11 Jan 2021Working Paper Summaries

Accounting for Product Impact in the Airlines Industry

by George Serafeim and Katie Trinh

A systematic methodology for measuring product impact can be applied across a range of industries. Examining two competitor companies in the airlines industry, this study finds that analyzing each dimension of product impact allows for deeper understanding of each company’s business strategies.

Author Abstract

We apply the product impact measurement framework of the Impact-Weighted Accounts Initiative (IWAI) in two competitor companies within the airlines industry. We design a monetization methodology that allows us to calculate monetary impact estimates of fare affordability, timeliness and gate control, among other factors. Our results indicate substantial differences in the impact that competitors have through their products. These differences demonstrate how impact reflects corporate strategy and informs decision-making on industry-specific areas, including airline route structure choices.