INDSG442R Research Methods

Introduction 

This chapter of the research is about to introduce the topic which is to evaluate the economic impact of COVID19 on the aviation industry by considering the case of Air Arabia. It explains the research objectives, aims, and questions along with the study background and significance.  

Study background

The impact of COVID19 is widespread and very harsh in some sectors including the aviation industry. Different aviation organizations and their employees have faced the economic impact of this pandemic.  In 2020, the international passenger traffic has dropped by 60% due to the impact of this pandemic (Internationalairportreview.com, 2021). This has brought the air travel totals to the level of 2003. According to the reports generated by the International civil aviation organization (ICAO), the seating capacity in this industry dropped by 50% in the year 2020. In the last year, just 1.8 billion passengers have traveled by air which is much lower as compared with the last year. In 2019, approximately 4.5 billion passengers traveled by air. The financial losses of the airline industry are $370 billion dollars due to the impact of COVID19 (Maneenop and Kotcharin, 2020). The navigation and airport service providers have faced a loss of $13 and $115 billion respectively. 

Introduction to Air Arabia 

Air Arabia is identified as the largest and first low-cost carrier in North Africa and the Middle East. This organization started its journey in the year of 2003 with the vision of becoming one of the budget airline service providers in the world (Press.airarabia.com, 2021). This organization is focused on innovation, profit margin, reputation, and operational excellence. The mission of this airline company is to bring revolution to the airline industry through offering safe, value for money, and trustable operations. At present, it is flying travelers to more than 170 destinations within Europe, Asia, Middle East, and North Africa. The workforce of Air Arabia contains more than 2300 employees who are adhering to the core values of this business in order to serve as per the expectation of the consumers (Careers.airarabia.com, 2021). This organization has built a positive organizational culture that is supportive to the employees. Its approach to continuous career development attracts many true talents towards the business. It values its consumers and believes that the trust of consumers in this company has helped it to ensure a strong market position.  

Problem statement

The aviation industry has faced the economic impact of COVID-19 due to the decreased number of passengers. The revenue rate of companies like Air Arabia has dropped drastically.  In addition, this led to termination of employees and cutting different benefits and compensation. Air Arabia has faced a total loss of AED 44 million in the third quarter of 2020 (Airarabia.com, 2020). Moreover, in the first half, they have faced a loss of AED 169 million due to this pandemic (Airarabia.com, 2020). This airline firm has laid off 57 employees in 2020 and taken serious steps to cut different benefits. This is because the company has to bear additional costs of safety and sanitization. Thus, both the company and its employees have faced economic impact. 

Research aim 

The aim of this study is to evaluate the economic effect of the COVID-19 pandemic on the economic performance and employees of Air Arabia. 

Research objectives 

Based on the aim, the following objectives of this study has been determined,

1. To evaluate the effect of the pandemic on the economic performance of Air Arabia
2. To investigate the impact of economic distress of Air Arabia on its employees
3. To identify effective strategies to overcome the economic distress due to the pandemic

Research questions 

The research is being supported by the following questions which have been designed based on the objectives,

1. What are the impacts created by COVID-19 on the economic performance of Air Arabia?
2. How does the economic distress of Air Arabia due to the pandemic affect its employees?
3. What are the most potent strategies to overcome the present economic condition of Air Arabia?  

Factors contributing to research questions 

The selection of research questions is a complex process and certain factors are there that are contributing to this process. Firstly, personal interest in the research topic has helped to determine these research questions. The topic can be explored by answering these questions. Secondly, this research must be completed within the minimum time, and based on this consideration; the above-mentioned questions of the research have been formulated. Thirdly, COVID-19 has affected all of the sectors and it is a recent issue that needs more research to solve its adverse effects. Answering the research question will help to find out the most appropriate solutions to the identified problem related to this pandemic. 

Justifying the research questions 

These research questions have been chosen because they can help to assist the aviation industry regarding a current topic of interest. Different companies of this industry are facing economic impact due to the pandemic and want to gain strategies that can help them to minimize the impact. In addition, these questions can help to achieve a clear picture of the economic impact both on the industry players and its workforce. Moreover, these research questions can help to critically analyze the problems and find effective strategies suitable for this situation.  

Significance of the study 

Theoretically, this research study helps to understand the current situation of airline companies due to the economic impact of COVID-19. Further, it helps to gain an idea about the change in the situation of employees of this industry due to the economic impacts that this industry is facing. It can be understood how the initiative of operational cost-cutting by the company has directly impacted its staff.  Practically, this study has its significance for the organization to gain strategies for improving the situation and help employees to mitigate the economic issue. 

Literature review 

Different key kinds of literature have been critically analyzed for elaborating the research problem. This has helped in providing a theoretical foundation for the discussion of the research. In a study, the literature review is generally used for elaborating various concepts of the study sector. This section can help to understand the impact of pandemics on economic performance and its effect on employees. 

To evaluate the effect of the pandemic on the economic performance of the aviation business 

Air transport represents a great share in GDP and the dramatic drop of passengers in this sector has impacted economically. Amankwah-Amoah et al. (2021) said that the drop in passengers due to COVID19 has impacted the annual sales and revenue target of the aviation industry around the globe. In addition to this, the government guidelines regarding health-related and sanitization measures have increased the operational costs of this industry. In both airlines and airports, the operational costs have increased to fulfill the safety requirements (Mhalla, 2020). The aviation companies are bound to make huge purchases of PPE kits, temperature checks, and disinfection equipment to combat this situation. Moreover, the government has also provided guidelines regarding social distancing that have forced the aviation businesses to decrease the total number of seats in a flight, which is in some cases up to 50%. The crisis has increased due to changes in consumer behavior. As said by Gössling (2020), flight customers are avoiding public transportations due to the risk of transmission of disease. Change in safety policies and procedures and offering lucrative discounts on travel also cannot improve the situation. Many business travelers have also reduced their traveling schedules. Suau-Sanchez et al. (2020) mentioned that business travelers prefer video conferences instead of traveling for meetings. Many consumers of this industry are also availing of different substitutes for traveling. For example, instead of taking flights for domestic travel, many consumers prefer private cars. Thus, both long and short-haul flights are facing constant loss from the previous economic year. Nižetić (2020) further contradicted that changes in consumer behavior during pandemics and supply shocks have impacted this industry severely. Low productivity has caused due to this situation that has decreased the revenue rate. The aviation industry can see improvement in economic results only after lifting travel restrictions and obtaining the trust of consumers. 

To investigate the impact of economic distress of companies on their employees 

Financial distress in large multinational organizations often impacts the well-being of their employees. Sobieralski (2021) has stated that the total number of employees has decreased in every sector after the COVID pandemic. The impact of this pandemic is high on the major airline companies and this impact is lower in the case of regional and budget airline companies. Companies have started terminating employment in many positions to reduce operational costs to deal with the economic crisis. For instance, in the airline industry, many employees lost their jobs during this time because of a lack of skill and talent. As argued by Maneenop and Kotcharin (2020), termination is not the only way that the airline industry has focused on during the economic crisis. Many companies reduced the compensation and other benefits of existing employees to save operational costs. On the other hand, Aman and Altass (2021) have contradicted that a higher rate of employee layoff created pressure on the existing employees. Due to this reason, existing employees are afraid of losing their employment too. Extra workload makes them stressed which affect their performance. It can negatively affect the customer satisfaction level as these companies have restarted their business again.  

Pending salaries is another issue that is being faced by the airline industry employees due to the economic distress of companies during this pandemic. Kang et al. (2021) have stated that many airline organizations have delayed providing salaries to employees which leads to the poor economic condition of employees. They are facing problems in managing daily life expenses. Sobieralski (2020) has contradicted that besides delayed salaries, many employees are getting unnecessary salary cuts which are preventing them from performing well. As a result, they are being worried and making more workplace mistakes which are preventing the overall growth of the concerned firms. 

To identify effective strategies to overcome the economic distress due to the pandemic 

The aviation industry has seen tremendous economic loss during this pandemic. They can execute different strategies during and after the pandemic to achieve economic success and save the business. Dube et al. (2021) said that reduction of costs is an essential strategy that can be applied by aviation businesses to stop further loss. Different long-haul flights can be suspended during this situation as the demand is quite low. However, focus can be given to short-distance travel or domestic services. This can help businesses to save operational costs.  In addition, Olaganathan (2021) argued that aviation companies need to give more focus on fundraising and liquidity. Cash can be raised through share issues targeting big institutional investors and the current pool of shareholders. This can be done by offering the shares at a discount or providing extra incentive for closing the transaction sooner. Bhuiyan and Bashar (2020) contradicted that bank guarantees, grants, and subsidies can be availed by the aviation businesses for achieving greater cash. Obtaining an adequate amount of cash can help these firms to make effective decisions and conduct operations smoothly. Moreover, government tax reliefs such as corporate taxes can be evaluated and improvised effectively. 

The aviation companies also need to reduce the capital expenditure by canceling or postponing different large and medium projects. Macilree and Duval (2020) mentioned that it is essential for aviation players to pause improvement projects that require huge capital investments. As there is a pause in demand, thus expending too much in improvement projects can decrease the financial condition of an aviation company. Czerny et al. (2021) argued that it is essential for aviation firms to redraw their budget. The aviation firms need to conduct item-by-item budget evaluations that can help them to identify the points of extra expenditure. They need to focus more on Xero’s budgeting techniques and rethink how to improve the structure of the business. 

Framework of the study 

Figure 1: Study framework

(Source: Created by the Author) 

The above-mentioned figure is showing the economic impact of the pandemic on the airline industry. The connections between variables have been shown step by step in this conceptual model. This can help to guide in conducting the research further. 

Gaps in the literature  

As this is a recent topic, limited research has been done. Most of the research papers have investigated the impact of COVID-19 on different industries. However, the focus on the suffering of employees and its relation with organizational growth has not been discussed together. This paper intends to address this gap by analyzing the economic impact of the pandemic on the performance of the Aviation industry and its employees along with strategies to overcome this situation and ensure success again. 

Research methodology 

This study section helps readers to gain an idea about the methodology that helps to investigate the topic. 

Research methodology overview 

The selection of appropriate methods helps to answer the research question and generate trustworthy research. This research has followed the pragmatism philosophy to answer the research question in a proper way. As stated by Allmark and Machaczek (2018), it allows researchers to collect both qualitative and quantitative data which can enhance the trustworthiness of the research outcome. Besides, this research has focused on an abductive approach to generate a reliable outcome in the end.  According to Mitchell and Education (2018), this approach perfectly fits with the pragmatism philosophy and it has the capacity of ensuring the best predictions. It has helped in this research in terms of constructing theoretical approaches and logical interferences. 

Table 1: Research methodology

(Source: Created by the author) 

Research design 

A mixed-method design is selected for this study. Qualitative and quantitative data will be collected. As opined by Sahin and Öztürk (2019), this design is helpful in terms of understanding the findings of qualitative and the outcome of quantitative studies. It also helps in gathering and analyzing authentic data to address the research question. 

Data collection method 

The survey tool was deployed for gathering data through the help of rating scale questions. This tool has been used to collect information from the employees of Air Arabia about their experiences in this situation. In addition, a structured interview is done with the manager of this company to get in-depth data about the topic area.

Conclusion  

The pandemic has a significant impact on the aviation industry and it has created economic distress. However, this poor economic situation has not only impacted the company but also its employees are suffering. This can impact the company’s performance further and competitive advantage can be lost. The economic distress has limited the industry’s ability to improve further as different improvement projects are either paused or suspended. Controlling the situation is essential by deploying different strategies as done by this company. Taking loans and selling shares has helped them to gain capital, which is essential for the continuation of operations. 

Recommendations 

The findings of this study have revealed that during this hard time, employees are not getting enough assistance and support from the leaders and they are afraid of losing their jobs which are the reasons for their poor performance. It is recommended for the leaders of airline companies to support the employees at this time to help them to remain confident and productive. As stated by Adwan (2021), it can help companies to overcome economic crises within the minimum time by meeting the expectations of customers. Productive employees can help in this regard.  

On the other hand, it has been found that COVID is the main reason behind the decreasing number of passengers on flights. Hence, it is recommended to airline companies comply with the COVID protocol set by the government. It can make the customers realize that this industry is concerned about their well-being (Dube et al. 2021). It can influence them to continue traveling by flights which will be helpful to overcome the economic crisis. Besides, a strong marketing approach must be continued to attract potential consumers towards the airline companies. New operations, compliance with the COVID protocol, and discounts on flights must be highlighted in marketing strategies.   

Study limitations

This study has different limitations that include considering small sample sizes. The researcher cannot involve large sample sizes due to the Covid-19 crisis, which is essential for increasing the reliability of research. In addition, the researcher has got minimum time for conducting this research, which is another limitation. 

Future study suggestion

In the future, large sample sizes can be involved to measure the impact of the poor economic situation of the company on employees. In addition, further statistical analysis can be done to evaluate the impact of pandemics on the economic distress of the company.  

Reference list

Adwan, M., 2021. COVID-19 on aviation: Insights on challenges facing the airlines; managing uncertainty, and the potential role of leadership in dealing with a crisis. Business Educator: Working Paper Series of the Centre for Management Learning and Business Education, 1, pp.61-78.

Airarabia.com (2020), Press release, Available at: https://press.airarabia.com/air-arabia-reports-aed-169-million-first-half-2020-net-loss-due-to-impact-of-covid-19/ [Accessed on 21^st June 2021]

Airarabia.com (2020), Press release, Available at: https://press.airarabia.com/air-arabia-reports-aed-44-million-net-loss-in-third-quarter-as-covid-19-impact-continues/ [Accessed on 21^st June 2021]

Allmark, P. and Machaczek, K., 2018. Realism and Pragmatism in a mixed methods study. Journal of advanced nursing, 74(6), pp.1301-1309.

Aman, Q. and Altass, S., 2021. Pre-and Post-COVID-19 condition, performance and future of the airline industry: Evidence from accounting data. Amazonia Investiga, 10(37), pp.9-23.

Amankwah-Amoah, J., Khan, Z. and Wood, G., 2021. COVID-19 and business failures: The paradoxes of experience, scale, and scope for theory and practice. European Management Journal, 39(2), pp.179-184.

Bhuiyan, D. and Bashar, A., 2020. The covid-19 pandemic: conceptual model for the global economic impacts and recovery. The Covid-19 Pandemic: Conceptual Model for the Global Economic Impacts and Recovery (July 20, 2020).

Careers.airarabia.com. (2021). Why Air Arabia. Available at: https://careers.airarabia.com/content/Life-at-Air-Arabia/?locale=en_GB#

Careers.airarabia.com. (2021). Why Air Arabia. Available at: https://careers.airarabia.com/content/Life-at-Air-Arabia/?locale=en_GB# [Accessed on 25^th June, 2021]

Czerny, A.I., Fu, X., Lei, Z. and Oum, T.H., 2021. Post pandemic aviation market recovery: Experience and lessons from China. Journal of Air Transport Management, 90, p.101971.

Dube, K., Nhamo, G. and Chikodzi, D., 2021. COVID-19 pandemic and prospects for recovery of the global aviation industry. Journal of Air Transport Management, 92, p.102022.

Dube, K., Nhamo, G. and Chikodzi, D., 2021. COVID-19 pandemic and prospects for recovery of the global aviation industry. Journal of Air Transport Management, 92, p.102022.

Etikan, I. and Bala, K., 2017. Sampling and sampling methods. Biometrics & Biostatistics International Journal, 5(6), p.00149.

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