ANALYZING APPROACHES TO EVALUATING AIRLINES PERFORMANCE

• Main Author: O. Marusych
• Format: Article
• Language: English
• Published: LLC "CPC "Business Perspectives" 2014-09-01
• Series: Економіка розвитку
• Subjects: airline; research of performance; the Balanced Scorecard; the concept of economic value added; process-oriented approach
• Online Access: http://www.ed.ksue.edu.ua/ER/knt/ee143_71/e143mar.pdf
• ISSN: 1683-1942; 2304-6155

Currently, understanding of what constitutes a business process, what internal factors impact the company's performance make airlines review the methods for assessing their performance. To assess the profitability of the processes, several different methods were developed whose approbation proved both their popularity and the reliability of the results: the concept of the economic value added (EVA), a Balanced Scorecard (BSC) and the process-oriented cost-benefit analysis (BPA). The concept of the economic value added is now claiming to play a leading role in determining the shapes and structural elements of the methodology of corporate governance in the world. The system of parameters that characterize the activities of an airline within the concept of cost management, has constantly been updated. With the introduction of modern information technologies, appearing of new ideas the parameters are becoming more objective and complex. Despite the fact that the system of parameters is an indicator of the general state of an enterprise, it would be wrong to only limit oneself to their analysis. In order to immediately prevent or solve any problems arising at a plant, a system of timely and reliable indicators performance is required to most fully evaluate the efficiency of an airline as a whole. Such a system is a balanced system of efficiency indexes. It can significantly improve the quality of business management, especially if a company has several activities. By means of this technique it is possible to assess the effectiveness of not only individual investments or projects, but also of entire companies or commercial entities. The problem of a balanced scorecard is that it does not solve the fundamental problems of performance measurement and gives guidelines how to combine diverse indicators into an overall assessment of effectiveness. This problem of a combination of different types of indicators is resolved through a process-oriented analysis of profitability. This method allows us to estimate the impact of each business process, which is carried out in a company on its income, which makes it possible to compare the revenues received from the process with the costs. This also makes it possible to identify highly profitable business processes and identify those that are not such. Having the advantages of other methods and eliminating the inherent shortcomings, the RIA provides measuring the effectiveness of all the levels of airlines – from the entire company to its divisions, business processes and individual products.