resources.
sustainably.
Revenue Remodelling refers to Standard – business as usual.
innovative use of the revenue Innovative – following a circular economy model.
management system.
Consumer Cost refers to a ‘total Increasing – the ‘total cost’ is high.
customer’ cost approach. Decreasing – the ‘total cost’ approach is cost effective.
Customer Value Proposition
Properties Dimensions-Explanation
Customer Solutions refers to products Standard - business as usual.
and services that embrace sustainability Innovative – following the PLC approach.
across their Product Life Cycle (PLC).
Use of Data refers to the use of customer Effective – Data analytics customer driven.
information enabling effective Customer Ineffective – Data analytics capacity driven.
Experience Management (CEM).
Use of Technology refers to the use of Standard - use of conventional technologies.
sustainable technologies that enhance Seamless – use of sustainability driven technologies.
customer value.
Regulatory requirements
Properties Dimensions-Explanation
Regulatory faults and misconceptions High – Level 1 major findings.*
refers to the level of awareness in the use Medium- Level 2 minor findings.*
of the regulations. Low – no findings.*
*based on audits – inspections.
Strong – excellent safety record and low risk profile.
‘Safety first’ concept refers to the
Medium – medium to average safety record and
organisational risk profile and the safety
medium risk profile.
performance.
Weak –high risk profile and low safety record.
Competitive Dynamics refers to the Increasing- city pair competition.
liberalisation status of the competitive Decreasing - city pair competition.
environment.

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 Labour Relations and Productivity
Properties Dimensions-Explanation
Employee satisfaction, motivation, and Strong – high satisfaction rate.
loyalty refers to the level of workforce Medium – medium satisfaction rate.
relations. Weak – low satisfaction rate.

High – grounded aircraft (i.e. lack of pilots or

Human capital shortages refers to the lack engineers).
of skilled employees. Medium – risky but manageable situation.
Low – personnel number is sufficient.
Industrial relations refers to union Disruptive – flight operations cancelled.
actions. Passive – no disruption to flight operations.
High - pay, gender, race and disability gaps addressed
Gender diversity and inclusion refers to effectively.
employment gaps between staff based on Medium – steady progress in addressing pay, gender,
protected characteristics (i.e. Age, race and disability gaps.
Disability, Race and Sex) Low - slow progress in addressing pay, gender, race and
disability gaps.
Ethical and Social Responsibility
Properties Dimensions-Explanation
Transparent – the airline is honest and makes significant
Voice of trust refers to the level of
efforts to adapt sustainability strategies.
transparency and honesty with regards to
Deceptive- airline makes no significant effort but makes
the environment and the society.
false impression regarding sustainability.
Responsibility costs refer to cost that Increasing – cost is growing.
relates to environmental and social Decreasing – cost is reducing.
responsibility attributes.
High – significant effort in meeting the majority of
SDG Contribution refers to corporate relevant SDGs.
commitment to UN SDGs. Medium – average contribution.
Low – limited or no contribution to SDGs.
Supply Chain Interdependencies
Properties Dimensions-Explanation
High quality - suppliers/partners with premium
Procurement Standards refers to the standards.
suitability of the selected Medium quality - suppliers/partners adequate standards.
suppliers/partners. Low quality - suppliers/partners with inadequate
standards.

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Supply chain innovation refers to Linear – supply chain solutions based on transactional
adopting a closed loop reasoning where mind-set.
the customer supplier relationship moves Circular – supply chain solutions based on shared value
beyond the transactional mind-set. mind-set.
Resource Scarcity refers to supplier In control - resources are available.
resources and their availability. Out of control – lack of resources.
Environmental Conformity
Properties Dimensions-Explanation
Climate Change mitigation refers to Strong - effective risk management in place.
effective risk management regarding Medium - satisfactory planning in place.
climate change. Weak – limited planning in place.
High – meeting effectively ambitious targets.
Environmental sensitivity in the use of
Medium - meeting effectively compliance targets.
noise, waste, energy refers to the
Low – setting and meeting low targets.
development of an effective
Greenwashing – conveying a false impression about the
environmental profile.
environmental profile.
Increasing – increased Year on Year (YoY) Carbon
Footprint measurements (i.e. tCO2 per passenger and
CO2 emissions refers to total carbon
total tCO2.)
footprint produced by the airline.
Decreasing – decreased YoY Carbon Footprint
measurements (tCO2 per passenger and total tCO2.)
Other pollutants refers to air quality High – meeting effectively ambitious targets.
standards and monitoring Nitrogen Medium - meeting effectively compliance targets.
oxides (NOX) and Particulate matter Low – setting and meeting low targets.
(PM) levels.
Consumer Protection
Properties Dimensions-Explanation
Discrimination incidents refers to any High –major incidents.
incidents regarding passenger Medium- minor incidents.
discrimination. Low – no incidents.
Passenger complaints refers to the Increasing – number of complaints rising i.e. YoY basis.
number and nature of complaints Decreasing - number of complaints falling i.e. YoY
received by customer service. basis.
Compensation payments refer to Increasing - YoY rates rising.
passenger remuneration due to flight Decreasing - YoY rates falling.
disruptions.

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With the given properties and dimensions, decision makers are able to increase their
awareness about AoC and act in a more holistic way.

A simple two-step process is recommended for the use of the Su Business Drivers
concept. The first step is to use Table 2-12 to increase awareness about the current
sustainability status. For example, the concept could be used to perform a situational
review of existing business activities related to the properties and dimensions of the Su
Business Drivers. This process can identify Strengths, Weaknesses, Opportunities and
Threats (SWOT) for the individual airline. Based on the results of the situational review
the second step initiates an inquiry process where decision makers can investigate links
between the different Su Business Drivers and build a business case for sustainability at
a corporate level. The use of the Su Business Drivers concept can make important
contributions to the attainment of sustainable solutions. Thus, the eight (8) Su Business
Drivers with their properties and dimensions can act in this case as innovative catalysts
that contribute to the formation of the Conceptual Framework.

4.5.2 The Formation of the Conceptual Framework

The formation of the Conceptual Framework was necessitated by the need to create a
narrative that informs and enables business sustainability for individual airlines. For this
reason, the researcher considered the development of the Conceptual Framework based
on the following principles:
- Holistic and rational based on the ‘commercial imperative for sustainability’.
- Risk-based thinking.
- Continuous Improvement reasoning.

The discussion below explains the role of every principle in the development of the
Conceptual Framework.

4.5.3 Holistic Approach and the Commercial Imperative for Sustainability

Michael Porter (1979) was among the first that informed companies about the need to
“look beyond their corporate boundaries by factoring their industry environment into their
strategy-decision making” (Bertels and Dobson 2017: 4). Nevertheless, contemporary
sustainability literature moves a step further; it proposes that businesses should view the
way they operate as part of a ‘nested system’ (i.e. Figure 4-10). Instead of reporting their
socio-ecological impact, companies are asked to embed contextual strategies that

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influence positively the ecosystem, the economy and society (Bertels and Dobson 2017:
4). In this way, companies are able to understand their impact and influence change in
the nested system. Similarly, in this research study, the Conceptual Framework embraces
the holistic concept in an effort to influence decision makers in the airline industry
towards developing more focused objectives within the sustainability context.

Figure 4-10 The Nested System as adopted by Bertels and Dobson (2017)

Nonetheless, this type of reasoning includes multiple challenges. For instance, responding
effectively to sustainability challenges (ecological, social and commercial) and taking
advantage of opportunities like the ones described by the Global Opportunity Explorer
(2018), which requires companies to embed strategic and operational planning within the
context of Sustainability. The commercial impact of sustainability changes the landscape
in which companies operate but can still safeguard profits and commercial benefits. This
type of reasoning is called ‘the commercial imperative for sustainability’ (CISL2018g).

4.5.4 Risk-Based Thinking

Risk-based thinking is also critical for decision making. In accordance with ISO 9001
2015 (Abuhav 2017) the word risk is defined as the effect of an uncertainty. Moreover,
according to Project in Controlled Environment (PRINCE2) methodology, a risk is

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classified as an uncertain event that has an impact on the achievement of business
objectives.and it consists of threats that could have a negative impact or opportunities
that could have a favourable impact on key organisational processes and objectives
(Axelos 2017). In fact, a company that effectively addresses risks and opportunities
associated with the sustainability context is more likely to integrate sustainability into
strategy more effectively (Bansal and Desjardine 2014).

4.5.5 Continuous Improvement

The purpose of the Conceptual Framework is to generate a total system approach to airline
sustainability and to create the foundation for the establishment of a Management System
for Sustainability in line with a continual improvement approach, whilst providing a
sound basis for sustainable development initiatives. The researcher selected the Plan-Do-
Check-Act (PDCA) cycle methodology to build the Conceptual Framework for this
research study. The PDCA cycle assists effectively with the structure of the Conceptual
Framework and also integrates well with the Su Business Drivers concept. The PDCA is
a four-step management methodology for the control and continuous improvement of
business processes and products. It is also known as the ‘Deming cycle’ since it was
developed by Dr William Edwards Deming in the 1950s (Moen and Norman 2010). The
four phases or stages of the PDCA cycle are shown in Table 4-13.

Table 4-13 The PDCA Cycle (Pietrzak and Paliszkiewicz 2015)

Stage Stage interpretation based on literature

Understand the organizational context; set objectives and
PLAN
measurable targets; design the strategy and plan for control.
Implement the designed strategy and align the company to the
DO strategy; communicate and motivate people to engage effectively
with the application and execution of the proposed strategy.
Examine how well intended outcomes have been accomplished;
CHECK check for any deviations from the expected outcomes; milestone
review; observe for effects and monitor any changes.
Assess deviation from the targets; confirm and correct and feed the
ACT DO stage (single loop knowledge) or reconsider strategic
components and return to the PLAN (double loop knowledge).

The PPDCA methodology allows gradual development of a strategy based on an

information intensive process that aims to help organisations to change and improve their

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processes or to solve a persistent problem. PDCA methodology is implemented in four
phases and it could also be utilised for the development of a Management System
framework.

Many international standards31 combine the PDCA Cycle logic with a process approach
to create management systems that address risk, meet management’s objective, and
enhance quality and support evidence decision making.

4.6 Chapter Summary

Chapter four (4) discussed the outcomes of the coding process. Three data sets were
examined with the application of different coding techniques. The first outcome
identified seven thematic units and produced a holistic view that informs the airline
industry about AoC for sustainability that emerge from a systems perspective. The
second outcome demonstrated AoC from an airlines perspective and assisted in the
construction of a core category (i.e. Su Business Drivers) consisting of eight focused
categories (i.e. ECO FTP, CVP, LRP, REG RQT, SCI, CON PTC, ENV, ESR). The
core category was assessed with the use of the interview process and the integration of
late-stage literature review. Properties and indicative dimensions emerged, and the core
category was concluded in a way that informed airlines about sustainability concerns
more holistically. The final outcome of the Grounded Theory process was the ‘Airline
Sustainability Construct’ that consists of:

(a) The Sustainability Business Drivers (Su Business Drivers) that review AoC for
airlines in more holistic and systematic way.
(b) A Conceptual Framework that complements the Su Business Drivers and
generates a holistic approach to sustainability. It also creates the foundations for
the establishment of a Management System for Sustainability that could improve
airlines’ ‘equity over time’ in a liberalised environment.

The construct aims to leverage sustainability awareness and assist airlines in creating
sustainability solutions. The use and application of the Conceptual Framework will be
discussed in more detail in the following chapter.

31
For example, ISO 9001:2015 and ISO 9004 follow the PDCA Cycle approach.

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 Chapter Five: The Conceptual Framework
This chapter provides a comprehensive overview of the Conceptual Framework that is
presented as a proposed solution to the research problem. In particular, the following
sections present and analyse the Conceptual Framework that is based on the PDCA cycle
methodology. The chapter is divided into three parts. The first part introduces the
Conceptual Framework and two fundamental attributes, the Sustainability Criteria (Su
Criteria) and the Levers of Change. The Su Criteria are also connected to the Su Business
Drivers concept. The second part is the structure of the Conceptual Framework. The
design of the Conceptual Framework is based on the PDCA cycle methodology that has
been enriched by the research outcomes of the Grounded Theory approach. The
Conceptual Framework has been designed to direct attention to specific areas for the
sustainability of airlines in a liberalised environment and to implement an integrated
systems thinking approach to deliver sustainable solutions.

The Conceptual Framework is also translated into a practical implementation guide for
the development of a Management System for Sustainability (SuMS) suitable for airlines
operating in a liberalised environment. This is the final part of this chapter. The guide
offers the ability to explain the use of the Conceptual Framework and assist more
effectively in the implementation of the different steps. The Conceptual Framework can
be applied to any airline regardless of business model or geographic region. Further
research could address the case of airline groups and that of global airline alliances.

5.1 The Attributes of the Conceptual Framework

The Conceptual Framework implements the PDCA cycle methodology in four stages.
The first stage is the PLAN cycle process. The purpose of the PLAN cycle process is to
develop a robust plan for sustainability with measurable targets and other intended
outcomes based on a thorough situational review and informed decision making. The
second stage is the Do Cycle process. The DO Cycle process is based on the successful
implementation of the plan developed earlier. In this effort, the use of effective
communication and workforce motivation is essential for the delivery of effective
strategies. The third stage is the Check Cycle process. At this stage, targets and intended
outcomes can be checked for performance evaluation purposes. Lastly, the Act Cycle

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process stage provides the opportunity for valuable feedback so that additional action
takes place.

The proposed Conceptual Framework is presented in Figure 5-1.

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 PLAN

Pillars of the PLAN process

Situational review of the
organisational environment
and existing sustainability
challenges and opportunities
Setting sustainability
objectives and
measurable targets
across the Su Criteria
Developing the
Establishing a process
Business Case for
approach to achieve targets
Sustainability with a
and facilitate planning and
focus on Su Criteria
control of management
and the Levers of
activities
Change

Su Criteria
Levers of Change (CISL 2018h)
Action for Su Su Business Drivers with Impact of the Regulatory Environment
Leadership and associated properties and Sustainable Production and
Workforce dimesons (Author) Consumption
motivation ECO FTP SCI Design Technology and Planning for
CVP LRP Sustainability
UN SDGs REG RQT ENV Marketing and Communication
Contribution CON PTC ESR Collaboration and Partnerships

DO
Plan in Action

Pillars of the DO process

Organisation
Collaboration and Implementing alignment to
Partnerships aligned contextual Sustainability Context
with Su Business strategy Communication and
Drivers and Marketing aligned
UN SDGs with Su Business
Effective
Impact of the Drivers and UN SDGs
Communication of
Regulatory Sustainability Strategy
Sustainable Production Environment Design Technology
and Consumption aligned with Su and planning for
aligned with Business Drivers sustainability aligned
Su Business Drivers and and with Su Business Workforce motivation
UN SDGs UN SDGs Drivers and (Sustainability leaders
Feedback UN SDGs
Feedback and Champions)
for innovation
for
and
reconsidering
further
sustainability
improvement
objectives
on CHECK
sustainability Performance Evaluation

Monitoring successful
implementation vs
deviations from targets
Feedback
for
Improving targets

Meeting the Meeting partially Fail to meet the

targets the targets targets

ACT
Feedback for Action

Yellow Flag Red Flag Green Flag

Single Loop Double Loop Double Loop
Developing solutions Developing solutions Developing innovative
that feed the DO for improvement that solutions that feed the
process feed the PLAN process PLAN process

Figure 5-1 The Researcher’s Conceptual Framework

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 5.1.1 The Su Criteria

The Conceptual Framework has been designed to address the needs of the airline industry
in the domain of business sustainability. It helps airlines to build a sustainable path and
meet the demands of the future, acknowledging challenges and opportunities driven by
internal and external factors (i.e. economy, society and the environment). The Conceptual
Framework applies a set of Sustainability Criteria (Su Criteria) that integrate well with
sustainability theory, aimed to create ‘Levers of Change’ for the business environment.
The Su criteria were derived as an outcome of inductive reasoning. The idea for
developing criteria for the planning process was necessitated in order to customise the
PDCA cycle to the needs of the airline industry and to satisfy the criteria set earlier in the
literature review chapter. Furthermore, the framework suggests a process approach that
can facilitate the development of a customised Management System for Sustainability
(SuMS).

The Su Criteria guide both the planning and implementation process of the PDCA cycle.
In fact, the Su Criteria differentiate the application of the PDCA cycle from a cycle that
assists conventional strategic improvement to a cycle that delivers sustainability results.
The Su criteria are important for the development of the business case, the sustainability
objectives and strategies as well as the development of the correct activities and
processes. They shift the focus towards achieving sustainability targets and meet the
criteria set earlier in the literature review chapter. The three (3) Su Criteria are:
1) Su Business Drivers
2) Action for Sustainability (Su) Leadership and Workforce Motivation
3) UN Sustainable Development Goals (SDG) Contribution

The application of the Su criteria is a critical factor for the effectiveness of the framework.
Airlines can choose how to implement the set of criteria that are suitable to their own
business case for sustainability.

5.1.2 Su Business Drivers

The outcome of the primary research acknowledges eight (8) focused categories (i.e. Su
Business Drivers) that are significant for the sustainability of airlines in a liberalised
environment. In the Conceptual Framework the Su Business Drivers facilitate the
situational review process. This is the process where airlines identify their current status

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with regards to important sustainability factors (i.e. properties and dimensions of Su
Business Drivers). The outcome of the situational review informs and assists the
development of the sustainability objectives. The development of the objectives is a
complex process in the sustainability domain. Airlines need to be aware of the different
links between the Su Business Drivers before identifying sustainability objectives and
also align them with the sustainability context (i.e. Levers of Change). Table 5-1 presents
the relevant block linked to the Conceptual Framework.

Table 5-1 The Su Business Drivers Block

Su Business with associated properties and

Dimensions (Author)
ECO FTP SCI
CVP LRP
REG RQT ENV
CON PTC ESR

5.1.3 Action for Sustainability (Su) Leadership and Workforce Motivation

Leadership is a key ingredient for changing views and initiating purposeful actions in the
context of sustainability (Visser and Courtice 2011). The Cambridge Impact Leadership
Model, (CILM) shown in Figure 5-2, has been chosen as the preferred approach to
leadership for the Conceptual Framework. It acknowledges that leadership in
management requires a mind-set for sustainability and recognises that the CILM includes
the right standards to build this type of mind-set. The model has been designed to build
leadership skills for long-term business success and for system-level change (CISL
2018a). This is a model that acknowledges the contribution of the UN Sustainable
Development Goals as a universal, comprehensive and ambitious task for leaders and
their team. It also embodies the commercial imperative for sustainability and takes into
account a risk-based thinking reasoning.

This model is the outcome of informed research by CISL’s work with over 8,000 leaders
around the world; it fosters leadership that builds systemic understanding and delivers
progress and transformation (CISL 2018a). In the case of the Conceptual Framework the
CILM model could work in order to ‘cultivate purposeful, reflective leadership at all
levels, and to embrace diverse and complementary strengths and approaches’ (CISL
2018a: 14). The airline business from a sustainability perspective requires business

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leaders that are able to align commercial outcomes with the delivery of positive social
and environment targets. With the use of CILM airlines could transform their leadership
landscape in different domains (i.e. industrial relations, SDG contribution and the
ecosystem).

Business Puprose

Developing Leading Change

Leadership for Sustainable
Across Business Economy

The Leadership
We Need

Figure 5-2 The Cambridge Impact Leadership Model as adopted by CISL (CISL 2018a)

In addition to developing a leadership model sustainability needs to be embedded into the

mind-set of individual employees in a way that actions, decision and contact with
stakeholders define a sustainable organisation (Exter 2014). The relationship that defines
this view is expressed as follows:

i + oc = so

Inputs (i) account for individual behaviour and values. Organisational culture (oc) is
defined as one’s experience at work. Sustainable outcomes (so) refer to sustainability
being embedded into mind-set and behaviour of employees (Exter 2014: 3). For the
researcher’s Conceptual Framework, workforce motivation and sustainability leadership
are two factors that play a critical role in the successful implementation of the PDCA

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cycle process.

Airlines will have to create their own sustainability leaders and champions/change agents.
Employee engagement with the sustainability context requires a behavioural change
(Exter 2014: 15). Therefore, it is important to initiate steps that move beyond informing
and communication, and invest in programmes that stimulate learning and engagement in
practicing sustainability in the working environment (CISL 2018a; Exter 2014).

5.1.4 UN Sustainable Development Goals (SDG) Contribution

The Conceptual Framework considers that SDG contribution can improve an airline’s
interaction with the travelling public, local societies and the environment. In 2014, the
UN organisation introduced a transformational vision of the world and asked the Member
States to encompass seventeen (17) objectives, namely Sustainable Development Goals
(SDGs), that stimulate action in areas that are important for humanity and the planet
namely, peace, prosperity, people, environment and partnership, by 2030. The SDGs were
adopted in a meeting at the United Nations Headquarters in New York on 25-27
September 2015 by the Heads of State and Government and High Representatives
(Sustainable Development Goals n.d.). This type of mind-set differs from conventional
management thinking as it takes into account concepts like Sustainable Production and
Consumption (SPC), design technology and planning for sustainability, collaborations
and partnerships for achieving sustainability goals, sustainability marketing and
leadership for sustainability. ICAO, as a specialised UN agency, was the first
organisation in the CAT system that linked its five (5) strategic objectives (e.g Safety,
Security etc) to the seventeen (17) UN SDGs as shown in Figure 5-3.

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 SDG1

SDG2

SDG3

SDG4

SDG5

Safety
SDG6

SDG7

CAP/EFF
SDG8

SDG9
Security

SDG10

ECO D EV
SDG11

SDG12
ENV

SD13

SDG14

SDG15

SDG16

SDG17

Figure 5-3 ICAO Strategic Objectives Linked to SDGs (ICAO n.d; Sustainable Development Goals n.d.)

The UN SDG have been developed to motivate businesses to contribute to the wellbeing
of society and the environment. The development of business objectives could facilitate
further enhancement of the relevant goals. Airlines also can link their strategic objectives
to assist the SDGs initiative and currently there are a number of airlines that have taken
this approach, based on the CSR reports that have been reviewed in this research.

5.1.5 The Levers of Change

Business sustainability management addresses key concepts that impact businesses and
their ability to form effective strategies in the wider context of sustainability. The
following five (5) areas are considered catalytic in informing decision-making towards
the sustainability direction:

a) Impact of Regulatory environment. Shaping a zero carbon economy and

addressing the negative effects of human activity requires policy instruments at a global

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level and businesses that understand their pivotal role in the well-being of civil society
and the environment (CISL 2018b). The airline industry is considered to be a highly
regulated industry (Doganis 2019). Airlines can play an important role in shaping core
objectives in this field and contribute to high level initiatives that can support their
sustainable path in a liberalised environment.
b) Sustainable Production and Consumption (SPC). The SPC concept has a unique
role in the sustainability discussion. Businesses in the context of sustainability need to
design their own sustainable production and consumption patterns. Emerging schools in
this area involve systems thinking, sustainable business models and circular economy
thinking (CISL 2018c). For the airlines tackling overcapacity, unprofitable flying and
unsustainable growth are two areas that require attention and are closely related to SPC.
c) Design Technology and Planning for Sustainability. Sustainability initiatives in
the areas of product design and technology are meant to support a more sustainable future.
Technology is a driver for the aviation industry and a key contributor to passenger growth
(CISL 2018d). Innovation across the supply chain can reduce cost and carbon footprint,
parameters that are critical for the future of the airline industry.
d) Communication and Marketing. The ability to effectively communicate
sustainability objectives and strategies within the airline environment and especially with
stakeholders, including employees, supply chain and the travelling public. Sustainability
Marketing is a more innovative conception of marketing than the traditional. The
literature informs that an integrated approach that shifts the attention of the customers
from consumerism to a more responsible path incorporates a 4 Cs concept into the
traditional marketing approach, which will be more beneficial in shaping effective
sustainability strategies (Peattie and Belz 2010). Airlines could study all four areas of the
4 Cs concept, shown in Figure 5-4, from creating customer solutions that take into account
the entire Product-Life-Cycle (PLC) of their products to developing innovative charging
systems, better distribution processes and more effective communication processes
leading to a seamless travel concept.

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 Customer Solutions Consumer Cost
(Products and Services (Innovative Charging
that embrace systems that include a
Sustainability along their total customer cost
PLC. ) approach )

Convenience
Communication
(Distribution processes
(communication with
that move beyond the
stakeholders that is open
acquisition of products to
on dialogue and critique
include their use and
and informs
disposal)
transparency)

Figure 5-4 The 4 C’s Concept as adopted by Peattie and Belz (2010)

e) Collaboration and Partnerships. Sustainability can be achieved collectively

(CISL 2018f). Collaborations and partnerships with actors in the corporate environment
(airlines, airline alliances, aircraft manufacturers, etc), governments, international
organisations and other non-profit actors can build a stronger argument towards achieving
large-scale change in this area.

5.1.6 The Role and Relevance of Existing Sustainability Indicators in the

Development of the Conceptual Framework

The role and relevance of existing sustainability indicators to the Researcher’s

Conceptual Framework is considered highly significant for planning purposes and for
setting achievable targets in the sustainability domain. The idea of including data that
can inform better decision making for sustainability purposes is well recognised among
scholars and key organisations (Patterson 2016; Stevenson and Marintseva 2019;
Sustainable Development Goals n.d.; United Nations n.d.; UNWTO n.d.). The aviation
and the tourism industries have many things in common and therefore the work carried
out by UNWTO32 on the development of sustainability criteria for tourism destinations is
in the context of this research study. The UNWTO opened a significant discussion on
sustainable development in tourism and in 2004 developed a guidebook for the
development of sustainable indicators for tourism destinations (UNWTO 2004). In

32
UNTWO is a UN specialised agency for Tourism since 2003.

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addition to this effort, the Global Sustainable Tourism Council33 (GSTC) introduced a set
of criteria known as the GSTC Criteria to set industry standards for tourism organisations
(Patterson 2016: 4). There is a wealth of different criteria that can be used in setting
measurable targets as means of Sustainability Indicators (Su Indicators) in the current
framework. This can include raw data, category indices, ratios and, percentages. The
merits of selecting good indicators as measurable targets in the Conceptual Framework
are many. Indicators can facilitate better decision-making and assist more efficiently in
progress evaluation.

An extensive list of existing sustainability indicators from different sources is presented

in Table 5-2. The selected indicators have been used for sustainability related projects,
mainly in the tourism industry. Similar indicators can be adjusted to the sustainability
needs of airline related projects and assist the effective use of the researcher’s Conceptual
Framework.

Table 5-2 Existing Sustainability Indicators (Farinha et al 2019; Sloan, Simons-Kaufman and Legrand
2012; United Nations Economic and Social Council 2019)

Environmental Indicators
Sub domains: Average air temperature and Temperature extremes
Climate Change, Energy Average precipitation
Management, Waste Air Quality Index
Management, Air Quality Levels of population exposed to noise
and Noise, Carbon Tourist density
Management, Recycling and Renewable energy share
Disposal Global primary energy intensity (ratio of energy per unit of GDP)
Worldwide material consumption (material footprint per capita)
GHG (Greenhouse Gas) emissions
Direct energy consumption
% use of energy efficiency measures
Urban waste collected
% urban waste prepared for reuse and recycling
% of firms that make waste separation
Investments on protection of biodiversity and landscapes
Global mean percentage of biodiversity areas covered by protected
areas

33
GSTC is a multi-stakeholder organisation formed in 2008 to promote sustainable tourism (Patterson
2016)

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 Material footprint per capita
Environment expenses

Social Indicators
Sub domains: Demography, Population death rate
Safety, Social Cohesion, Annual population growth rate
Wellness in Destination, Resident population growth
Tourist Satisfaction Foreign population with status of residence
Literate world population share
Unemployment rates
Tourist satisfaction
% satisfaction of inhabitants with tourism
% satisfaction of inhabitants with impact on tourism
Crime rates
Trafficking rates
Regional development composite index
Annual number of climate-related and geophysical disaster deaths
Annual number of deaths from infectious diseases
Access to internet
Annual number Occupational Safety and Health incidents
Economic Indicators
Sub domains: Economic Global growth rate of real GDP per capita
Impact, Seasonality, Inflation
Employment Per Capita purchasing power
Sectoral employment
Employment by gender
Seasonality rate
Seasonal employees
Labour productivity (GDP per employed person)
Direct economic losses from disasters
Climate-related and geophysical economic losses
Economic losses from infectious diseases
Gender pay gap
Income inequalities
Overall rate of taxation
Tariffs rate
Trade Growth

Additional criteria for using effective Su Indicators can be identified in the GRI initiative,
the GSTC initiative and the Dow Jones Sustainability Index (DJSI) family, as shown in

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Table 2-3. The GRI initiative as discussed in the literature is using a set of universal and
topic-specific standards that can assist sustainability reporting (GRI 2020). The DJSI
index family is an initiative mainly used as a benchmark for investors that value
sustainability business management practices (DJSI 2020). Both initiatives are also using
airline related criteria as shown in Table 5-3; the GSTC initiative is industry-specific,
focusing on setting standards for tourism destinations.

Table 5-3 Industry Specific Criteria (DJSI 2019; GRI 2013; GSTC 2019)

Dimensions DJSI GRI

Airline Specific Criteria
Economic Efficiency Carbon offsetting
Fleet Management Employment, accessibility and mobility
Risk & Crisis Management Jobs and economic multiplier effect
Environmental Climate Strategy Environmental Materials sourcing and use (plastic
Policy & Management Systems products)
Operational Eco-Efficiency Renewable/alternative energy sources
(use of Biofuels)
Energy efficiency initiatives (Fuel use
efficiency, total energy consumption)
Air quality (local air quality)
Emissions to air (aircraft engine
emissions)
Emissions to air - GHG emissions (ETS)
Emissions to air - GHG emissions and
other emissions
Noise (Aircraft and components)
Social Labour Practice Indicators Labour conditions
Passenger Safety Labour management relations (industrial
Talent Attraction & Retention actions)
Cabin personnel health and safety
Cabin air quality
Unlawful sex tourism (human trafficking)
Persons with special needs access to
services and facilities
Fleet technological improvement
Corporate governance (Gender
participation on governance bodies)

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 Dimensions GSTC initiative Criteria
SECTION A: (a) Management structure and framework
Sustainable (b) Stakeholder engagement
management (c) Managing pressure and change
SECTION B: Socio- (a) Delivering local economic benefits
economic (b) Social wellbeing and impacts
sustainability
SECTION C: (a) Protecting cultural heritage
Cultural (b) Visiting cultural sites
sustainability
SECTION D: (a) Conservation of natural heritage
Environmental (b) Resource management
sustainability (c) Management of waste and emissions

When comparing the two tables, it is clear that there are areas of similarities across the
different sustainability domains. At a broader level, a comprehensive set of sustainability
indicators can become key to the planning process of any sustainability objective.
However, the current section is not looking to identify a full set of sustainability
indicators. The researcher argues that Su indicators should be tailored to the needs of the
Planning Process in the PDCA cycle methodology. Therefore, their selection and further
development should be the outcome of a systematic process. The identification of
different types of sustainability indicators can enhance the effectiveness of the PDCA
cycle process by stimulating better use of data sources. Sustainability indicators can be
a catalyst for action in the planning process and can develop further the analysis of the
‘situational review’ with data driven information. This is a rigorous analysis and can
result in setting effective sustainability objectives and measurable targets.

5.2 The Structure of the Conceptual Framework

Airlines that operate in liberalised environment are in need of a Conceptual Framework

that captures the complexity of the aviation system and delivers sustainable results. The
PDCA cycle methodology is a proven continuous improvement methodology (i.e. used
for all the British Standards Institution (BSI) standards and the Baldrige Framework) that
also supports the holistic view of the current research study. The structure of the
Conceptual Framework is based on the PDCA cycle methodology and therefore consists
of four main stages.

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The first two stages are of significant importance as they cover the planning and
implementation process. The PLAN and DO cycle processes rely on the following set of
pillars for achieving effective results.

Pillars of the PLAN (P) Cycle Process

The PLAN cycle process consists of four pillars that take place in the following order:

i. A situational review of the organisational environment and existing sustainability

challenges and opportunities.
ii. Setting sustainability objectives and measurable targets across the Su Criteria.
iii. Developing the Business Case for Sustainability with focus on Su Criteria and the
Levers of Change.
iv. Establishing a process approach to achieve targets and facilitate planning and
control of management activities.

Pillars of the DO (D) Cycle Process

In the DO cycle process, pillars do not follow a specific order. Emphasis is given on how
the pillars integrate with the contextual strategy implementation process.

i. Effective communication of sustainability strategy.

ii. Organization alignment to sustainability context.
iii. Workforce motivation (engage with sustainability leaders and champions for
effective process delivery).
iv. Contextual strategy implementation (i.e. alignment of levers of change and the Su
Business Drivers).

Next, the PDCA cycle enters its third stage. In the CHECK cycle process the framework
checks for any deviations from the targets and/or intended outcomes with the aim to
provide a feedback for action to the ACT cycle process. The deviations are checked with
the use of performance evaluation methods and a flagging system.

The final stage is the ACT (A) cycle process. This process initiates positive/negative
feedback loops34. Based on the performance results and with the aim to provide feedback
for further improvement, the framework allows a flagging system in the ACT cycle

34
Feedback loops are secondary effects of a direct effect of one variable on another. A positive feedback
enhances the effect; a negative feedback dampens it. (William et al 2017: 871).

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process that suggests either a single loop or a double loop activity. In particular, during
the ACT cycle process the operator could either:

i. correct and feed the DO stage with better implementation of processes (i.e. single
loop/feedback for improvement), or
ii. reconsider strategic components and feed the PLAN stage with another more
effective sustainability objective (i.e. double loop/feedback for improvement), or
iii. meet the intended outcomes and feed the PLAN stage with another interlinked
sustainability objective that allows for innovation (i.e. double loop/feedback for
innovation).

An implementation guide has been created to explain how the process works. The guide
is presented in the section below. Explanation of the suggested tools and the flagging
system is also provided in an effort to enhance the decision-making process throughout
the PDCA cycle.

5.3 Implementation Guide for the Effective Use of the Conceptual Framework

This implementation guide was created in order to provide guidelines for the use of the
Conceptual Framework. The guide is presented in Table 5-4 and proposes a list of key
actions and a list of suggested tools that could be used as a guidance in order to implement
effectively the Framework. The guide can also be used by airline management teams as
a mechanism for building the customised SuMS.

The guide is divided int0 four sections in order to facilitate the PLAN-DO-CHECK-ACT
pillars of the PDCA Cycle. Every pillar includes steps that management teams need to
follow. For every step there are key actions and relevant guidance for delivering effective
outcomes. Management teams are encouraged to use selected strategic tools to facilitate
the different steps. Tools have been selected to encompass outcomes of the Grounded
Theory approach and well-known strategic management tools in the context of
sustainability.

However, the use of the suggested tools is not exclusive and therefore additional tools
that can help deliver intended outcomes in the context of sustainability can be explored
and applied.

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 Table 5-4 Implementation Guide for the SuMS Development

PDCA Stage: PLAN

Steps Key Actions Guidance Suggested Tools
The relevant teams should perform a
Perform a thorough
review of the Su Business Drivers
situational review
1) Concept. This should be a situational
of the
review of the eight (8) focused
organisational
categories (Su Business Drivers, their
environment
properties and dimensions). The
(Micro - Meso -
outcome of this process is to identify
Macro) and
and analyse existing and future
identify existing - The Su Business
challenges and opportunities for the
sustainability Drivers.
sustainability of the individual airline.
challenges and
opportunities. - SWOT analysis.

Sustainability objectives focus on

- STEEP or PESTEL
bridging the gap between existing
Analysis.
2) challenges and organisational
Set sustainability performance. Their role is to respond to
- Porter Five Forces.
objectives and market opportunities within the context
measurable targets of sustainability. The Su Criteria
- Six Segment diagram
across the contemplated by the ‘Levers of
by James Stacey (CISL
Su Criteria. Change’ form the basis of the
2018g).
sustainability objectives. Objectives
should also be specific and measurable
and need to have a long-term
- The Road to Context
Contextualising your
prospectus.
strategy and goals: A
Establish the Design the strategy based on the
Guide (Bertels and
business case for analysis of the previous step. Outline
Dobson 2017).
3) sustainability. strategic and operational considerations
Embrace that need to be implemented to enhance
sustainability an airline’s resilience to sustainability
leadership for challenges.
strategy In this effort, leadership plays a core
formulation. Focus role in the overall success of the
is on Su Criteria proposed strategy. Sustainable
and the Levers of development is a collective effort that is
Change. based on building knowledge,

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 managing risk, defining accountability
and ownership and meeting high levels
of performance.

Establishing a A range of processes that will support

process approach to the relevant action plans are vital to the
4)
achieve targets and implementation of the relevant strategy.
facilitate planning Consider the process flow and
- BSI Standards.
and control of interactions between processes, as well
management as relevant risks. Plan for resource
activities. allocation or resource redistribution.

Complementary Steps
A strong network of sustainability
- CILM (Cambridge
leaders in the organisation inspires and
Impact Leadership
creates sustainability champions across
Model (CISL 2018a).
the workforce (CISL 2018a).
Develop a network - Embedding
Therefore, it is important for the senior
Apply of sustainability sustainability into
management team to embed a
in leaders and mind-set and
sustainability mind-set into the
steps 1, champions for behaviours of
organisation and motivate the
2 and 3 effective process employees (Exter
workforce in establishing a
delivery. 2014).
sustainability approach too.
- Being an effective
change agent: A guide
(Bertels et al 2016).

Measurement requirements are key

Define
ingredients of a management system
performance - Scoring systems.
Apply (Panagopoulos, Atkins and Sikora
requirements - Performance analysis
in Step 2016). To develop the right set of
against and reviews.
3 measurements, check the sustainability
sustainability - KPIs, audits etc.
objectives and determine what is the
results.
intended output for every objective.

PDCA Stage: DO
Key Actions Guidance
Implement This is the stage that puts strategy into action. Effective implementation
the designed strategy requires careful monitoring and control of defined processes. In this effort

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 the role of the sustainability leaders and champions is to communicate and
motivate people to engage effectively with the application and execution
of the proposed strategy.
Effective use of resources - human and other (i.e infrastructure,
environmental, information, etc) - play a significant role for the
Manage resources
implementation process and especially for cost effectiveness. Airlines by
effectively
nature are sensitive in this area and therefore it is important to focus on
effective asset management.

PDCA Stage: CHECK

Key Actions
Verify intended outputs against
sustainability objectives.
Guidance
Intended outcomes are evaluated based on the validation model that has
been designed in the planning process. Any deviation from the expected
outcomes is monitored and reported. A three flag model is suggested.
Green flag: objectives and outputs are aligned. Business as usual.
Yellow flag: objectives and outputs deviate. Necessary steps required to
correct the output to meet the objectives
Red flag: objectives and outputs are out of line. Objectives need to be
reinvented.

PDCA Stage: ACT

Key Actions Guidance for Feedback Loops
Innovation Green flag leads in a double loop: use feedback to innovate.
Yellow flag leads in a single loop: Use feedback for improvement and
proceed with necessary changes to produce the intended outcome.
Improvement Red flag leads in a double loop: use feedback for improvement to address
a failure in meeting intended outcomes and use the planning process to
redefine the sustainability objective.

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 5.3.1 Suggested Tools for the PLAN Process

The research has identified valuable tools that could assist the work of the Conceptual
Framework, especially during the planning process. The section provides useful
information about the proposed tools and advises the users on how to use the tools and/or
where to find additional information for effective employment of the tools. Briefly, the
tools are the outcome of literature exploration and are meant to guide the user. Additional
tools could be considered by users but they have to be situated in the context of this
research. The implementation guide highlights the following tools:

5.3.2 The Six Segment Diagram

The six segment diagram allows management teams to argue the business case for
sustainability and to develop an integrated approach focusing on multiple core areas.
Table 5-5 provides guidelines for the use of the diagram. The diagram focuses on
operational and strategic areas and allows for an in-depth understanding of operational
and strategic risks. In this way, it can assist in building the right sustainability strategies.

Table 5-5 Six Areas of Operational and Strategic Risk and Opportunity of Embracing Sustainability
within an Organisational Context as adopted by CISL (2018e).

Sustainability:
The Commercial Impact

Think about where your organisation currently stands in terms of these six segments or categories, and
consider which three are the most relevant to your business.

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 Operational Strategic
Market forces Brand reputation
Consider how economic factors affect the price, Consider brand reputation in terms of
demand, and availability of your products and sustainability.
services.
Operational disruption Business model
Consider factors that could disrupt Consider how sustainability is currently
your operations. integrated in the business model.
Employee engagement Stranded assets35
How sustainability is positioned internally Consider if business is affected
in your organisation. by stranded assets.
Search for Threats and Opportunities (i.e. Risks): Identify relevant pressing risks (operational and
strategic).
Identify Potential Action to take: contextualise potential strategies.
Establish a Clear Argument for the Business Case for Sustainability: Provide a compelling
explanation about the business case and prioritise with an evidence-based justification the areas that are
most pressing for the firm.

The diagram assists in the development of the second and third pillar of the PLAN cycle
process and can be effectively used once the situational review has taken place,
investigating challenges that affect ‘equity over time’. In addition, with the use of the
diagram decision makers are able to understand interconnections within the airline
ecosystem (i.e. suppliers - customers - society - regulators). By taking actions, they are
also able to recognise roles and responsibilities as part of a wider system (Williams et al
2017). This is a particularly useful diagram for airlines as it provides a complete picture
that is both operational and strategic.

5.3.3 The Road to Context - A Guide by Bertels and Dobson (2017)

The Road to Context includes four steps as shown in Table 5-6 and proposes for every
step tools and ideas that allow companies to develop contextual strategies. Contextual
strategies are important in order to build the adaptive capacity36 of a firm.

35
Dysfunctional assets that no longer create value to the airline (CISL 2018g)
36
The ability of actors in a system to maintain basic structure and manage resilience represents the adaptive
capacity of the system (Williams et al 2017: 872).

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 Table 5-6 Steps to Contextualisation as adapted by Bertels and Dobson (2017: 10-28)

Steps Examples of helpful resources

Acknowledge The Planetary Boundaries Framework.
Acknowledge the need to operate within global, regional, UN SDGs.
and/or local environmental and social thresholds. Global Risks Report.
Prioritise Life Cycle Analysis.
Transparently understand and prioritise a set of focus areas in Corporate Responsibility
relation to key socio-ecological trends at the global, regional Management.
and /or local level.
Set Strategy and Goals Future-Fit Business Benchmark.
Set strategies and goals by transparently articulating the Context based sustainability.
current performance gap and what portion of this gap the Context based carbon metric.
business will address.
Track Multicapital Scorecard.
Transparently track performance against realistic trajectory Integrated Reporting.
targets.

The suggested Guide37 proposes businesses to view their operations as part of a ‘nested
system’ and explains how to develop contextual strategies and goals. The guide is
available for use through the site of Embedding Project38 and illustrates to corporate
members how they can “factor socio-ecological thresholds into their corporate strategies
and goal setting processes” (Bertels and Dobson 2017: 4).

5.3.4 Standards and Processes

There is a current wealth of standards and process frameworks that can assist in the
development of useful processes that could assist the control and monitoring of
management activities. The research is suggesting the use of Annex SL as a guiding tool
in developing an effective SuMS. Developed by BSI39, Annex SL introduces a standard
that applies to all management systems standards consisting of ten clauses (BSI 2018).
ISO 26000 could also be expanded and with the appropriate customisation based on the

37
The Guide is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License and
it is free to share (copy and redistribute the material in any medium or format) or adapt (remix, transform
and build upon) the material with appropriate attribution (Bertels and Dobson 2017). The Guide also
provides additional information for the helpful resources presented in Table 5-7.
38
The Embedding Project is a global public benefit research project that helps companies embed social and
economic factors across their operations and decision making (Embedding Project 2019).
39
BSI is the oldest National Standards Body in the World (BSI 2019). A guideline to Annex SL is available
online through the BSI website.

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research findings could assist in the materialisation of the SuMS.

5.3.5 Performance Measurement and Feedback Loops

Every objective in the Conceptual Framework should be accompanied by strategies and

metrics that monitor the successful implementation of the intended outcomes. Table 5-7
provides a set of tools that could be used for this purpose. The suggested tools use their
own metrics systems.

Table 5-7 Set of Suggested Tools for Performance Measurement

Tool Explanation Literature

Baldrige Scoring system used by the Baldrige Excellence Baldrige Performance
Excellence Framework. The system is based on two (2) Excellence Programme
Framework40 evaluation dimensions: process and results. (2018: 31-33).
Scoring System.
Establishing a set of pre-defined Key Performance Neely, Gregory and Platts
Indicators (KPIs) capable of measuring efficiency (1995).
Performance
and effectiveness of actions in the context of the Neely et al (1996).
Measurement
sustainability construct. Gutierrez et al (2015).
System (PMS).
Panagopoulos, Atkin and
Sikora (2017).
Measuring organizational performance with the use Kaplan and Norton
of a more balanced set of performance measures and (1996: 76, 2007).
Balanced
create future value thought investment in suppliers, Anand (2016).
Scorecards.
customers, employees, processes, technology and
innovation.

Quantifying the efficiency and effectiveness of actions in the context of business can
result in an effective Performance Measurement System (PMS) (Neely, Gregory and
Platts 1995; Panagopoulos, Atkins and Sikora 2017). Based on the nature of every
objective decision makers are advised to create their own PMS.

5.3.6 Flagging System and Adaptive Capacity

The Conceptual Framework proposes a flagging system in the Check phase of the PDCA

40
A framework that uses the PDCA cycle to improve an organisations performance. Decision makers have
to challenge themselves across seven critical areas namely: leadership, strategy, customers, measurement
analysis and knowledge management, workforce, operations, and results. The answers to the questions are
assessed based on the scoring guidelines and useful feedback is provided for the performance of the
organisations across the seven areas (Baldrige Performance Excellence Programme 2018).

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cycle. The flagging system activates when the Do process for every objective has been
completed. Based on the final outcome of the objective a green, yellow or red flag is
awarded.

- Green Flag means that the objective has been fully met.
- Yellow Flag means that the objective has been partially met due to poor
implementation process.
- Red Flag means that the objective has failed and needs to be reconsidered.

Decision makers will have to set their own limits in terms of the flagging system. For
example, if they decide to use KPIs for measuring the outcome, they will have to set their
own limits as to the boundaries of green, yellow and red.

5.4. Chapter Summary

Chapter five (5) illustrated the four main stages of the Conceptual Framework designed
to address key areas for the sustainability of airlines in a liberalised environment. A
comprehensive overview of the Conceptual Framework outlined the implementation of a
holistic and integrated systems thinking approach. This type of approach allows decision
makers to shift their mind set from conventional thinking and practices to understanding
the context of business sustainability. Business sustainability for airlines that operate in a
liberalised environment is the key objective the Conceptual Framework is looking to
achieve, based on a well-founded methodology (PDCA Cycle process) and customised to
the needs of the airline industry. The use of the three (3) Su Criteria (Su Business Drivers
- Leadership for Action - UN Sustainable Development Goals (SDG) Contribution)
together with the Levers of Change concept and the use of existing Sustainability
Indicators produce an integrated systems thinking approach for the business environment.
The use of effective indicators is highly beneficial to the researcher’s framework.
Developing a Business Case for Sustainability requires a set of clear goals and targets and
the role of sustainability indicators is significant in this process.

The Conceptual Framework is complemented with an implementation guide that builds

the foundations for the SuMS and consists of guidance towards key actions that can take
place to enhance the PDCA process alongside suggested tools from the literature review.
The use of the Conceptual Framework outlines a sustainability approach that creates a
more comprehensive view than what is currently available with the use of CSR reporting.

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The solution is more customised to the needs of the airline industry and allows decision
makers to examine sustainability issues and consider continuous improvement with a
closed loop approach.
The following chapter will focus on the validity of the research process and the
Conceptual Framework.

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 Chapter Six: Framework Validation and Contribution to
Knowledge
This chapter presents the outcomes of the validation process. Three different methods
are discussed in an effort to present evidence for the validity of the study. The first
method is based on criteria set in chapters two (2) and three (3). The first set of criteria
flows from the literature review and the second from Grounded Theory validation
reasoning. The second method was based on validation interviews from high level
executives in aviation and the consulting industry that examine the robustness of the
sustainability construct and the Conceptual Framework. The third method was based on
the use of a case study that demonstrates how the Conceptual Framework integrates a
systems thinking approach to airline sustainability.

6.1 Meeting Literature Criteria

The literature review search outlined a set of criteria that the suggested solution had to
meet. The researcher met the criteria as follows:

6.1.1 Create a comprehensive list of factors than what is currently covered by the
current CSR reporting initiatives

The Su Business Drivers core category demonstrates a more comprehensive list of factors
that also include properties and indicative dimensions. The Su Business Drivers can be
used to inform the GRI initiative and the ISO26000 in multiple areas across the triple
bottom line approach. A comparison between the different features demonstrates that the
Su Business Drivers address sustainability based on an integrated systems thinking
approach and include new features like that of Customer Value Proposition (CVP) and
Regulatory Requirements (REG RQT) in the sustainability inquiry. In addition, the
recommended properties, mainly informed by the sustainability literature, are a
comprehensive list of factors that allow an in-depth understanding of the status of the
individual categories that consist of the Su Business Drivers. This differs from the
analysis required in the GRI reporting initiative and the ISO26000 process. Instead of
monitoring progress as is the case with the GRI initiative or attempting to develop a
process approach like the ISO26000, the analysis based on the Su Business Drivers
approach can reach valuable conclusions and feed the Conceptual Framework and the

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process approach in a more constructive way.

6.1.2 Address challenges in the context of sustainable development and the Triple
bottom line approach from an operational and a business strategy perspective.

The current research allows an airline to address challenges from an operational and
business strategy perceptive with the use of the PDCA cycle process. The Conceptual
Framework with the use of the Su Criteria and the Levers of Change set sustainability
objectives at a business strategy level and then assists decision makers to identify
processes that will allow operationalisation of sustainability. In this way, business
strategies are complemented with operational practises that are aligned.

6.1.3 Reengineer the concept of airline business sustainability through the lens of
an integrated paradigm based on contemporary sustainability views and a
systems thinking approach.

The Sustainability Construct presents the integrated paradigm that aims to reengineer the
concept of airline business sustainability. Chapters four (4) and five (5) describe in detail
the reasoning of this integrated approach. The Sustainability Construct as mentioned
earlier consists of two components and was influenced by the work of contemporary
sustainability and systems thinking literature, as shown in the reference list.

6.1.4 Contribution to the SDGs initiative

Both components of the Sustainability Construct include a provision for SDG

Contribution. More specifically, (a) in the ESR category of the Su Business Drivers and,
(b) in the Su Criteria block of the Conceptual Framework. The Conceptual Framework
supports the SDG’s initiative and connects the formations of sustainability objectives to
SDG contribution as part of the integrated systems thinking approach.

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6.2 Validation Interviews

The researcher has asked four experts to provide comments and recommendations for the
Conceptual Framework. The researcher selected to include in this process two aviation
experts those that took part in the initial interview process and two experts with strong
sustainability credentials that were not involved in the development of the research. Table
6-1 provides the interviewee information.

Table 6-1 Experts’ Profile

Title Business Area Experience

Industry professional with more than twenty years
of experience in the sustainability domain. Areas
Sustainability
Consultancy of expertise cover sustainability strategy with a
Director
comprehensive knowledge of environmental,
social and governance issues.
Airline industry professional with more than
twenty-five years of experience in marketing and
commercial; customer experience; customer
Global Air
loyalty and lounges; digital and e-commerce;
Transport Airline Industry
ancillaries; alliances, partnerships and joint
Executive
ventures; international affairs; M&As (non-
financial); airport services; program and project
management.
Aviation industry professional with more than
twenty-five years of experience in the aviation
Regional Aviation International
industry. Additional qualifications: Black Belt in
Executive Institution
Lean Six Sigma (L6S), Lead Auditor in ISO
9000:2015 and qualified PRINCE2® Practitioner.
Academic, author and reviewer of leading aviation
publications with more than twenty years of
experience in the aviation sector. Areas of
Professor Academia expertise cover human factors and risk
management; aviation safety; strategic
management and project management; and,
international aviation policy and governance.

In this way, peer evaluation served two purposes. Firstly, interviewees that have been
involved in the initial research process were able to validate whether the framework meets

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the expectations set at an earlier stage. Secondly, a new pool of interviewees looked at
the Conceptual Framework and the research process without having a previous interaction
with the research. The Interviewees were shown three schematics: The first schematic
was the application of the Grounded Theory approach (Figure 2-6), the second was the
Sustainability Construct (Figure 4-9) and the third was the Conceptual Framework
(Figure 5-1). The researcher explained the research method, the use of the sustainability
construct and the Conceptual Framework. The researcher asked the following questions:

- Does this Conceptual Framework represent a new approach to sustainability for

airlines that operate in a liberalised environment?
- Does this Conceptual Framework create the foundation for the establishment of a
Management System for Sustainability in line with a continuous improvement
approach, whilst providing a sound basis for sustainable development initiatives?
All four interviewees agreed that the Conceptual Framework is a new approach to airline
sustainability and that it creates the foundations for the establishment of a SuMS in line
with a continuous improvement approach. Table 6-2 provides all the interviewee’
comments made for the Conceptual Framework.

Table 6-2 Experts’ Comments

Participant Title Participants Comments

The Conceptual Framework follows the sustainability reasoning. The airline

sustainability construct concept is innovative and well-founded in the context of
sustainability. The Conceptual Framework embodies a continuous
Sustainability
improvement approach with the PDCA cycle methodology. The Su Business
Director
Drivers relate to the three main sustainability pillars (economic, social and
environmental). The properties are relevant and customised to the needs of the
airline industry. Dimensions are indicative and should be developed further.

The Conceptual Framework is inspiring and has a logical process. The Su

Business drivers and their properties are very useful and present real AoC for
airlines that operate in a liberalised environment. The planning process sets the
Global Air Transport
foundations for a thorough review of the current situation. The concept of
Executive
setting sustainability objectives is very interesting. It is a new way of thinking
about the risks in the industry and how to address them. In addition, the closed
loop concept is motivating and visionary.

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 The Conceptual Framework follows the sustainability reasoning. It creates the
foundations for a SuMS for the airline industry. The approach is very innovative
and holistic. The Framework meets the expectations of the research and
Regional Aviation provides the industry with an integrated approach. It can also be used by
Executive different business models and in different geographic regions. It is risk-based
and dynamic. The overall PDCA approach has the potential to become
commercially viable and its current implementation motivates senior
management and employees towards achieving sustainability targets.

The research methodology follows effectively the Grounded Theory paradigm.

The sustainability construct and the Conceptual Framework are innovative
outcomes and well presented. The Su Business Drivers are relevant with very
Professor
resourceful properties in place. The Conceptual Framework is based on a well-
recognised process (PDCA). The PDCA process is well organised and the idea
for three different loops is highly innovative and original.

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6.3 Conceptual Framework Case Study: The Case of Ryanair

As the current research advocates an integrated systems thinking approach on

sustainability, a case study analysis seemed an appropriate method for validating this
view. Yin (2018: 2) suggests to choose a case study where the focus of study is a
contemporary phenomenon. In this occasion the case study aims to examine the
usefulness of the integrated systems thinking approach to airline sustainability in the
liberalised environment.

The researcher selected Ryanair for the application of the Case Study. The profile of
Ryanair was relevant to this research, as the airline operates in one of the most liberalised
markets in the world and is also a market leader with an excellent profitability record.
The analysis of the case study includes a short discussion of the current profile of Ryanair
and the key challenges the company has to tackle to maintain its current position as
Europe’s leading low-cost airline41. Consequently, the need to apply systems thinking
that captures the complexity of the CAT system and delivers effective results is outlined.

6.3.1 Overview: Ryanair, Europe’s Leading Low-Cost Airline

The main objective is to investigate the case of Ryanair (FR), Europe’s low-cost market
leader and one of the world’s largest airlines in international traffic, with more than 130
million passengers carried in 2018. Ryanair is registered in Ireland and it is a pan-
European low-cost operator with eighty six (86) bases across Europe and North Africa, a
fleet of four hundred and thirty one (431) Boeing 737 aircraft and a presence in thirty
seven (37) countries with over eighteen hundred (1800) routes (Ryanair 2019). Ryanair
operates in the most liberalised market in the world, Europe’s Single Aviation Market.

The Single Market in Europe is unique in its nature, especially for the level of commercial
freedom exercised by airlines that have the privilege to operate in it. The birth of Single
Aviation Market promoted “regulatory convergence” among EU Member States and
created an internal market for air services which today counts more than 920 million
passengers (European Commission Mobility and Transport 2018b). EU registered
airlines like Ryanair enjoy both the benefits and the challenges of increased competition
in the Single Market.

41
Currently Ryanair is Europe’s lowest cost producer (CAPA 2019b).

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Ryanair is Europe’s most profitable airline and an indisputable market leader in passenger
numbers. The company reported 1.450 billion Euro (€) net profits in fiscal year
2017/2018. Over the years, the company experienced a phenomenal growth, not only over
other low-cost carriers like EasyJet, Norwegian and Wizz Air, but also over well-
established rivals, i.e. the key three airline groups IAG Group, Air France KLM and the
Lufthansa Group (Ryanair 2019). The company’s strategy for many years mainly focused
on reducing costs and lowering the risk to protect the present customer value proposition.
This strategy led Ryanair to the top but also created numerous challenges that account for
serious risks to brand reputation and to its business model. The case of Ryanair presents
high interest for a sustainability research study. This is due to the fact that this is an
airline that has managed to change the competitive landscape in Europe. Therefore, the
sustainability status of Ryanair is considered pivotal for the European aviation industry.
Table 6-3 presents Ryanair’s Strength and Weaknesses based on a Strength, Weaknesses,
Opportunities and Threats (SWOT) analysis performed by CAPA – Centre for Aviation
(2019b).

Table 6-3 Ryanair’s Strength and Weaknesses based on CAPA- Centre for Aviation (2019b; author)

Strengths
- Ultra low costs.
- Ultra low fares (AVG Fare 39 Euro).
- Highest load factor in Europe and one
of the highest in the world (96% in
FY2018).
- Largest airline in passenger (PAX)
numbers in Europe (139 million PAX
in FY2018).
- Expanded network (primary, secondary
and tertiary airports).
- Widely known brand but with many
defaults in different areas (i.e customer
and workforce satisfaction)
- Highest operating margins among
European airlines (23.3% in FY2018).
- Digital strategy (website, booking
processes, Ryanair mobile app, My
Ryanair CRM database)
Weaknesses
- Brand poorly rated by customers (low
ranking in consumer brand surveys).
- Poor labour relations and pilots
unionisation (i.e. union actions cannot
be ruled out).
- Increase in labour costs (pay increase of
20% in pilot salaries).
- Lower average departing frequency per
route than main LCC rivals (i.e. Easy
Jet, Norwegian, Vueling, Eurowings
Flight Scheduling and FSNC rivals
(Lufthansa, Air France and British
Airways).
- * The analysis also suggested that 737-
MAX is a possible strength for Ryanair
as it will further reduce its unit cost.
However, given the current status with
the grounding of 737 MAX for safety

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 reasons, this is counted now as a
weakness and a risk that needs to be
mitigated. Nevertheless, if the safety
issue of the 737MAX is solved then the
aircraft will add 4% more seats and
burn 16% lower fuel than the current
737-800 that Ryanair operates.

Ryanair currently enjoys a distinct position as Europe’s market leader and most profitable
airline. However, this year Ryanair issued its second profit warning in four months (The
Financial Times 2019). The company predicted a 7 per cent drop in ticket prices which,
in combination with rising fuel cost, would affect the company’s profitability. The
company stated that “Higher oil prices and lower fares have over the past 4 months seen
a wave of EU airline failures including Primera (UK & Spain), Small Planet and Azur
(Ger), Sky Works (Swi), VLM (Bel), Cobalt (Cyprus) and Cello (UK)” (Ryanair 2019:
7). From a sustainability perspective the discussion on Ryanair’s leading position and the
failures of weaker rivals is more complex.

6.3.2 How Systems Thinking Paradigm can Inform the Case of Ryanair

The Airline Sustainability Construct, as the key outcome of this research, can enlighten
Ryanair about the different areas on which the company needs to focus in terms of
sustainability. The analysis has taken place based on data derived from Ryanair’s 2019
Annual Report42.

6.3.3 Challenges and Opportunities

An analysis based on Ryanair’s current Risks and Uncertainties shows that the company
faces numerous challenges. When grouping those risks with the use of the Su Business
Drivers Concept, the investigation reveals Areas of Concern (AoC) across all the main
Su Business Drivers and their properties, as shown in Figure 6-1. The figure clearly
demonstrates that Ryanair faces multiple impediments that pose a threat to business
sustainability and require further action. Different links between the Su Business Drivers
can be identified in the form of triangles for further investigation.

42
Ryanair recorded a wide range of risks and uncertainties in its latest report under the section ‘Principal
Risks and Uncertainties’ (Ryanair 2019: 59-72). Refer to Appendix H for evidences on the Ryanair Case
study Analysis. H.1 refers to recorded risks and H.2 to the grouping process.

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Ryanair (FR) Case Study

Researcher s Conceptual
Framework

Union
Human Actions
Capital
Shortages Voice of
Trust
Labour Relations
and Productivity Ethical and
(LRP)
Social Responsibility
ESR

Economic Footprint Supply Chain Procurement

(ECO FTP) Su Business Interdependencies Standards
Drivers (SCI)

Customer Value
Proposition
(CVP) Consumer Protection
(CON PTC)

Regulatory Environmental

Compensation
Requirements Conformity

Payments
(REG RQT) (ENV)
Regulatory faults
and
misconceptions

Su Business Drivers
Properties

Figure 6-1 Ryanair’s Su Business Drivers Diagram

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The current diagram investigates three sets of links. The first example relates to Ryanair’s
continual growth, which has significantly increased its carbon footprint. The analysis
shows that this is having an impact on the company’s environmental profile, economic
footprint and ESR approach (i.e. ECO FTP-ENV-ESR). The second example is Ryanair’s
network expansion and fleet growth that increases its dependency on highly qualified
personnel both at an operational and senior level (i.e. ECO FTP –LRP-CVP). This is
having an impact on labour relations, labour costs and productivity and the customer
value. The final example is looking at Ryanair’s dependence on a large number of
external service providers, which is increasing with the company’s growth (i.e. ECO
FTP-SCI-REG RQT). This is having an impact on the company’s supply chain
environment, the economic footprint and the ability to cope with changes, avoiding
regulatory faults and misconceptions while securing a strong safety culture.

Additional links can explore more areas that could pose a threat to sustainability.
However, the outcome of the current analysis suggests that Ryanair should prioritise
sustainability solutions that can effectively address the following challenges:

- Tackle the environmental impact and carbon offset costs from the fleet expansion i.e.
585 aircraft by 2024 (Ryanair, 2019).
- Manage change in labour relations, addressing with caution staff shortages and
handling effectively the new EU 83/2014 EASA Flight Time Limitation (FTL)
regulations while maintaining a strong safety culture and keeping costs at a reasonable
level.
- Retain the low-cost producer narrative – carbon effective storytelling in the eyes of
the consumers and investors when compliance with European Union’s Emission
Trading Scheme (EU ETS) policies adds to operational costs and when jet fuel
remains a factor of economic risk and a main source of pollution (Ryanair 2019).
Furthermore, the analysis indicates that risks associated with the company’s cost strategy,
like the increase of jet fuel or the cost from emission allowances, can be addressed more
effectively from a sustainability perspective than from a strict economic perspective.
Therefore, the airline can view a shift to greener travel as an enabler and a commercial
opportunity instead of a challenge. For this to happen Ryanair has to focus on three core

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areas:

- The company’s understanding of sustainability in the wider context. As a

traditional low-cost carrier, Ryanair measures the benefits of sustainability in
terms of fuel economy and mainly concentrates on monitoring and reporting
processes. What is needed is a change in mind-set. If sustainability is to be
embedded it requires the development of a programme that will form a trajectory
of organisational change approach based on leadership engagement; employee
awareness; the development of sustainability champions and sustainability leaders
(CISL 2018a, Exter 2014).
- The current sustainability leadership model. Ryanair has very strong leadership
and highly skilled senior personnel (Ryanair 2019). However, sustainability
leadership based on the CILM model differs from the traditional leadership
approach cultivating the necessary thinking, values and practice in the wider
context of sustainability (CISL 2018a). It is important that the company’s
leadership aligns commercial success with the delivery of positive social and
environmental outcomes, thus viewing sustainability as an enabler instead of a
burden for business development.
- The Branding of Sustainability: The airline claims to be a trustworthy advocate
for environmental sustainability. Therefore, a powerful message of change can
benefit labour relations and also incentivise Ryanair’s customer base to implement
greener practices.
With this in mind, Ryanair now has a clear sustainability business case to develop.

6.3.4 The Use of the Conceptual Framework

Furthermore, the use of the Conceptual Framework allows Ryanair to concentrate on

more systemic sustainability challenges and identify solutions that take into account
interconnections across social, economic and ecological systems. In addition, the airline
can engage in a continuous improvement process that provides the ability to understand
performance targets and act accordingly via the Conceptual Framework. Table 6-4
presents a list of actions and suggested tools that could be used in the case of Ryanair.
Management teams need to use the framework taking into account the set of Su Criteria
and Principles discussed in the previous chapters.

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 Table 6-4 Suggested Guidelines for the use of the Conceptual Framework in the Case of Ryanair

The PDCA Guidance for Key Actions

Approach
PLAN The PLAN pillar is the beginning of the Suggested Tools
sustainability narrative for this research study.
There are four different actions that need to take Su Business Drivers
place in order to implement effectively this stage: Six-Segment
- Perform a Situational Review for Diagram43
Ryanair.
- Identify priority areas for Ryanair and set
Sustainability objectives based on the
outcome of the review.
- Establish a business case for
sustainability and design the strategy to
enhance airline’s resilience to
sustainability challenges.
- Establish a process approach supported
by action plans and measurable targets.
DO The main function of the DO process is to implement successfully the
contextual strategies. In this process, there are three pillars that play a
significant role in this cause.
- The first pillar is the effective communication of Ryanair’s
sustainability strategies to its workforce. For this purpose, in the
planning process there is the commitment to develop a leadership
plan that stimulates employees’ awareness and champions’
empowerment in the context of sustainability.
- The second pillar is the alignment of the different departments to the
sustainability strategies. This acts as a safeguard for the successful
implementation of the SuMS processes.
- The final pillar is embedding workforce motivation by establishing
sustainability leaders and sustainability champions in the different
departments that can positively impact the implementation process.
CHECK Monitoring the implementation of the Sustainability strategies is a difficult
task and requires processes that are well thought out and designed. The
suggested CHECK process (i.e. three flag model) allows Ryanair to evaluate
results and monitor deviation from sustainability targets, as shown below:

43
Refer to Appendix H.3 for the Ryanair analysis based on the suggested tool.
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 Target Flag
Ryanair meets its targets. Green
Ryanair deviates from its targets. Yellow
Ryanair fails to meet the target. Red
With the use of technology and qualified personnel the CHECK process can
become very effective in assessing intended outcomes.
ACT The ACT process is based on a loop logic. Based on the CHECK process
results, the airline has three options:.
Flag Feedback
Green (double Use feedback to innovate.
loop)
Yellow (single Use feedback to correct
loop) processes.
Red (double Use Feedback to rethink
loop) the objectives.
Overall, the ACT process delivers feedback for improvement and/or
innovation.

With the selected case study, the researcher made an effort to outline that Ryanair faces
systemic risks, and understanding interconnections is vital for the well-being of the
airline. Therefore, it is suggested that the company should use a sustainability approach
that takes into consideration not only the ‘low-cost low-fare approach’ but more
innovative strategies. In this way, sustainable solutions in the wider context of
sustainability can be pursued to improve Ryanair’s “equity over time” in the liberalised
environment.

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6.4 Grounded Theory Criteria
Grounded Theory sets its own list of validity criteria. The researcher followed mainly a
constructivist approach and therefore Table 6-5 presents the relevant criteria as follows:
Table 6-5 Check List for Evaluation Criteria based on Charmaz (2014: 337-338)
Charmaz (2014: 337-338)
Credibility (has your research
achieved intimate familiarity
with the topic? Are there
strong logical links between
the gathered data and your
argument and analysis?)
Resonance (do the categories
portray the fullness of the
studied experience? Does the
Grounded Theory make sense
to your participants?)
Response by the Researcher
From the very beginning the researcher made an effort to achieve
familiarity with the subject. The researcher attended major
events and development courses and engaged in constructive
dialogues with industry professionals. An extensive set of
observation notes documented interesting points and inquiries
and multiple memos were created. The gathering of data was
iterative and holistic. The topic of sustainability can produce
multiple inquires and create confusion if it is not addressed
effectively. The Grounded Theory approach was time
consuming but gave the opportunity through the iterative process
to investigate theoretical insights that made the discussion more
focused in the business sustainability domain. Theoretical
sensitivity was systematically developed in this research in order
to create theoretical insights from the different data sets (Data
Set I, Data Set II, Data Set III). Strong logical links existed
between the different sets of Data as demonstrated in Chapter 4.
Numerous types of documents were used for analysis (the data
sets include extant documents, interview transcripts, memos,
observation notes and late stage literature).
The Airline Sustainability Construct consisted of well-founded
categories and a Conceptual Framework based on a CI
methodology. The PDCA cycle approach is a highly recognised
approach for CI industry initiatives. The research study
developed a new sustainability approach for airlines that operate
in a liberalised environment. The new approach is based on an
integrated systems thinking reasoning aimed to improve ‘equity
over time’. The sustainability construct was tested with the use
of validation interviews with experts and earned positive
feedback and excellent comments. The responses on the
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 validation interviews and the use of the case study presented in
section 6.3 demonstrate that the proposed solution is holistic and
relevant to airlines that operate in a liberalised environment.

Concepts were generated with the use of coding and

categorisation. Interconnections between the codes and
categories were identified and with the use of constant
Originality (are your
comparison the final set of categories was concluded. Despite
categories fresh? Do they offer
the fact that CSR initiatives include in their reporting factors
new insights? Does your
across the Triple Bottom Line approach, the Airline
analysis provide a new
Sustainability Construct provides new insights with the use of
conceptual rendering of the
two areas (CVP and REG RQT) and a set of properties that add
data? Etc.)
scope to the categories. Furthermore, the Conceptual
Framework provides a new conceptual rendering in data with the
use of the third Data Set that becomes the foundation for
transforming the PDCA cycle into a sustainability framework.

The current research study introduced for the first time the
Sustainability Construct concept. The Sustainability Construct
consists of the Su Business Drivers and the Conceptual Framework
designed to utilise Su Business Drivers and implement a systems
thinking approach to airline sustainability. The research study
opens new perspectives on how airlines should view business
sustainability and proposes a direction on how to operationalise

Usefulness (do your analytic sustainability in a liberalised environment. The use of a

categories suggest any generic Conceptual Framework to airline sustainability based on a PDCA

processes? Can the analysis process cycle in combination with the eight (8) Su Business

spark further research in other Drivers provides new insights on how airline senior management

substantive areas? How does understands sustainability challenges. Furthermore, the use of a CI

your work contribute to methodology based on a PDCA cycle becomes the foundation for

knowledge?) the development of a Sustainability Management System (SuMS)

with the potential to operationalise sustainability.

In addition, the construction of the Su Business Drivers core

category opens an interesting door for generic inquires. The
concept promotes interconnectedness between the different Su
Drivers and could also be of interest to other stakeholders of the
CAT system who wish to understand the complexity of the airline
industry. This is an area that sparks further research.

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6.5 Chapter Summary

Chapter six (6) outlined the methods used to validate the outcomes of this research in a
process that was complex as it had to fulfil different requirements. The first method used
a set of criteria derived from the literature review and an additional set from the Grounded
Theory approach. The research findings successfully fulfilled the required criteria that
included, among others, originality and usefulness. The second method was the use of
validation interviews with industry experts. The outcome was very positive and the
experts also outlined the originality and usefulness of the findings. Finally, a case study
was used effectively to demonstrate the usability of the airline Sustainability Construct in
the case of Ryanair.

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 Chapter Seven: Discussion
In this chapter the researcher explains the experience derived from the research journey
and addresses difficulties and milestones that transformed knowledge. The discussion
looks back and identifies how the idea of this research study was conceived and what
fostered curiosity to explore the subject of sustainability with a focus on the airline
industry. The discussion also outlines the limitations that impacted the gathering of data,
the analysis and interpretation of the findings.

7.1 Overview of the Research Journey

The research journey started seven years ago with the researcher’s participation in one of
the most interesting worldwide conferences that took place in ICAO’s headquarters in
Montreal. ATConf6 marked the beginning of this journey. The conference discussed
the topic of aviation sustainability, looking at the views of the different stakeholders and
focusing on the challenges created by liberalisation in the wider aviation system. The
researcher had developed a special interest in the subject of liberalisation early in her
academic years, during which she had also concluded her Master thesis. Her professional
experience in the airline industry as a marketing coordinator with Virgin Atlantic Airways
and later as a Marketing Manager and a freelance consultant in the travel and tourism
industry initiated the idea of exploring a subject that combines the concept of
sustainability with airlines that operate in a liberalised environment.

The idea to explore sustainability proved a challenging experience, mainly due to the
nature of the selected topic. Sustainability is a diverse and difficult topic to confine,
especially when it involves the investigation of the main three pillars. However, the
global nature of the airline industry, the highly regulated environment and the multiple
links of airlines with the different stakeholders of the CAT system created an interesting
puzzle to solve. In addition, the fact that airlines over time face difficulties to convert
revenue into profit, as well as the failure of a number of established carriers in recent
years, induced curiosity and increased motivation.

The researcher set a twofold research objective: to develop a Conceptual Framework that
generates a new and holistic total system approach to airline sustainability and to create
the foundation for the establishment of a Management System for Airlines operating in a

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liberalised environment. The first Progress Review Panel (PRP) process proved
successful and provided valuable feedback. The research approach was embraced by the
research team despite the fact that it was not a methodology that was widely used for this
type of problems. Grounded theory was chosen as a methodology that stimulates
innovative thinking, and this proved an extremely helpful methodology for a business
sustainability problem. As explained in Chapter 2, the qualitative nature of the study
allowed for flexibility and encouraged multiple knowledge inquiries.

The research started with exploring the aviation system from the top, looking at ICAO
Working Papers, and then became more focused to include the ‘voice’ of the airline
industry. However, the iterative nature of Grounded Theory led to additional insights
from the sustainability literature and valuable observations from participation in prime
aviation events. The researcher engaged in a journey that included several milestones
and active participation to relevant events following by extensive networking with
industry stakeholders.

During the time of the research, traffic growth increased and the airline industry saw
record profits. Nevertheless, profits were not distributed evenly across the different
geographic regions and airlines continued to face numerous problems that also caused the
collapse of reputable airlines like Monarch, Air Berlin, Primera and Wow. It became
obvious that any solution to the sustainability enquiry had to involve a more open and
holistic perspective on sustainability. In an effort to look at how other industries focus on
sustainability, the researcher attended a course on Sustainability Business Management.
The on-line course was considered a milestone for this research as it influenced the
researcher’s sustainability views. The course consisted of eight modules and 100 hours
of learning. Upon assessment completion the researcher received a certificate for
“successfully completed the programme of study in Business Sustainability
Management”, also certified by the United Kingdom CPD Certification Service.

The course was interactive and allowed the researcher, among other activities, to engage
in useful forum discussions and also test ideas and sustainability views. Modules have
introduced multiple concepts with examples and interviews from executives that practice
sustainability in every-day life and act as sustainability leaders in their organisations. In
addition, forums were extremely beneficial with comments and valuable discussions in

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place, guiding exchanges of ideas between professionals. The following table (Table 7-
1) refers to an example from the last forum discussion that shows how this experience
influenced the researchers’ mind set.

Table 7-1 Statement from the CISL Forum 07/08/2018

When I joined the course I had the view that sustainability consisted of 3 pillars
(economic, environmental-social) but I couldn’t really understand how and if those
pillars could be connected in a meaningful way for business purposes. Today, after
8 weeks, I have realized that the path to sustainability for a company or an
organisation is not a long road to utopia. Business as usual is a poor strategy.
Sustainability champions are not zealots but the outcome of lead by example. Change
is happening, ready or not. Successful partnerships create the opportunity to tackle
sustainability challenges based on a systems approach. Sustainability marketing is
shifting from satisfying needs and wants to changing behaviours and the way
generations consumed for decades. Reducing CO2 emissions is not a crusade but an
act to keep global markets open to consumers and businesses. Technology and
innovation benefit products and services in the long term when the focus is on
sustainable production……......and much more!!

In addition, in 2016, the first outcome of this research was published in the proceedings
of the third (3) International Aviation Management Conference (IAMC). The paper had
the title “A Study on Air Transport Liberalisation Based on ICAO’s Extant Documents”
(Athousaki, Hooper and Lykotrafiti 2016). The paper introduced the Grounded Theory
approach and the study of ICAO Working Papers (WPs) from the Worldwide Air
Transport Conferences (ATConf 5 and ATConf 6) in the form of extant documents. Table
7-2 presents the abstract of the IAMC paper. Following the presentation, the paper
received many positive comments, and the researcher had the opportunity to connect with
aviation professionals interested in the sustainability approach. The paper was published
at the Conference Proceedings.

Table 7-2 IAMC Conference Paper Abstract (Athousaki, Hooper and Lykotrafiti 2016)

The need to reduce control over the rules that influence commercial activities resulted
in an effort to liberalise the airline industry. Nations that embraced the idea of
liberalisation and committed to this cause with long term strategies placed significant
investment and regulatory improvements and became dominant players in the

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 aviation industry. ICAO’s Worldwide Air Transport Conferences developed
awareness at an international level of increased concerns relating to the progress of
liberalisation. This paper aims to provide an in depth discussion through the analysis
of ICAO’s extant documents in understanding concerns raised during ATConf5 and
ATConf6 and to support the view that Worldwide Air Transport Conferences not only
contribute in understanding global air transport problems in the area of economic
regulation but also fortify ICAO’s role in this field.

The interview process with aviation professionals was another milestone for this research,
and was one of the important steps in the fulfilment of this study. The study of the extant
documents and the second set of data identified the potential core category. As a result,
the time has come to test the core category in the eyes of aviation professionals. The
positive reaction to the concept and the desire of the professionals to participate in a
sustainability discussion that goes beyond airline economics was overwhelming. All
those who took part had many valuable insights to share and contributed enormously in
the development of the Sustainability Construct.

The interpretation of the interview results alongside the CISL course leveraged
sustainability knowledge. When the time came to engage the late stage literature review
to identify the final solution, the researcher had a complete view of the findings and their
interpretation. The idea to engage the application of the PDCA cycle emerged as an
outcome of this process and the Conceptual Framework was completed. The validation
process concentrated more on an in-depth discussion of the Conceptual Framework. The
application of PDCA cycle was an idea that was welcomed by the interview experts and
the researcher concluded the research.

Overall, the research journey was a rewarding and transformational experience and the
researcher is looking now to disseminate the knowledge of this study and explore the
potential for further research. Having discussed the research journey, the next section
presents the limitations of this research.

7.2 Research Limitations

Naturally a study on this type of topic has research limitations. First, the use of Grounded
Theory and the coding process focused the research on creating outcomes for the
liberalised environment and in the context of the CAT system, as presented in this study.

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As a result of the Grounded Theory methodology, generalisation of the results should be
further investigated. The data was not preselected apart from the purposeful sampling
phase (Data Set I) and therefore Data Set II and Data Set III were the outcomes of a
constant comparison that guided the research process. Other qualitative methods could
have produced different a type of sets. Hypotheses emerged from the late stage coding
approach as opposed to being predetermined.

Secondly, the first Data Set examined WP only, despite the fact that Information Papers
fall also into the category of extant documents. The researcher decided to consider WP
only as they appeared more revealing and explanatory. Thirdly, there are limitations in
the use of NVIVO 12. The software assists the development of the coding process but
doesn’t provide any help to the analysis of data. Fourthly, the study applies to individual
airlines that operate scheduled services in a liberalised environment. Cargo-only
companies and airline groups are not taken into account in the coding process or in the
interpretation of this research.

Fifthly, the dimensions presented in the core category are indicative and despite the fact
that they add power to the properties, can be acknowledged as non-financial indicators
that need to be further investigated. Sixthly, there were a limited number of participants
in Data Set III; notwithstanding that additional interviews could have been pursued, this
work offered valuable insights and contributed effectively to the saturation process.
Another limitation is the idea of operationalising sustainability; although this concept was
limited by the conceptual nature of the framework, the researcher provides further
guidance on this matter. Lastly, the inception of a Sustainability Conceptual Framework
creates a number of limitations regarding the implementation and the recommended tools
that can be used to safeguard the effectiveness of the Framework. More specifically, the
framework is based on inductive reasoning. This means that responding effectively to
sustainability challenges (ecological, social and commercial) requires the need to embed
strategic and operational planning within the context of Sustainability and the PDCA
cycle methodology. The PDCA cycle methodology guided the overall approach and the
use of the various suggested tools in the Conceptual Framework. The use of another CI
methodology could have produced different results. Therefore, any use of the Conceptual
Framework is confined in this context.

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Overall, this research study was driven by the complexity of the CAT system, the many
different actors, interactions, dependencies and parameters that shaped to a degree the
final sustainability outcomes.

7.3 The Idea to Operationalise Sustainability

The research study opens new perspectives on how airlines should view the sustainability
concept and proposes a direction on how to operationalise sustainability in a liberalised
environment. The Ryanair Case Study, as presented in section 6.3, demonstrated the
usefulness of the sustainability construct and examined how a systems thinking approach
could assist Ryanair to develop a business case for sustainability, addressing existing
challenges. Nevertheless, the actual use of the Conceptual Framework requires the use
of data and the development of a process-based approach tailored to the needs of the
airline. Therefore, the idea to operationalise sustainability beyond the analysis of the Su
Business drivers and the use of generic guidelines for the application Conceptual
Framework was one of the limitations of the research study. However, with the use of
appropriate information, decision makers can create a SuMS that implements a systems
thinking approach to airline sustainability.

The following figure, Figure 7-1, demonstrates how the planning process in the proposed
Conceptual Framework can be utilised for ‘operationalisation’ purposes. Airlines need
to focus on the formation of sustainability objectives, derived from a thorough
‘situational review’ based on the Su Business Drivers concept. In this way, decision
makers can set ‘specific goals’ within the sustainability context. For example, the goal
of sustainable passenger growth is only feasible in the context of sustainability if the
airline considers SPC practises and external challenges that could alter the environment
that they operate. In this case, an airline needs to create a business case for passenger
growth setting ‘measurable targets’, as means of Su indicators. Environmental, social
and economic indicators can assist effectively the development of a plan that will
operationalise sustainability.

[183]
 Su Business
Drivers

Situational Review

Su
Objectives

Business Case for Su

Operational and
Strategic Planning

Selection of measurable targets

Su
Plan to Operationalise Su
Indicators

Figure 7-1 The Idea to Operationalise Sustainability

The concept of operationalisation requires an ‘achievable approach’. In the case of

sustainable passenger growth, airlines can use their limited capabilities and resources to
develop ‘realistic’ forms of action. For this reason, airlines need to implement strategies
that do not contradict the sustainability context and use their resources in a ‘responsible’
way. Currently many initiatives provide guidelines on responsibility areas. Lastly, the
designed actions require ‘time-related limits.’ Airlines wishing to follow a sustainability
approach need to evaluate constantly their current position and set reasonable timelines
for meeting the measurable targets. The PDCA cycle methodology safeguards the CI
effort and the Conceptual Framework has provisions for monitoring progress and
feedback.

7.4 Chapter Summary

The overall research journey was a lengthy but rewarding process. The researcher is
content with the proposed solution as it meets the objectives set in this research and
[184]
provides a holistic reasoning approach to a problem that involves the well-being of a
principal actor of the CAT system. Sustainable airlines contribute to effective mobility
and shield the entire air transport community. With this in mind, the researcher concluded
this study with the notion that ‘business as usual’ in a challenged world is a rival to
business sustainability.

The limitations to this research, although many, were addressed and managed in such a
way to ensure that final outcome produces a work that is original, feasible and useful.

[185]
 Chapter Eight: Conclusions
The air transport industry is a complex and dynamic industry that consists of numerous
inter-dependent groups (i.e. airlines, airports, aircraft manufactures and air navigation
services) with common interests but also with conflicting views. In particular,
Commercial Air Transport (CAT) is a multifaceted system comprising the following five
(5) distinct groups:

- The intergovernmental organisations and regulatory bodies.

- The aviation value chain.
- The aviation employees and their union representatives.
- The travelling public.
- The non-governmental organisations that act to protect the interests of the value
chain.

The airline industry, as part of the aviation value chain group, is the main facilitator of
international traffic in terms of goods and people. It is an industry that shaped the
development of commercial aviation and a principle actor in the CAT system,
contributing significantly to the phenomenal growth of the last 50 years. Indeed, traffic
growth is the outcome of improved aircraft technology and the evolution of liberalisation
introduced gradually in different parts of the world.

In fact, many airlines benefited enormously from the liberalisation process and increased
their route network and passenger numbers. In addition, new business models emerged in
the liberalised markets, such as the Low Cost Carriers (LCC) business model that also
increased competition and significantly affected market share distribution. However,
despite the growth experienced by the air transport sector over four decades of
liberalisation, the airline industry remains marginally profitable. Soon after liberalisation,
it became obvious that, apart from benefits, airlines also faced significant challenges
caused by competitive pressures, as a result a number of established airlines either shut
down or survived through consolidation.

Undoubtedly, the significant number of airline failures in recent years suggests that airline
sustainability in the liberalised environment is a dynamic and complex topic that is open
to various interpretations. In addition, several systems pressures and trends could

[186]
potentially disturb the operation of the CAT system and its existing balance with society,
economy and the environment. Subsequently, the airlines, as principal stakeholders of the
CAT system must maintain a sustainable path. This is not any easy task to implement as
the challenges that lie ahead are multifaceted and can affect airlines in multiple ways.

For the purpose of this research, airline sustainability was defined as ‘equity over time’
and ‘sustainability’ was viewed as a concept that ‘is complex and conceptual’ and
requires a ‘holistic’ and ‘system’s thinking’ approach. However, a Conceptual
Framework that covers the wider context of sustainability based on a systems thinking
approach was missing from the Air Transport industry.

Therefore, the motivation for this research study was driven by the idea of integrating a
Conceptual Framework with a Management System that could continuously improve the
‘airlines sustainability in a liberalised environment’.

During the seven (7) year research journey, and with the support of both academia and
the industry, this idea materialised, the ‘systems thinking’ approach was constructed and
the concept became a reality. Following this study, it is the researcher’s belief that this
integration can improve “equity over time” whilst establishing an integrated systems
thinking process for improving airline sustainability in a complex, dynamic and
liberalised environment.

Consequently, the twofold objective of this research study was:

a) to develop a Conceptual Framework that generates a new and

holistic total system approach to airline sustainability,

b) to create the foundation for the establishment of a Management

System for airlines operating in a liberalised environment.

To achieve the objective, the research identified six (6) sub-objectives to be accomplished
in order to generate a new and holistic total system approach to airline sustainability and
to create the foundation for the establishment of a Management System for airlines
operating in a liberalised environment.

[187]
This chapter provides an overview of the research objective/sub-objectives and
summarises how these objectives have been achieved with reference to the work
presented in the previous chapters.

8.1 Sub-Objective One

Understand the concept of sustainability for airlines that operate in a

liberalised environment and provide the scope and the sustainability
definition for the purposes of this research study.

The first objective was aligned to the literature review that took place in this research
study. Following the constructivist Grounded Theory approach the literature review was
engaged in this type of research in two stages, the early and the late stage. In fact, the
first objective covers the early stage literature that is considered significant for supporting
greater sensitivity and creativity (Cohen, Manion and Morrison 2018).

For achieving the sub-objective, the early stage literature was divided into three parts.
The first part investigated the origins of the CAT system; the second part explored the
current status of the airline industry in the liberalised environment; and the third part
examined the concept of sustainability that looked more appropriate for this research
study and the possibility of applying a systems thinking approach in the study.

Chapter two (2) outlined the outcome of the early stage literature and introduced
additional themes as part of the literature exploration. The literature also discussed how
the CAT system and the airline industry in particular associate with the phenomenon of
‘Great Acceleration’ and the exceptional increase in travel growth in the past thirty years.
Systems pressures and trends urged the need for airlines to find a more sustainable way
in facilitating this growth. Sustainability was defined as ‘equity over time’ and the study
was situated in the context of business sustainability. The concept of systems thinking
was explored in an effort to discuss effectively a Conceptual Framework that could serve
a better approach to business sustainability.

[188]
8.2 Sub-Objective Two

Examine the key dimensions of sustainability and evaluate the impact

of liberalisation on airline performance, taking into account the
evolution and change that took place in different geographic regions.

This objective was also incorporated in the early stage literature as one of the main parts
of the literature discussion in Chapter two (2). The objective was achieved with a
thorough discussion on the evolution of the liberalisation process, the strategic role of
ICAO and the transformation that took place in the airline industry. The challenges of
the traffic growth identified multiple areas of inquiry about the sustainability of individual
airlines in the liberalised environment.

This study on the literature took a top down approach, situating the discussion in the
origins of the CAT system and the formation of the regulatory framework. The evolution
of the liberalisation process and the impact this process on the airline industry was
discussed from a sustainability perspective.

8.3 Sub-Objective Three

Explore the idea of applying a Grounded Theory approach and select

a suitable research strategy for conducting the research.

The third objective was one of the milestones of this research. The researcher was guided
by a research design that was qualitative in nature and could produce knowledge in the
domain of business sustainability that was reliable and well-founded. The idea of
applying a Grounded Theory approach was explored as it appeared relevant and
appropriate to the holistic nature of this study. The researcher explored the different
versions of Grounded Theory. The philosophical worldview of this research was closer
to the constructivist route and was based on inductive reasoning that favoured theory
generation emerging from qualitative data analysis.

Chapter three (3) explained and justified the methodological approach of this research

[189]
study. It also highlighted the key ingredients (i.e. coding techniques, constant comparison
method, theoretical sampling, etc) and the application of Grounded Theory with the use
of three different data sets. The final outcome was based on the systematic analysis of
the data sets and the use of mechanisms (i.e. theoretical sensitivity and saturation) aimed
to achieve theory building.

8.4 Sub-Objective Four

Introduce an integrated systems thinking approach to sustainability and

examine the type of drivers that can be effectively drawn in an effort to
operationalise sustainability, creating a more holistic path to business
sustainability.

The fourth objective was achieved with the analysis of the results from the three data sets
obtained in this research and the process of theoretical sampling. With the use of the
coding process, a set of Sustainability Business Drivers were identified and tested in the
eyes of aviation professionals.

The very useful insights that resulted from the interview process and using late stage
literature resulted in the development of the eight (8) Sustainability Business Drivers (Su
Business Drivers) with their properties and indicative dimensions. Chapter four (4)
discussed the results from the Data Set investigation and presented the eight (8) Su
Business Drivers in a detailed diagram (i.e. Figure 4-8). Consequently, it was examined
how these findings could inform ‘equity over time’ in a more comprehensive way that
could result in a rigorous sustainability construct.

In this effort, the role of the late stage literature was pivotal. The late stage literature was
incorporated to assist the theoretical sampling process and also to increase theoretical
sensitivity. Glaser and Strauss (1967) outline that theoretical sampling is a process of
generating theory. In this case, theoretical sensitivity increased when the researcher
attended the online course on Sustainability Business Management with the University of
Cambridge Institute for Sustainability and Leadership (CISL).

The University of Cambridge Institute for Sustainability and Leadership (CISL) is a well-

[190]
recognised universal institute with work underpinned by research and grounded in
practitioner insights with global influence in the domain of business sustainability (CISL
2019). Their work was relevant and most appropriate to this study. In addition, research
papers from a variety of journals (i.e. Table 7-1) were used as part of providing the right
scope and direction for the concept of sustainability.

Table 8-1 Example of Q1 Journals reviewed (SJR 2018)

Q1 Journals
International Journal of Industrial Organization Journal of Environmental Management
International Journal of Production Economics Journal of Sustainable Tourism
Journal of Air Transport Management. Sustainability Accounting, Management and
Journal of Business Ethics Policy Journal
Journal of Business Research Transportation Research Part A: Policy and
Journal of Cleaner Production Practice
Transportation Research Part E

The overall result of the Grounded Theory approach was the development of the ‘Airline
Sustainability Construct’, consisting of the Su Business Drivers and the Conceptual
Framework. The construct is holistic and includes more properties than the existing
Global Reporting Initiative (GRI) index, and it is more tailored to the needs of the airline
industry than the ISO 26000. It also embraces five key areas in the sustainability domain
(i.e. Levers of Change: impact of regulatory environment; sustainable production and
consumption; design technology and planning for sustainability; marketing and
communication; and collaboration and partnerships).

8.5 Sub-Objective Five

Develop a Conceptual Framework that generates a total system

approach to airline sustainability and creates the foundation for the
establishment of a SuMS in line with a continuous improvement
approach, whilst providing a sound basis for sustainable development
initiatives.

The fifth objective was driven by the Airline Sustainability Construct. The Conceptual
Framework was designed to utilise effectively the Su Business Drivers concept in the
[191]
wider context of business sustainability. It was the outcome of the findings of Data Set
III and the late stage literature driven by a holistic and integrated systems thinking
approach.

Chapter five (5) presented the Conceptual Framework with its main features. Business
sustainability for airlines that operate in a liberalised environment is the key objective
that the Conceptual Framework is looking to achieve, based on a well-founded
methodology and valuable sustainability tools. The Plan-Do Check-Act (PDCA) Cycle
process was selected to assist the development of the Conceptual Framework. The
framework was also translated into a practical implementation followed by a set of tools
aimed to assist the different planning stages.

8.6 Sub-Objective Six

Validate the Conceptual Framework, based on interviewing airline

industry experts, the use of a case study analysis and a set of criteria
derived from literature.

Chapter six (6) outlined the methods used to validate the outcomes of this research. The
validation process had to follow the Grounded Theory reasoning. The research study was
validated with use of three different methods: the use of validation interviews; a case
study on Ryanair; and, the use of literature and Grounded Theory criteria.

8.7 Sub-Objective Seven

Fill an academic literature gap in the airline sustainability

improvement process.

The Sustainability Construct and the proposed Conceptual Framework introduces a new
approach to the sustainability of airlines operating in a liberalised environment. The
current research introduced for the first time the concept of Sustainability Business
Drivers (Su Business Drivers) in the airline industry and used this concept to build a more
holistic approach to Sustainability. Furthermore, the Sustainability Construct consisting

[192]
of the Su Business Drivers and the Conceptual framework is designed to implement a
systems thinking approach to airline sustainability. Overall, the research opens new
perspectives on how airlines should view the sustainability concept and proposes a
direction on how to operationalise airline sustainability in a liberalised environment.

[193]
 Chapter Nine: Recommendations for Further Work
Business sustainability is a research area that creates the potential for further research
across different domains in the aviation industry. Airlines were the principle research
topic in this study as the researcher felt that it was essential to propose a more structured
approach for one of the main actors of the CAT system. The research contributed in
developing a different approach to sustainability with the development of the
Sustainability Construct comprising the Su Business Drivers and the continuous
improvement Conceptual Framework. Both concepts have been sufficiently developed
for the purposes of this research. However, there are areas where future research can be
initiated for either extending further the Conceptual Framework or expanding the
Sustainability Construct concept outside the airline industry.

The work of existing sustainability initiatives is significant and this research study
recognises the work of key organisations in the airline sustainability effort. First, the UN
SDGs initiative is distinguished as the global effort that creates an integrated mind-set for
sustainable development in businesses. The Conceptual Framework includes provision
for contribution to this effort from an airline’s perspective. The use of the UN SDG
initiative in the research study is explicit and inspires airlines to form closer links with
their related publics. Second, the UNWTO initiative on Sustainable Tourism provides an
excellent source of sustainability practises and successful case studies. In this study, the
UNWTO initiative revealed many useful Su indicators that could inform the planning
process of the Conceptual Framework and help the airlines to prepare a more advanced
business case for sustainability. Third, the GRI initiative is applicable to all forms of
businesses. It is currently used by many airlines to assist CSR reporting. Airlines can
compare and contrast findings from CSR reporting and inform the Su Business Drivers.
In this way, the GRI standards can further develop the planning process in the Conceptual
Framework. Finally, the ISO26000 and ISO 14000 family standards are designed to
provide solutions and improve organisational performance in social responsibility and
environmental management respectively. Airlines can benefit from both standards in
their effort to build an effective SuMS or create their own standard with the use of Annex
SL methodology.

[194]
Furthermore, the following research ideas can be explored when considering the
Conceptual Framework:

- ‘How to operationalise sustainability with the use of the Conceptual

Framework.’ The actual development of the SuMS can be explored and tested
with an airline.
- ‘How to achieve more effective integrated sustainability reporting based on the
Su Business Drivers.’ A more customised approach to sustainability reporting
can be explored with the use of the core category of this research.
- ‘How the Su Criteria are adopted by different business models.’ This is a project
that can test what type of airlines initiate more in innovative loops and could
provide interesting insights in terms of business model resilience.
- ‘Factor analysis of Su Business Drivers.’ Further research can explore the use of
factor analysis in the core category (Su Business Drivers). This type of research
could also investigate the formation of a Sustainability Index that builds a
thorough sustainability profile for airlines that operate in a liberalised
environment.
- ‘Further development of category dimensions.’ The development of a widely
accepted set of dimensions could be further explored for creating a more
standardised approach in assessing sustainability performance.
- ‘Flagging System Automation.’ The flagging system is a reasoning mechanism
and can be further explored as an algorithm in the context of automated
reasoning. In this way, an airline that adopts the Conceptual Framework
develops a SuMS that is SMART and has multiple functions that inform more
accurately the decision-making process.
- ‘A Sustainability Construct for Airline Groups, and/or alliances and/or the
cargo industry.’ Other actors of the airline industry can explore the development
of a Sustainability Construct. The principles of business sustainability are not
temporal, and therefore there are parts of the Conceptual Framework that do not
require alteration to use. The areas that could be further investigated for
customisation purposes are mainly the Su Business Drivers and any additions in
the planning process.

Building further upon this research, the utilisation of the Conceptual Framework can be
[195]
expanded to cover additional stakeholders in the CAT system. Identifying what drives
sustainability and applying a continuous improvement framework is a contribution to
knowledge that has the potential to reach a broader audience. With the use of a Grounded
Theory methodology and based on the first outcome of this research which was the study
of the extant documents, other actors can develop their own Sustainability Construct.
Given the challenges the aviation industry has to face in the next ten to twenty years,
more stakeholders will be looking for sustainable solutions. More specifically, the
Sustainability Construct can be explored as a tool that enhances the sustainability of the
CAT system and further research in this domain can include:

- Generating a Conceptual Framework with a holistic approach on CAT

sustainability for regulators.
- Exploring Su Business Drivers for MROs.

Additional ideas can be explored, as the overall outcome of this research opens a wealth
of knowledge in the wider CAT sector.

[196]
 Appendices
Appendix A: Liberal Agreements (ICAO Secretariat 2016: 4-8)

Region Agreements

- the Decision on Integration of Air Transport of the Andean

Community (CAN) (1991);
- the Multilateral Air Services Agreement (MASA) of the
Caribbean Community (CARICOM) (1998);
Americas
- the Fortaleza Agreement of the Southern Common Market
(MERCOSUR) (1999);
- the Air Transport Agreement of the Association of Caribbean
States (ACS) (2008).

- the Single Aviation Market within the European Union;

Europe - the multilateral agreement on the establishment of the
European Common Aviation Area (ECAA).

- Damascus Agreement in 2004 developed through the Arab

Middle East
Civil Aviation Commission (ACAC).

- The agreement on the establishment of sub-regional Air

Transport cooperation among Cambodia, Lao People’s
Democratic Republic, Myanmar and Vietnam (CLMC) in
1998 and the CLMV multilateral agreement on air service in
2003;
- the Memorandum of Understanding on Expansion on Air
Linkages between the Indonesia, Malaysia and Thailand-
Growth Triangle (IMT-GT) (1995);
Asia–Pacific
- the Memorandum of Understanding on Expansion of Air
Linkages between Brunei, Indonesia, Malaysia, and
Philippines – East ASEAN Growth Area (BIMP-EAGA)
(2007);
- the Association of Southeast Asian Nations (ASEAN)
Multilateral Agreement on Air Services (MAAS) in 2009.
The ASEAN multilateral Agreement on the Full liberalisation
of Passenger air services (MAFLPAS) in 2011;

[197]
 - the implementation framework of the ASEAN Single
Aviation Market (ASAM 2011).

- The Yamoussoukro Decision (YD) 2000 – inter Africa

connectivity common set of harmonised rules;
Africa
- The declaration on the establishment of a Single African Air
Transport Market (SAATM) 2015.

[198]
 Appendix B: Data Set I
Appendix B.1: ICAO WPs Database ATConf/5 2003

Files ATConf5 2003 Title

Files\\Extant Documents\\ATConf5\\ATConf5_wp001_en Conference origins and organizational

arrangements

Files\\Extant Documents\\ATConf5\\ATConf5_wp005_en Case studies on liberalization

Files\\Extant Documents\\ATConf5\\ATConf5_wp006_en Safety and security aspects of liberalization

Files\\Extant Documents\\ATConf5\\ATConf5_wp007_en Liberalizing air carrier ownership and control

Files\\Extant Documents\\ATConf5\\ATConf5_wp008_en Liberalization of market access

Files\\Extant Documents\\ATConf5\\ATConf5_wp009_en Aircraft leasing in international air transport

Files\\Extant Documents\\ATConf5\\ATConf5_wp011_en Safeguards to ensure fair competition

Files\\Extant Documents\\ATConf5\\ATConf5_wp012_en Sustainability and participation

Files\\Extant Documents\\ATConf5\\ATConf5_wp013_en Consumer interests

Files\\Extant Documents\\ATConf5\\ATConf5_wp014_en Product distribution, including computer

reservation systems and the internet

Files\\Extant Documents\\ATConf5\\ATConf5_wp015_en Improving dispute settlement in a liberalized

environment

Files\\Extant Documents\\ATConf5\\ATConf5_wp016_en Transparency in international air transport

regulation

Files\\Extant Template air services agreements for bilateral,

Documents\\ATConf5\\ATConf5_wp017_Template_en regional or plurilateral liberalization (including
Attachment A)

Files\\Extant Template air services agreements for bilateral,

Documents\\ATConf5\\ATConf5_wp017Add_en regional or plurilateral liberalization
(Attachment B)

Files\\Extant Documents\\ATConf5\\ATConf5_wp018_en Role of ICAO in facilitating liberalization

[199]
Files\\Extant Documents\\ATConf5\\ATConf5_wp019_en Declaration of global principles for
international air transport

Files\\Extant Documents\\ATConf5\\ATConf5_wp020_en Commercialization and liberalization

Files\\Extant Documents\\ATConf5\\ATConf5_wp021_en Liberalization developments related to market

access

Files\\Extant Documents\\ATConf5\\ATConf5_wp022_en Revision of the Manual on the Regulation of

International Air Transport (Doc 9626)

Files\\Extant Documents\\ATConf5\\ATConf5_wp023_en Industry situation and airline traffic outlook

Files\\Extant Documents\\ATConf5\\ATConf5_wp026_en Airline views on liberalizing ownership and

control

Files\\Extant Documents\\ATConf5\\ATConf5_wp027_en Ensuring an effective and globally compatible

slot allocation system -

Files\\Extant Documents\\ATConf5\\ATConf5_wp028_en Maintaining the multilateral interline system

Files\\Extant Documents\\ATConf5\\ATConf5_wp029_en Dispute settlement in international air transport

Files\\Extant Documents\\ATConf5\\ATConf5_wp030_en Consensus and cooperation: a tool for the

liberalization of air services

Files\\Extant Documents\\ATConf5\\ATConf5_wp031_en The impact of the restructuring of civil aviation

on employment and social practices

Files\\Extant Documents\\ATConf5\\ATConf5_wp033_en Air carrier ownership and control; leasing;

slots; consumer interests

Files\\Extant Documents\\ATConf5\\ATConf5_wp034_en Issues of labour and social policy to be

considered in connection with liberalization of
international air transportation

Files\\Extant Documents\\ATConf5\\ATConf5_wp046_en Transparency in international civil aviation

regulation

Files\\Extant Documents\\ATConf5\\ATConf5_wp076_en Implications of liberalization on aviation safety

and security

[200]
Files\\Extant Documents\\ATConf5\\ATConf5_wp091_en Traffic rights, airport capacity and airport slots:
the airport operators' view

Files\\Extant Documents\\ATConf5\\ATConf5_wp096_en Safeguarding safety and security oversight

through the course of economic liberalization

Files\\Extant Documents\\ATConf5\\ATConf5_wp097_en Model air commerce act

Files\\Extant Documents\\ATConf5\\ATConf5_wp103_en Draft Report on Item 1.2 (i.e. Safety and

security aspects of liberalization)

Files\\Extant Documents\\ATConf5\\ATConf5_wp104_en Draft Report on Item 1, 1.1 (i.e. Preview

Background to and experience of liberalization)

Files\\Extant Documents\\ATConf5\\ATConf5_wp105_en Draft Report on Item 2, 2.1 (i.e Market access)

Files\\Extant Documents\\ATConf5\\ATConf5_wp108_en Draft Report on item 2.3 (i.e. Fair competition

and safeguards)

Files\\Extant Documents\\ATConf5\\ATConf5_wp111_en Draft Report on item 2.4 (i.e. Consumer

interests)

Files\\Extant Documents\\ATConf5\\ATConf5_wp112_en Draft Report on item 2.5 (i.e. Consumer

distribution)

Files\\Extant Documents\\ATConf5\\ATConf5_wp113_en Draft Report on item 2.7 (i.e. Transparency)

Files\\Extant Documents\\ATConf5\\ATConf5_wp115_en Draft Report on item 3.1 (i.e. REVIEW OF

TEMPLATE AIR SERVICES AGREEMENT)

Files\\Extant Documents\\ATConf5\\ATConf5_wp116_en Draft Report on item 4.1 (i.e. Consideration of

Global Framework for Ongoing Liberalization)

[201]
 Appendix B.2: ICAO WPs Database ATConf6 2013

Files ATConf6 2013 Title

Files\\Extant Documents\\ATConf6\\ATConf6- Agenda (Revised)

WP001-REV.en

Files\\Extant Documents\\ATConf6\\ATConf6- Safeguards for air transport liberalization

WP003.en

Files\\Extant Documents\\ATConf6\\ATConf6- Fair competition in international air transport

WP004.en

Files\\Extant Documents\\ATConf6\\ATConf6- Consumer protection and definition of passenger

WP005.en rights in different contexts

Files\\Extant Documents\\ATConf6\\ATConf6- Commercialization and privatization of airports

WP006.en and ANSPs

Files\\Extant Documents\\ATConf6\\ATConf6- Funding of safety, security and economic

WP007.en oversight functions

Files\\Extant Documents\\ATConf6\\ATConf6- Night-flight restrictions (Revised)

WP008-REV.en

Files\\Extant Documents\\ATConf6\\ATConf6- Implementation of recommendations of CEANS

WP009.en 2008

Files\\Extant Documents\\ATConf6\\ATConf6- Taxation on international air transport

WP010.en

Files\\Extant Documents\\ATConf6\\ATConf6- Slot allocation and related concerns regarding

WP011.en airport capacity constraints

Files\\Extant Documents\\ATConf6\\ATConf6- Air carrier ownership and control

WP012.en

Files\\Extant Documents\\ATConf6\\ATConf6- Expanding market access for international air

WP013.en transport

Files\\Extant Documents\\ATConf6\\ATConf6- Price transparency in international air transport

[202]
WP015.en

Files\\Extant Documents\\ATConf6\\ATConf6- Status of ICAO policies on air transport

WP016.en regulation

Files\\Extant Documents\\ATConf6\\ATConf6- Achievements since ATConf/5

WP017.en

Files\\Extant Documents\\ATConf6\\ATConf6- Economic aspects of aviation security

WP018.en

Files\\Extant Documents\\ATConf6\\ATConf6- Financing the air transport system

WP019.en

Files\\Extant Documents\\ATConf6\\ATConf6- Facilitating air transport and air travel

WP020.en connectivity

Files\\Extant Documents\\ATConf6\\ATConf6- Funding air transport infrastructure

WP021.en

Files\\Extant Documents\\ATConf6\\ATConf6- Sustainability and Economic development of air

WP022.en transport

Files\\Extant Documents\\ATConf6\\ATConf6- The air transport value chain: Industry features in

WP023.en the past decade

Files\\Extant Documents\\ATConf6\\ATConf6- The way forward: action plan for the

wp024-rev_en implementation of a new regulatory framework

Files\\Extant Documents\\ATConf6\\ATConf6- Tourism perspective on consumer protection

WP031.en

Files\\Extant Documents\\ATConf6\\ATConf6- Tourism perspective on consumer protection

WP031-REV.en (Revised) (EN only)

Files\\Extant Documents\\ATConf6\\ATConf6- Views of Arab States on fair competition

WP032.en

Files\\Extant Documents\\ATConf6\\ATConf6- Views on advancing ICAO's work on air

WP033.en transport liberalization

Files\\Extant Documents\\ATConf6\\ATConf6- Influence of alliance and airline mergers in the

[203]
WP039.en field of fair competition and prevention of
monopoly

Files\\Extant Documents\\ATConf6\\ATConf6- The formation of a specialized team to study a

WP043.en model text for consumer protection regulations
in the field of air transport

Files\\Extant Documents\\ATConf6\\ATConf6- Liberalization of market access

WP044.en

Files\\Extant Documents\\ATConf6\\ATConf6- Achieving compatibility in consumer protection

WP045.en regulations

Files\\Extant Documents\\ATConf6\\ATConf6- Relaxing the rules for airline designation

WP046.en

Files\\Extant Documents\\ATConf6\\ATConf6- Fair competition and African air transport

WP048.en

Files\\Extant Documents\\ATConf6\\ATConf6- Basic principles for fair competition

WP051.en

Files\\Extant Documents\\ATConf6\\ATConf6- EU and ECAC industry and regulatory

WP053.en developments

Files\\Extant Documents\\ATConf6\\ATConf6- Establishing priorities for ICAO work in the air

WP061.en transport area

Files\\Extant Documents\\ATConf6\\ATConf6- Fair competition and regulatory cooperation in

WP062.en the aviation sector

Files\\Extant Documents\\ATConf6\\ATConf6- A tourism perspective on international air

WP063.en transport regulation (EN only)

Files\\Extant Documents\\ATConf6\\ATConf6- Making travel and tourism a more effective tool

WP065.en for sustainable development (EN only)

Files\\Extant Documents\\ATConf6\\ATConf6- Liberalization: addressing restrictive regulations

WP067.en (EN only)

Files\\Extant Documents\\ATConf6\\ATConf6- Consumer protection: A joined-up approach

WP068.en required between governments and industry

[204]
Files\\Extant Documents\\ATConf6\\ATConf6- ANSP governance and performance
WP073.en

Files\\Extant Documents\\ATConf6\\ATConf6- Guiding principles for service priority policy

WP074.en

Files\\Extant Documents\\ATConf6\\ATConf6- Airspace sovereignty

WP080.en

Files\\Extant Documents\\ATConf6\\ATConf6- Issues of labour and social policy to be

WP081.en considered in connection with liberalization of
international air transportation (EN only)

Files\\Extant Documents\\ATConf6\\ATConf6- Market access: slots and night restrictions

WP089.en

Files\\Extant Documents\\ATConf6\\ATConf6- Passenger protection under cases of flight

WP091.en disruption

Files\\Extant Documents\\ATConf6\\ATConf6- Expansion of marker access for international air

WP097.en transport in proactive, progressive, orderly and
safeguarded manner

Files\\Extant Documents\\ATConf6\\ATConf6- Enhancing consumer protection by legislation

WP098.en

Files\\Extant Documents\\ATConf6\\ATConf6- Market liberalization and its effect on national

WP100.en and regional economies, consumers and
communities

[205]
 Appendix B.3: ICAO WPs Database A/39 2016 (ICAO 2016)

Files A/39 2016 Title

Files\\Extant Documents\\39th PROVISIONAL AGENDA FOR THE 39TH SESSION OF

Assembly\\wp_001_en THE ICAO ASSEMBLY

Files\\Extant Documents\\39th IMPLEMENTATION OF RECOMMENDATIONS OF

Assembly\\wp_004_en THE ICAO SIXTH WORLDWIDE AIR TRANSPORT
CONFERENCE (AT CONF/6) (LONG-TERM VISION
AND CORE PRINCIPLES ON CONSUMER
PROTECTION)

Files\\Extant Documents\\39th PROGRESS REPORT ON THE DEVELOPMENT OF

Assembly\\wp_005_en INTERNATIONAL AGREEMENTS ON THE
LIBERALIZATION OF MARKET ACCESS, AIR CARGO
AND AIR CARRIER OWNERSHIP AND CONTROL

Files\\Extant Documents\\39th REPORT ON THE DEVELOPMENTS REGARDING

Assembly\\wp_006_en ECONOMIC ASPECTS OF AIRPORTS AND AIR
NAVIGATION SERVICES

Files\\Extant Documents\\39th REPORT ON COOPERATION WITH THE UNITED

Assembly\\wp_007_en NATIONS, INTERNATIONAL ORGANIZATIONS AND
OTHER STAKEHOLDERS IN THE AREA OF DATA
AND ANALYSES

Files\\Extant Documents\\39th CONSOLIDATED STATEMENT OF CONTINUING

Assembly\\wp_008_en ICAO POLICIES IN THE AIR TRANSPORT FIELD

Files\\Extant Documents\\39th MODERNIZATION OF THE ICAO STATISTICS

Assembly\\wp_009_en PROGRAMME

Files\\Extant Documents\\39th ICAO COMPREHENSIVE AVIATION SECURITY

Assembly\\wp_014_en STRATEGY (ICASS)

Files\\Extant Documents\\39th ESTABLISHMENT OF A GLOBAL AVIATION

Assembly\\wp_015_en SECURITY PLAN

Files\\Extant Documents\\39th NO COUNTRY LEFT BEHIND (NCLB) INITIATIVE

Assembly\\wp_023_en

[206]
Files\\Extant Documents\\39th
Assembly\\wp_025_en
Files\\Extant Documents\\39th
Assembly\\wp_030_en
Files\\Extant Documents\\39th
Assembly\\wp_032_en
Files\\Extant Documents\\39th
Assembly\\wp_033_en
Files\\Extant Documents\\39th
Assembly\\wp_048_en
Files\\Extant Documents\\39th
Assembly\\wp_049_en
Files\\Extant Documents\\39th
Assembly\\wp_051_en
Files\\Extant Documents\\39th
Assembly\\wp_052_en
Files\\Extant Documents\\39th
Assembly\\wp_056_en
AVIATION’S CONTRIBUTION TOWARDS THE
UNITED NATIONS 2030 AGENDA FOR SUSTAINABLE
DEVELOPMENT
REPORT ON THE GLOBAL AVIATION SAFETY PLAN
OBJECTIVES, THE GLOBAL AIR NAVIGATION PLAN
PRIORITIES AND THE IMPLEMENTATION OF THE
UNIVERSAL SAFETY OVERSIGHT AUDIT
PROGRAMME CONTINUOUS MONITORING
APPROACH
REPORT ON THE ESTABLISHMENT OF
REGULATORY REQUIREMENTS FOR ASSISTANCE
TO AIRCRAFT ACCIDENT VICTIMS AND THEIR
FAMILIES
THE ICAO NEXT GENERATION OF AVIATION
PROFESSIONALS (NGAP) PROGRAMME
CONSOLIDATED STATEMENT OF CONTINUING
ICAO POLICIES AND PRACTICES RELATED TO
ENVIRONMENTAL PROTECTION – GENERAL
PROVISIONS, NOISE AND LOCAL AIR QUALITY
CONSOLIDATED STATEMENT OF CONTINUING
ICAO POLICIES AND PRACTICES RELATED TO
ENVIRONMENTAL PROTECTION – CLIMATE
CHANGE
CIVIL AVIATION AND THE ENVIRONMENT
CONSOLIDATED STATEMENT OF CONTINUING
ICAO POLICIES AND PRACTICES RELATED TO
ENVIRONMENTAL PROTECTION – GLOBAL
MARKET-BASED MEASURE (MBM) SCHEME
SUSTAINABLE ALTERNATIVE FUELS FOR
AVIATION
[207]
Files\\Extant Documents\\39th ICAO CIVIL AVIATION TRAINING PROGRAMME
Assembly\\wp_062_en AND CAPACITY-BUILDING IN AVIATION

Files\\Extant Documents\\39th REPORT ON THE DEVELOPMENT OF A SINGLE SET

Assembly\\wp_064_en OF HARMONIZED LONG-TERM FORECASTS

Files\\Extant Documents\\39th REPORT ON IMPLEMENTATION OF

Assembly\\wp_066_en RECOMMENDATIONS OF THE SIXTH WORLDWIDE
AIR TRANSPORT CONFERENCE (ATCONF/6) AND
DECISIONS OF THE THIRTY-EIGHTH SESSION OF
THE ASSEMBLY

Files\\Extant Documents\\39th ICAO GENDER EQUALITY PROGRAMME:

Assembly\\wp_078_en PROMOTING THE PARTICIPATION OF WOMEN IN
THE GLOBAL AVIATION SECTOR

Files\\Extant Documents\\39th THE ECONOMIC IMPACT AND CHALLENGES

Assembly\\wp_127_en RELATED TO THE PROLIFERATION OF
UNJUSTIFIED AND EXCESSIVE TAXATION

Files\\Extant Documents\\39th AIR TRANSPORT LIBERALIZATION AND THE

Assembly\\wp_189_en ECONOMIC DEVELOPMENT OF THE COUNTRIES

Files\\Extant Documents\\39th STATEMENT ON THE WORK PROGRAM OF THE AIR

Assembly\\wp_352_en TRANSPORT REGULATION PANEL (ATRP)

Files\\Extant Documents\\39th AVIATION’S CONTRIBUTION TOWARDS THE

Assembly\\wp_374_en UNITED NATIONS 2030 AGENDA FOR SUSTAINABLE
DEVELOPMENT

Files\\Extant Documents\\39th THE CLEAN DEVELOPMENT MECHANISM (CDM)

Assembly\\wp_387_en FOR INTERNATIONAL CIVIL AVIATION AS AN
ALTERNATIVE TO THE CARBON OFFSETTING AND
REDUCTION SCHEME FOR INTERNATIONAL
AVIATION (CORSIA)

Files\\Extant Documents\\39th INDUSTRY VIEWS ON VOLUNTARY

Assembly\\wp_413_en PARTICIPATION IN CORSIA

[208]
 Appendix C: Data Set II
Appendix C.1: Published Interviews

Interview Date Interviewer Available Online at: Interviewee

Files\\CEO 11/05/2015 ATN https://www.atn.aero/#/analysis.html CEO Mark

Interviews\\Adria ?id=1594 Anzur
CEO 2015

Files\\CEO 08/06/2015 ATN https://www.atn.aero/#/analysis.html CEO Vitaly

Interviews\\Aerofl ?id=1599 Saveliev
ot CEO 2015

Files\\CEO 08/09/2015 FlightGlobal https://dashboard.flightglobal.com/ap CEO Andrew

Interviews\\Mona p/#/articles/416472?context=federate Swaffield
rch CEO 2015 d

Files\\CEO 06/11/2015 Anna Aero https://www.anna.aero/2015/11/06/an CEO Skúli

Interviews\\WOW na-aero-meets-with-wow-air/ Mogensen
CEO 2015

Files\\CEO 22/12/2015 Anna Aero https://www.anna.aero/2015/12/22/an SVP Adnan

Interviews\\Emira na-aero-meets-emirates-adnan-kazim/ Kazim
tes SVP 2015

Files\\CEO 17/02/2016 Anna Aero https://www.anna.aero/2016/02/17/30 CEO Michael

Interviews\\2016 -second-interview-michael-oleary- O’Leary
Ryanair CEO ceo-ryanair/

Files\\CEO 25/04/2016 FlightGlobal https://dashboard.flightglobal.com/ap CEO Patee

Interviews\\NOK p/#/articles/424502?context=federate Sarasin
CEO 2016 d

Files\\CEO 09/09/2016 Anna Aero https://www.anna.aero/2016/09/09/30 CEO Bjørn

Interviews\\2016 -second-interview-bjorn-kjos-ceo- Kjos
NORWEGIAN norwegian/
CEO

[209]
Files\\CEO 27/02/2017 FlightGlobal https://dashboard.flightglobal.com/ap CEO Bob
Interviews\\Spirit p/#/articles/434566?context=newssea Fornaro
CEO 2017 rch

Files\\CEO 10/04/2017 Anna Aero https://www.anna.aero/2017/04/10/an CEO Alex Cruz

Interviews\\2017 na-aero-speaks-alex-cruz-ceo-british-
British Airways airways/
CEO

Files\\CEO 01/07/2017 ATN https://www.atn.aero/#/analysis.html CEO Christine

Interviews\\FLYB ?id=1837 Ourmieres-
E 2017 CEO Widener

Files\\CEO 01/07/2017 ATN https://www.atn.aero/#/analysis.html CEO Lee Lik

Interviews\Scoot ?id=1847
Hsin
2017 CEO

Files\\CEO 01/08/2017 ATN https://www.atn.aero/#/analysis.html CEO Pieter

Interviews\\KLM ?id=1843 Elbers
CEO 2017

Files\\CEO 16/10/2017 Anna Aero https://www.anna.aero/2017/10/16/30 CCO Juha

Interviews\\2018 -second-interview-juha-jarvinen-cco- Jarvine
Finair CCO finnair/

Files\\CEO 01/11/2017 ATN https://www.atn.aero/#/analysis.html CEO Martin

Interviews\\Air ?id=1855 Gauss
Baltic CEO 2017

Files\\CEO 04/12/2017 FlightGlobal https://dashboard.flightglobal.com/ap CEO Mehmet

Interviews\\Pegas p/#/articles/443111?context=newssea Nane
us 2017 CEO rch

Files\\CEO 20/02/2018 FlightGlobal https://dashboard.flightglobal.com/ap CEO Doug

Interviews\\Ameri p/#/articles/445433?context=newssea Parker
can Airlines CEO rch
2018

[210]
Files\\CEO 19/03/2018 FlightGlobal https://dashboard.flightglobal.com/ap CEO Gareth
Interviews\\Jet p/#/articles/446854?context=newssea Evans
STAR 2018 rch

Files\\CEO 23/05/2018 FlightGlobal https://dashboard.flightglobal.com/ap CEO Carlos

Interviews\\Volot p/#/articles/448306?context=federate Munoz
ea CEO 2018 d

Files\\CEO 16/03/2018 ATN https://www.atn.aero/#/analysis.html CEO Akbar Al

Interviews\\Qatar ?id=1900 Baker
CEO 2018

[211]
 Appendix C.2: CSR Reports

CSR Report Airlines Online Available at

2017

Files\\CSR Air Canada https://www.aircanada.com/content/dam/aircanada/po

reports\\AC 2017- rtal/documents/PDF/en/corporate-sustainability/2017-
cs- summary cs-report-summary.pdf
report

Files\\CSR Air France https://csrreport2017.airfranceklm.com/wp-

reports\\AFKLM KLM content/themes/air-france-
CSR 2017 klm/pdf/AF%20KLM_At%20a%20glance_EN.pdf

Files\\CSR American https://s21.q4cdn.com/616071541/files/doc_download

reports\\AA CRR- Airlines s/crr/CRR-Report-2017.pdf
Report-2017

Files\\CSR ANA https://www.ana.co.jp/group/en/investors/irdata/annua

reports\\NH l/pdf/17/17_E_00.pdf
sustainabilityrepo
rt

Files\\CSR Cathay https://www.swire.com/en/sustainability/sd_reports/cx

reports\\CX report Pacific _2017.pdf

Files\\CSR China https://calec.china-

reports\\CI_2017- Airlines airlines.com/csr/download/2017/2017-en-CSR.pdf
en-CSR

Files\\CSR China https://www.csair.com/kr/en/about/shehuizerenbaogao

reports\\CZ CSR Southern /resource/244a89613fe44857917807c9d3c4e5c5.pdf
2017 Airlines

Files\\CSR Delta Air http://www.corporatereport.com/delta/2017/crr/

[212]
reports\\DL_2017 Lines
_CRR

Files\\CSR Emirates https://www.emirates.com/media-centre/copy-

reports\\EK- emirates-group-releases-201617-annual-
Environment- environmental-report
Report-2016-17

Files\\CSR Etihad https://www.etihadaviationgroup.com/content/dam/ea

reports\\EYcsr- Aviation g/corporate/etihadaviation/en-
report-2017- Group ae/pdfs/CSR_Reports/CSR_Report_2017_EN.pdf
english

Files\\CSR IAG https://www.iairgroup.com/en/sustainability/stories-

reports\\IAG and-updates
summary report

Files\\CSR Japan https://www.jal.com/en/csr/report/pdf/index_2017.pdf

reports\\JLindex_ Airlines
2017

Files\\CSR LATAM https://www.latam.com/content/dam/LATAM/LAN/F

reports\\LATAM- Airlines ooter/Sostenibilidad/Reportes%20de%20Sostenibilida
SustainabilityRep Group d/Sustainability_Report_2017_EN.pdf
ort2017

Files\\CSR Lufthansa https://www.lufthansagroup.com/fileadmin/downloads

reports\\LH- Group /en/responsibility/balance-2017-epaper/#0
sustainability-
report-20172018

Files\\CSR Norwegian https://www.norwegian.com/globalassets/ip/document

reports\DY_Norw Air Shuttle s/about-us/company/environment/norwegian-
egian sustainability-report-2017.pdf
Sustainabiity

[213]
Report

Files\\CSR Ryanair https://corporate.ryanair.com/wp-

reports\\FR content/uploads/2018/03/Enviromental-Policy-
Enviromental- Doc.pdf
Policy-Doc

Files\\CSR SAS https://www.sasgroup.net/annualreports/2017/wp-

reports\\SK-csr- content/uploads/2018/02/SAS_Sustainability_180129.
2017 pdf

Files\\CSR Singapore https://www.singaporeair.com/saar5/pdf/Investor-

reports\\SQ Airlines Relations/Annual-Report/sustainabilityreport1617.pdf
sustainabilityrepo
rt1718

Files\\CSR Turkish https://investor.turkishairlines.com/documents/ThyInv

reports\\TK Airlines estorRelations/download/yillik_raporlar/surdurulebilir
sustainabilityrepo lik-raporu-en-2017.pdf
rt

Files\\CSR Virgin https://www.vaflightstore.com/news/virgin-atlantic-

reports\\VS Atlantic 2017-sustainability-report/
sustainabilityrepo
rt1718

[214]
 Appendix D: Aviation Media Corporate Information

Air Transport News (ATN) corporate information from LinkedIn profile:

“AirTransportNews.aero is a key online source of the air transport industry providing

access to aviation news from all sectors of the industry worldwide, in-depth expert
analysis and interviews with senior industry executives. ATN aims not only at making
aviation news more accessible but also at providing decision-makers with reliable and
timely analyses to aid their decision-making. It is also a forum where industry experts,
professionals and academics exchange views and engage in constructive discussions.
Established in 2006, ATN has already acquired over 35,500 subscribers from more than
150 countries, an average of 250,000 visits/month and 37,000 unique visitors/month”
(ATN 2019).

Anna Aero profile information from corporate website:

“anna.aero is Airline Network News & Analysis: a free and open website dedicated to
outstanding airline network planning intelligence, produced by a multi-disciplinary team
including experienced airline and airport network planners. Besides genuine number-
crunching analysis, anna.aero also prides itself on a sleek news-gathering operation,
incorporating the latest in airline network developments. One of the key features of
anna.aero is that it aims to provide information on every single route launch in the world,
including photographic evidence to confirm the news. Launched in July 2007, anna.aero
has consistently refreshed its website with weekly news and analysis” (Anna Aero 2019).

FlightGlobal profile information from corporate website:

FlightGlobal is currently an aviation intelligence portal supporting the aviation industry.

It has over 100 years of presence in the aviation sector helping business to assess their
risk and drive their growth. The company recruits over 300 employees around the world
offering reliable data information from a range of sources. The company is a strategic
partner of IATA and the association of world airlines (FlightGlobal 2019). The company
rebranded as Cirium in 2019. Any searches before June 2019 acknowledge the company
as FlightGlobal.

The researcher had access to the published interviews through subscription to the relevant
portals.

[215]
 Appendix E: Interview Questionnaire

Interview Guide to “Airline Sustainability Questionnaire”

Qualitative data will be used mainly to form theory.

The term liberalised environment refers to bilateral liberalisation in the form of Open
Skies agreements and to any agreements, arrangements, commitments and/or
programmes for liberalization of regional air transport services that are currently in
operation (ICAO 2016).

Participants are asked to answer the following questions:

Interview questions

1) Would you agree that Air Service Liberalisation, aimed at lowering protectionist
barriers between states in an effort to promote a series of benefits both at an economic
and social level, had an overall positive effect on the airline industry?
If no please elaborate
If yes, choose from the following table core categories that in your opinion are vital
for the sustainable development of airlines that operate in a liberalized environment
(you can choose as many categories as you want or even all of them if you believe
that they all play a pivotal role to sustainable development):

Economic footprint (An airline’s economic footprint could be viewed as □

all the spending, the employment and earnings in a region that are related
to all economic activity by that airline)

Customer Value Proposition (CVP refers to all the benefits an airline □

promises to offer to its travelling public in return for a ticket payment)

Labour Relations and Productivity (LRP refers to the quality of labour □

relations and productive performance of an airline)

Regulatory Requirements (this category refers to the need for regulatory □

uniformity and compliance with license, safety and security, maintenance
standards and flight training requirements as well as the dissemination of
best practices in this area by airlines and their key stakeholders)

[216]
 Supply Chain Interdependencies (SCI refers to the pivotal role that □
airlines play in the aviation value chain)

Consumer Protection (CP refers to airlines protecting the rights of the □

passengers while they exchange truthful and transparent information in
the marketplace.)

Environmental Conformity (EC refers to airline actions resulting in strong □

and constant improvement of ICAO’s environmental goals.)

Ethical and Social Responsibility (this category refers to airlines □

conducting business in an honest and lawful way while embedding
business practices that contribute positively to social welfare).

Is there any other category that you would like to add that is not broadly represented
by any of the above categories?
2) The following schematic represents the key actors of the Commercial Air Transport
(CAT) system. It is a way of looking at the CAT system from a holistic perspective
and through the eyes of the key stakeholders using information gathered through this
research from important ICAO Doc and research from well-acknowledged scholars
in this area.
a. The schematic argues that there are five key groups in the CAT system that
interlink, with different interests but with a common goal, which is the
sustainable development of Commercial Air Transport. Do you agree with
the presented schematic?
Yes □
Yes but ……….needs to be added
No □ (please elaborate)

[217]
 Actors of the Commercial Air Transport (CAT) System1

Intergovernmental Groups Non Governmental Groups

IATA and additional organisations supporting
International and national organisations the interests of the Commercial Air Transport
responsible for creating standards and value chain and that of the consumers. Commercial Air Transport
 Air Carrier Organisations ( AFRAA, AACO,
operating procedures and regulations across
AAPA, AEA, AREA etc.)
all the interested parties of the commercial  Other Aviation Organisations (ACI - FIATA
Value Chain
air transport industry. -CANSO - UFTAA etc. )
 Other organisations interested in  Aircraft and aircraft component
 ICAO – UN organ and Worldwide Commercial Air Transport (ICC,IDI etc.) manufacturers
Intergovernmental Organisation
consisting of 191 Signatory States  Lessors and other firms used as sources
of capital
 States and their national and
international regulatory bodies (i.e. Civil Customer Groups  Infrastructure Providers (Airports, ASNPs,
Aviation Authorities EASA, FAA, UKCAA, Users of the commercial aviation communication providers)
etc.) air transport product
(individual and corporate  Service Providers (Insurance providers,
 Regional Intergovernmental Civil Aviation travellers, meeters and ground services providers, MROs,
greeters etc.) Caterers, fuel suppliers)
Organisations (AFCAC, ECAC, LACAC,
ACAC)
 Airlines and strategic airline alliances
 Regional and Transregional multilateral
intergovernmental organisations and  Firms responsible for the distribution of
Trade areas (EU, EEA, ASEAN,GCC, NAFTA the airline product – Passenger related
ETC) (GDS and CRS, travel agents, travel
Labour Force Groups integrators)
 Other organisations interested in Air  Aviation Employees supporting the value
Transport (other UN organs, Tourism chain and the end users in Commercial  Firms responsible for the distribution of
authorities etc.) Air Transport (pilots, engineers, cabin the airline product – Cargo related
crew etc. ) (Freight forwarders, Cargo integrators)
 Organisations supporting the interests of
the labour force (IFALPA, UFTAA etc)

1
To cite this figure: Athousaki, R. (2018) Airline sustainability questionnaire. Coventry University Figure: Actors of the CAT system (The schematic was developed with
valuable information from a range of sources : ICAO Doc 9626 2004, Pearce 2013, Tretheway and Markhvida 2014, Wensveen 2015).

3) The literature states that airlines not only play a core role in the development of the
CAT system but create significant value for all the actors. However, would you agree
that airlines operating in a liberalised environment are facing difficulties to sustain
their “equity over time”? The term “equity” is used in this research to explain both
tangibles and intangible assets.

a. Agree □ Disagree □ neither agree or disagree □ (provide a brief explanation

for your choice)
b. In your opinion, what are the key impediments (barriers) to airline
sustainability in a liberalised environment?
4) What is your opinion with regards to the development of a Conceptual Framework
that a) Generates a systemic approach to the sustainable development of airlines that
operate in a liberalised environment, b) Creates the foundation for the establishment
of a Sustainability Management System (SuMS) in line with continuous improvement
standards?
5) Are you familiar with any similar framework available to Commercial Air Transport
today, in particular to the Airline industry that aims to improve Airline sustainability
in the context of this research? Please expand your answer.
[218]
 Yes □ (please elaborate)
No □

Thank you very much for your time and interest.

Mrs Roxani Athousaki

PhD Candidate

Coventry University, UK

As part of the ethics process, the questionnaire was accompanied by the Participant’s
information sheet and participants’ consent form,

[219]
 Appendix F: List of Events attended by the Researcher to Enhance the Holistic
Approach

‒ 3rd International Aviation Management Conference, IAMC 2016, Emirates

University, Dubai, UAE

‒ Air Transport Research Society

ATRS Conference 2015, Singapore

ATRS Conference 2016, Rhodes, Greece

‒ European Association of Aviation Training and Educational Organisations (EATEO)

events:

International Conference on Aviation Training and Education, November 2017,

Limassol, Cyprus

Training as an important instrument in aviation safety and development / The need

for cooperation between all stakeholders at regional and interregional level,
November 2018, Brussels, Belgium.

‒ HERMES AGM Leaders Forum, Education and Performance in Aviation 2019

‒ HERMES AGM Leaders Forum, Ownership and Control in Aviation 2018

‒ ICAO Events:

World Aviation Forum 2015, ICAO HQ Montreal Canada

2014 IATA Global Training Partner Congress, ICAO HQ Montreal, Canada

2nd International Air Transport Symposium, IATS 2014-, "Development of Air

Transport: Setting the course, ICAO HQ Montreal, Canada

Sixth Worldwide Air Transport Conference, ATConf6 2013, Observer Status,

ICAO HQ Montreal, Canada

‒ OECD, Round on Safety Management Systems, March 2017, Paris, France

‒ Research Symposium 2017, Coventry University, UK (Best Research Poster Award)

[220]
Appendix G: Business Sustainability Management
Appendix G.1: CISL Certificate

This item has been removed due to 3rd Party

Copyright. The unabridged version of the thesis can
be found in the Lanchester Library, Coventry
University.

[221]
Appendix G.2: CPD Certificate

[222]
 Appendix H: Evidences of the Ryanair Case Study Analysis

Appendix H.1: Ryanair Challenges and Uncertainties (Ryanair 2019: 59-72)

1. Changes in fuel costs and availability affect the company’s results.

2. Ryanair is subject to cyber security risks and may incur increasing costs in an effort to minimize
these risks.

3. Ryanair has seasonally grounded aircraft and while seasonal grounding reduces variable
operating costs, it doesn’t avoid fixed costs and produces no revenue.

4. Ryanair may not achieve all of the expected benefits of its recent strategic initiatives like
‘Always Getting Better’ (AGB) and other customer experience related initiatives.

5. Currency fluctuations may adversely affect company results.

6. The “Brexit” Referendum and the resulting uncertainty about the status of the U.K. could
adversely affect Ryanair’s business.

7. The company may not be successful in increasing fares to cover rising business costs.

8. The Company is subject to legal proceedings alleging state aid at certain airports (i.e. Paris
(Beauvais), La Rochelle, Carcassonne, Girona, Reus, Târgu Mures and Montpellier airports).

9. The company faces significant price and other pressures in a highly competitive environment.

10. The company will incur significant costs due to new aircraft acquisition and any instability in the
credit and capital markets could negatively impact Ryanair’s ability to obtain financing on
acceptable terms.

11. Company’s growth may expose it to risks.

12. Ryanair’s new routes and expanded operations may have an adverse financial impact on its
results.

13. Ryanair’s continued growth is dependent on access to suitable airports; Charges for airport
access are subject to increase.

14. Labour relations could expose the company to risk.

15. The company is dependent on external service providers (i.e. engine overhauls, MRO, ground
handlers).

16. The company is dependent on key personnel (i.e senior management team). Competition for
highly qualified personnel is intense, and either the loss of any Executive Officer, senior
manager, or other key employee without adequate replacement or the inability to attract new
qualified personnel could have a material adverse effect upon Ryanair’s business, operating
results and financial condition.

[223]
17. The company faces risks related to its internet reservations operations and its elimination of
airport check-in facilities.

18. The company faces risks related to unauthorized use of information from the company’s website.
Screenscraper websites create loss in revenue from direct booking.

19. The Irish corporation tax rate could rise, affecting cash flow, as the majority of Ryanair’s profits
are subject to Irish corporation tax at a statutory rate of 12.5%.

20. Change in EU Regulations in relation to employers and employee Social Insurance could
increase costs.

21. Ryanair is subject to tax audits in many jurisdictions. Tax audits, by their nature, are often
complex and can require several years to conclude. In the event that the Company is
unsuccessful in defending its position, it is possible that the effective tax rate, employment and
other costs of the company could materially increase.

22. Risks associated with the Euro. The Company is headquartered in Ireland and its reporting
currency is the Euro. As a result of the uncertainty arising from the Eurozone debt crisis, there is
widespread speculation regarding the future of the Eurozone.

23. The introduction of government taxes on travel could damage Ryanair’s ability to grow and
could have a material adverse impact on operations.

24. Political uncertainty and an increase in trade protectionism could have a material adverse effect
on Ryanair’s business, results of operation and financial condition. Recession in key European
markets.

25. The company is substantially dependent on discretionary air travel.

26. EU Regulation (EC) No. 261/2004 on passenger compensation could significantly increase
related costs.

27. EU Regulation of Emissions Trading will increase costs. Under the legislation, airlines are
granted initial CO2 allowances based on historical performance and a CO2 efficiency benchmark.
The cost of such allowances increased significantly during fiscal year 2018 and has continued to
rise in the fiscal year 2019. There can be no assurance that Ryanair will be able to obtain
sufficient carbon credits or that the cost of the credits will not have a material adverse effect on
the company’s business, operating results, and financial condition.

28. Extreme weather events and external shocks (i.e. epidemics) could significantly damage
Ryanair’s business.

29. The company is dependent on the continued acceptance of low-fares airlines by the travelling
public.

30. The company faces the risk of loss and liability due to catastrophic losses.

[224]
31. Safety-related undertakings could affect the company’s results. There also can be no assurance
that new regulations will not be implemented in the future that would apply to Ryanair’s aircraft
and result in an increase in Ryanair’s cost of maintenance or other costs beyond management’s
current estimates.

32. EU Rules impose restrictions on the ownership of Ryanair Holdings’ Ordinary Shares by Non-
EU Nationals, and the company has instituted a ban on the purchase of Ordinary Shares by Non-
EU Nationals.

33. Holders of Ordinary Shares are currently unable to convert those shares into American
Depositary Receipts.

34. The Company’s results of operations may fluctuate significantly. The Company’s results of
operations have varied significantly from quarter to quarter, and management expects these
variations to continue.

35. Ryanair Holdings may or may not pay dividends. Since its incorporation as the holding company
for Ryanair in 1996, Ryanair Holdings has only occasionally declared special dividends.

[225]
 Appendix H.2: Challenges and Uncertainties Grouped

Su Business Driver: ECO FTP Su Business Driver: LRP Su Business Driver: CVP

Risks:1,3,5,10,11,19,20,21,22,32,33,34, Risks:14,16 Risks: 4,29

35

fuel costs; grounded aircraft; costs due to Labour relations; Always Getting Better poor
new aircraft acquisition; growth vs risks; dependency on highly performance; continued
Irish corporation tax rate; social qualified personnel. acceptance of low-fare
insurance costs ; Euro; restrictions on the airlines.
ownership; company’s results of
operations may fluctuate significantly;
inability to convert those shares into adr;
dividends.

Su Business Driver: SCI Su Business Driver: ENV Su Business Driver: CON

PTC
Risks: 2,12,13,15,17,18,31 Risks: 27,28
Risks: 26, 29

Cyber security risks; seasonally grounded CO2 allowances and EU Regulation (EC) No.
aircraft; new routes and expanded increasing carbon footprint; 261/2004; continued
operations; access to suitable airports; climate change; flight acceptance of low-fare
labour relations; dependency on external disruptions and cancelations; airlines.
service providers; dependency on highly natural disasters.
qualified personnel; internet reservations
operations; unauthorized use of Su Business Driver: ESR

information; safety-related undertakings. Risks: 21,23,25

Tax audits; propensity to fly.

Su Business Driver: REG RQT

Risks: 6,8,9,24,30

Brexit; legal proceedings alleging state aid at certain airports (i.e. Paris -Beauvais, La Rochelle, Carcassonne,
Girona, Reus, Târgu Mures and Montpellier airports); level playing field; trade protectionism; loss and
liability.

[226]
 Appendix H.3: Sixth Segment Analysis

OPERATIONAL

Market forces:

- Risks: Jet fuel is the highest contributor to Ryanair’s operational costs (35% for
2018). Any alteration in the price of fuel could affect the company’s results (i.e.
profitability) and network planning strategies. An energy supply side shock (i.e.
fuel shortage, OPEC crisis) could contribute significantly in uncertainty
especially as no assurances can be given, either for the price of jet fuel or for the
price of oil. With 439 aircraft in service and 139 on order this risk is of high
priority. Ryanair emitted 10,765,881 tCO2 (Calendar 2017), which equates to
0.084 tCO2 (Ryanair 2018). According to the latest EC results, Ryanair is one
of Europe’s top 10 carbon emitters. This is posing a risk to airline’s economic
footprint and reputation.
- Opportunities: Opportunity to take advantage of the changing regulatory
environmental landscape and shift to greener travel (CISL 2016, EASA2016).
Opportunity to revisit environmental initiatives and look for solutions that
support open and responsible supply chain practices. Opportunity to review the
company’s network planning and route withdraw strategies.
Operational disruption

- Risks: Cyber-attacks on Ryanair’s airline systems are a daily challenge (i.e.

reservation; on line payment) and pose a great threat as they could lead to the
misuse of customer information, litigation and potential liability, especially with
the new EUGDPR Regulation (2016/679) in place. To this threat one can add
any breaches on partner organisations with whom Ryanair has a commercial
relationship (i.e. Boeing, Maintenance units, Global Distribution Systems).
Failure of critical infrastructure to cope with aviation growth or even extreme
weather conditions (i.e. Air Space Management issues; airport security issues;
delays due to weather) provide serious risks for flight safety and economic
growth, not only for Ryanair but also for the wider industry.
- Opportunities: Opportunity to engage with intelligent cyber security
technologies and the use of adaptive algorithms in stopping breaches.

[227]
 Opportunity to cooperate with key aviation stakeholders engaging in behavioural
biometrics to test system security measures in key infrastructure.
Employee engagement

- Risks: Seasonal approach to employment poses serious risks for Ryanair. Loss
of expertise (i.e. pilots/cabin crew) and loss of talent; poor labour relations; lack
of ability to build loyalty and commitment affect operational plans and brand’s
reputation, the most recent example being October 2017 flight cancelations due
to the pilots’ loss over a main rival.
- Opportunities: Opportunity to combat inequality and focus on a labour force
that builds a more sustainable future based on loyalty.
STRATEGIC
Brand Reputation
- Risks: Ryanair brand’s reputation for sustainability favours a model of lowering
costs and risks to protect value proposition. However this approach lacks real
commitment to sustainability and creates the risk for the company to become
part of the sustainability problem instead of leading innovative solutions
(measures to control cost caused: flight cancelations due to labour relations
issues; poor response to failure infrastructure; cyber security deficiencies, etc.).
Always Getting Better (AGB) strategic initiative is more of a risk than an asset.
It is outdated and mainly focused on customer experience and satisfaction with
investments that increase the environmental and social impact (i.e. more flights
to primary congested airports and actions that increase waste).
- Opportunities: Opportunity to upgrade AGB to include social consideration in
developing solutions that reduce inequalities. Opportunity to adopt a more
environmentally friendly image especially in cities disrupted by climate change.
Business Model

- Risks: ESG (Environmental and social governance), Ryanair’s Environmental

and social reporting is prescriptive, with some aspects of philanthropic work, a
social responsibility discussion and actions that limit environmental impact. The
main risk with this approach is to lose the ability to make a greater impact for the
society and the environment.

[228]
 - Opportunity to rethink the concept of sustainability and especially that of
sustainability leadership across the different levels of management.

Stranded Assets

- Risks: No stranded assets have been identified by the annual report. This is highly
unlikely as the company operates 86 bases. Therefore, the risk of losing capital
over physical assets that are worthless is high.
- Opportunity to investigate a potential source of capital loss or misuse.

The six segment diagram analysis concludes with suggested actions in every domain. As
this analysis is for demonstration purpose only, the researcher will not propose any
actions at this stage.

[229]
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