Date of Conferral

2015

Degree

Doctor of Business Administration (D.B.A.)

School

Business Administration

Advisor

Kevin Davies

Abstract

Given the financial challenges faced by the airline industry, understanding of the combined effect of terrorism and the price of petroleum on airline profitability is imperative. The purpose of this correlational study was to determine if a combination of terrorism and the price of petroleum significantly predicted airline profitability, and which variable was the most significant. This study collected samples of financial records from major American commercial passenger and cargo airlines on costs of fuel (n = 84) and airline profitability (n = 84). The terrorism data (n = 84) were comprised of terrorist attacks on petroleum infrastructure in oil-producing nations, and incidents of highjacking aboard American aircraft. Systems theory, which explains complexity within systems, was the theoretical framework for this study. The results of the multiple linear regression analysis indicated the model was able to significantly predict airline profitability, F(2,81) = 5.447, p = .006, R2 = .12. Both terrorism and cost of fuel were statistically significant, with the cost of fuel (beta = -.511, p = .002) indicating a higher contribution to the model than terrorism (beta = .452, p = .005). This study is important to airline executives as the results of the study indicate that the leaders in the airline industry should focus on operational efficiencies to maximize profitability. Positive social change implications include increased employment in the civil aviation industry, higher commercial activity in tourist and other travel-related service businesses, and the adoption of green technologies by the civil aviation manufacturing industry.