This article describes the effects of Economic Regulation (ER) on domestic airlines in developing countries using Nigeria as
case study. In recent times ER has
received much attention in the developing countries as setbacks in airline industry are
partly attributed to poor financial management despite the huge loosely monitored Government subventions in the form of
bail outs. The regulatory mechanism for ER in t
he airline industry emphasised
non
-
financial qualitative metrics
and cost
variables whilst numerous financial ratios that guide industrial best practices globally received insignificant attention.
Literatures confirmed that financial ratios are of outmost
significance in evaluating airline solvency and they further provide
objective
basis for financial analysis, statistical inference, comparative and trend analysis.
Two sets of structured interviews
were administered to the NCAA and three (3) selected domes
tic airlines to determine the extent of adoption of quantitative
(financial ratios) in ER; regrettably,
the inherent
lack of quantitative data was evidenced. This article employed qualitative
comparative analysis methodology to bridge the existing literatu
re gaps. It developed a framework as benchmark for best
industrial practices by utilising financial ratios to assess airline solvency. The results of the study conducted were used t
o
modify the existing body of knowledge, propose institutional change that
are airline
-
specific and augment the holistic
mechanism for ER of airlines in Nigeria inclusive of consideration of mergers and acquisitions that improves both scope and
scale economies. Future work would include specific testing of the proposed framework
in an airline environment with the
objective of improving learning and dynamics of policy formulation in a complex air transport environme