Testing the impact of commodity risk on airline capacity forecasting: A systems dynamic framework from an airline perspective: An empirical analysis – Part 2

This paper adopts an empirical method of testing commodity risk on airline capacity forecasting. The paper incorporates modelling of a capacity-forecasting model through the adoption of systems dynamics. The paper attempts to explore and test the impact of commodity risk by analyzing the effect of changes in jet fuel spot price on average airfares of US domestic market. The study also attempts to measure the impact of other interrelated capacity variables. The postulated hypotheses have been derived from capacity risk analysis and causal feedback loop logic that underlines the study to observe the interrelations of capacity and risk variables in a dynamic setting.