Government holdings and performance in the airline industry: A focus on African and Middle East airlines

Megersa Abate, Sylvain Bourjade and Catherine Muller-Vibes

Transportation Research Part A: Policy and Practice, 2026, vol. 211, issue C

Abstract: This paper examines how government ownership influences airline operating profitability by drawing on a unique panel dataset of 162 airlines worldwide from 2007 to 2019. Using a two-stage least squares (2SLS) strategy to address endogeneity in ownership decisions, we find that the effect of government holdings on operating profitability is non-linear and follows a quadratic pattern. While moderate state participation is associated with operating profitability gains globally, the relationship differs markedly for airlines in Africa and the Middle East, where higher levels of government ownership yield comparatively stronger operating profitability effects. The analysis identifies indicative ownership ranges associated with higher operating profitability across regions, offering new empirical insights into the governance-performance trade-offs facing airlines in both mature and emerging markets.

Keywords: Government Holdings; Operating Cost; Stochastic Frontier; Airline Industry (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1016/j.tra.2026.105120

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