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campus fryslân CENTRE FOR SUSTAINABLE ENTREPRENEURSHIP CSR REPORTING OF THE EUROPEAN LOW-COST AND FULL-SERVICE CARRIERS: A QUALITATIVE CONTENT ANALYSIS Daniel Rost

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Page 1: CSR REPORTING OF THE EUROPEAN LOW-COST AND · PDF fileLOW-COST AND FULL-SERVICE CARRIERS: A QUALITATIVE CONTENT ... full-service carriers: a qualitative content analysis ... Stakeholder

campus fryslân

CENTRE FOR SUSTAINABLE ENTREPRENEURSHIP

CSR REPORTING OF THE EUROPEAN LOW-COST AND FULL-SERVICE

CARRIERS: A QUALITATIVE CONTENT ANALYSIS

Daniel Rost

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CSR reporting of the European low-cost and

full-service carriers: a qualitative content

analysis

MASTER THESIS

11/05/2016

Author:

Daniel Rost, s2337746

[email protected]

Supervisor:

Dr. Gjalt de Jong

University of Groningen

Faculty of Economics and Business

MSc in International Business & Management

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Abstract

The focus of this study was to qualitatively analyse the disclosures of corporate social

responsibility (CSR) practices by the growing low-costs carriers (LCCs) and the established

full-service carriers (FSCs) within the commercial European passenger aviation industry, in

order to ascertain the levels of implementation of socially responsible behaviour as reported

by the carriers with varying business models. To achieve this, the study used a comparative

research design and a qualitative content analysis of airlines’ multiple CSR disclosures.

Mostly in line with expectations, the study revealed generally low levels of CSR adoption

among carriers, with LCCs reporting less extensively on their CSR practices than FSCs in

terms of both the amount of reporting as well as content-wise. The study also found that all

carriers address individual dimensions of CSR to an unequal extent in their disclosures, with

the most attention paid to the social dimension of CSR.

Key words: corporate social responsibility (CSR), sustainability, airline industry, low-cost

carriers (LCCs), full-service carriers (FSCs), reporting, disclosures

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Acknowledgment

I would like to express my deep gratitude to my supervisor Dr. Gjalt de Jong for his support

and guidance through the process of writing this thesis. His professional approach and

provided feedback throughout the research project were both very helpful and greatly

enhanced my learning experience.

Groningen, 11th of May 2016

Daniel Rost

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Contents

1. Introduction............................................................................................................................. 4

2. Literature Review .................................................................................................................... 8

2.1. Corporate Social Responsibility (CSR) and Sustainability ................................................... 8

2.2. The Triple-Bottom Line .................................................................................................. 10

2.3. Greenwashing................................................................................................................. 12

2.4. Views of CSR................................................................................................................. 13

2.5. Stakeholder Theory ......................................................................................................... 15

2.6. Airline Business Models .................................................................................................. 16

2.6.1. Full Service Carriers (FSCs) ....................................................................................... 16

2.6.2. Low-Cost Carriers (LCCs) .......................................................................................... 17

2.6.3. Growing Importance of LCCs ..................................................................................... 18

2.7. Working Propositions...................................................................................................... 19

3. Methodology ......................................................................................................................... 21

3.1. Research Design ............................................................................................................. 21

3.2. Methods ......................................................................................................................... 22

3.3. Sample and Data ............................................................................................................. 23

4. Analysis and Findings ............................................................................................................ 25

4.1. Main Empirical Findings ................................................................................................. 25

4.2. Annual Reports............................................................................................................... 26

4.3. “Stand-alone” CSR Reports ............................................................................................. 26

4.4. CSR Related Websites .................................................................................................... 27

4.5. Extent of CSR Disclosure ................................................................................................ 28

4.6. Content Analysis of CSR Disclosures............................................................................... 28

4.6.1. Environmental Results ................................................................................................ 29

4.6.2. Social and Economic Results ...................................................................................... 33

5. Discussion and Conclusion ..................................................................................................... 39

5.1. Added Value of This Study.............................................................................................. 43

5.1.1. Theoretical Implications ............................................................................................. 43

5.1.2. Implications for Practice and Policy ............................................................................ 45

5.1.3. Limitations and Implications for Future Research......................................................... 46

References ................................................................................................................................. 48

Appendices ................................................................................................................................ 55

Appendix 1 – Figures .............................................................................................................. 55

Appendix 2 – Tables ............................................................................................................... 57

Appendix 3 – Sample Introduction ........................................................................................... 64

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1. Introduction

In the current era of globalization, civil aviation plays an important role in people’s

everyday lives. As businesses are being established globally across borders, the need for air

travel is evident. Thanks to its ability to reach faraway destinations in only matters of hours,

travelling by plane became popular for both business and leisure travellers. Recent growth in

civil aviation industry reported by International Air Transport Association shows that the

industry has more than doubled in the past decade, from US$369 billion to US$746 billion.

This growth has been mainly driven by low-cost carriers (LCCs), which are now estimated to

control about 25% of the worldwide market (Clayton & Hilz, 2015). After the deregulation of

the aviation industry, the entrance of LCCs significantly increased the competition in the

industry, previously mostly dominated by full-service carriers (FSCs). This is observed

mainly on regional routes, such as within Europe, as the low-cost model is currently being

primarily applied on short-haul regional or what are being termed point-to-point routes.

However, recently, attempts to enter even long-haul flights market by LCCs are increasingly

being observed. Overall, LCCs appear to influence the industry greatly, often forcing FSCs to

adjust their operations in many aspects.

In the past, companies did not pay too much attention to sustainability or society at

large and businesses operated basically as long as they covered the first two stages in

Carroll’s (1991) pyramid of Corporate Social Responsibility (CSR) – being profitable and

respecting the law. This meant that firms were not held accountable for using public goods

such as polluting the air or water as a result of their operations. Despite there still not being

uniformly enforced legal obligations for companies to internalise these externalities, things

are gradually changing now and some companies are increasingly becoming aware of them,

progressing towards the top of the Carroll’s pyramid while engaging in sustainability and

CSR efforts or at least claiming to do so.

The size and global reach of MNEs and the perception of them as drivers of

globalization, bound them to have significant influence on society (Kolk, 2007). Furthermore,

the recent rise of social media and IT technology, made it easier to widely publicize corporate

scandals and failures, which inherently raised debates on and concerns about the roles large

firms paly in a society (Jobber & Fahy, 2012). While the regulatory environment and firm’s

corporate governance arrangements still only set the minimum obligations towards its

stakeholders, there are arguments that this is not enough and that public concerns for

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regulation exceed those imposed by policymakers, and thus call for greater firms’ self-

regulation (Muller, 2006; Kolk, 2007). This is giving rise to and stresses the importance of

sustainability and/or CSR efforts and policies, which go beyond what is formally required by

law. Such accounts of CSR are reported in and made know to public through various ways

and often only voluntary communications such as sections in corporate annual reports,

separate CSR reports, or dedicated CSR websites.

Notwithstanding, as the airline industry is growing, so are its impacts on the

stakeholders, economy, environment, and society in general. With the ever increasing

competition among LCCs and FSCs, airline industry is often characterized by slim profit

margins, forcing carriers to focus on cost-reduction activities and developing alternative

revenue generating strategies. LCCs, with their aggressive cost reducing no-frills strategies

are especially efficient in this. Moreover, as shown in a study conducted by Mintel (2011),

there is evidence that consumers are becoming increasingly conscious of ethical issues when

making purchases and that they are interested in patronizing more sustainable products and

services. This is also implied in the literature, which signifies that increasingly consumers

expect companies to act in socially responsible ways and adjust their behaviours accordingly

(Kolk, 2007; McIntosh, 2003; Juholin, 2004). These expectations are sometimes being

stressed especially in relation to the tourism industry due to its rapid growth in the past years

with further growth expected. Because of its notable impact on tourism in general,

environment and society, the airline sector, within the tourism industry, is under considerable

pressure to implement socially responsible initiatives (Cowper-Smith & de Grosbois, 2011).

This is despite statistics reporting that the aviation industry is responsible for only 2% of all

CO2 emissions world-wide (ATAG, 2016). Nevertheless, consequently, Porter and Kramer’s

(2006) claim that CSR has become a source of competitive advantage may prove especially

relevant in the current competitive environment of the airline industry. Many studies have

identified positive impacts that CSR could have on the firm’s performance (Wang et al.,

2015). Among others these for example include, improvements in consumer satisfaction

levels (Luo & Bhattacharya, 2006), fostering firm’s reputation (Brammer & Millington,

2005), and increased employee motivation (Stodder, 1998).

However, there are both positive and negative views of CSR prevailing in the corporate

world and many organizations might think that CSR endeavours are superfluous and/or only

could be pursued when there is money to do so (Chin et al., 2013). This line of thinking

would appear consistent with the low-cost model, trying to cut all the unnecessary costs to a

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bare minimum, and perhaps even with other airlines given the increasing competition and

industry-wide cost-cutting strategies brought about by the slim profit margins and the

introduction of the low-cost business model in aviation in general. Nevertheless, consumers’

demands must still be accounted for, and thus both LCCs and FSCs may not necessarily

regard CSR as an optional extra but a prerequisite for competing successfully.

Given these facts, questions arise about how are CSR related practices and initiatives

being addressed by individual airlines and what roles do different business models in the

aviation industry play in relation to CSR. However, in the extant literature, there seems to be

a dearth of research studies concerned with CSR and its reporting in the airline industry in

general, thus the current levels of adoption of CSR practices in the aviation industry remain

largely unexplored (Wang et al., 2014; Coles et. al, 2014; Kemp & Vinke, 2012; Cowper-

Smith & de Grosbois, 2011). Therefore, the objectives of this study are:

To analyse the current adoption of CSR initiatives in a largely neglected airline

industry as reported by individual airlines;

To compare the levels of adoption of CSR practices by airlines with varying business

models of low-cost and full-service;

To contribute to the research on CSR and sustainability in aviation industry, through

a firm-based view of the three main dimensions of CSR – being environmental,

economic, and social.

At all stages, the study will be generally guided by and seeking answers to the

following main research question:

How and to what extent do LCCs and FSCs within the European commercial passenger

aviation industry disclose CSR activities in their reporting?

In order to answer the main research question, the following sub-questions will be addressed:

1) What is CSR?

2) What are the perspectives of CSR and the possible reasons to engage in CSR

initiatives?

3) How do LCC’s and FSC’s operating business models differ from one another?

4) How do LCCs and FSCs approach the disclosure of their CSR initiatives?

The rest of the thesis is organised as follows. Section 2 reviews the core concepts used

in the study with their surrounding problematic. Section 3 then outlines the empirical strategy

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that guided the study and introduces sample and data set. Section 4 presents the analysis and

its findings. Finally, Section 5 concludes the research study.

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2. Literature Review

2.1. Corporate Social Responsibility (CSR) and Sustainability

Defining the concept of CSR is an ambiguous task and often authors vary greatly in

their definitions (Montiel, 2008; Dahlsrud, 2008). In addition, the term CSR is often used

interchangeably with the term sustainability, and is also often known under different names,

such as corporate sustainability, social responsibility, or corporate citizenship.

On the website of the Dow Jones Sustainability Index (2016) corporate sustainability is

being defined as a business approach creating long-term shareholder value through

embracing opportunities and managing risks that are derived from economic, environmental

and social developments. One of the most widely used and cited definitions of CSR is by

Carroll (1979), who generally defines CSR as the social responsibility of business

encompassing the economic, legal, ethical and discretionary expectations that a society has

of organization at a given point in time. The European Union has recently put forward a new

and simpler definition of CSR as the responsibility of enterprises for their impacts on society

(European Commission, 2011). Thus, CSR, in its general sense, can be viewed as an

approach to business with commitment to further some social good, and which recognizes

that the firm has responsibilities in society beyond the pure profit-maximizing self-interested

economic role, extending to legal, ethical, environmental, and philanthropic roles (Morrison,

2011; Chin et al., 2013; Johnson et al., 2012). A relatively short and often widely accepted

definition posits CSR as actions that appear to further some social good, beyond the interests

of the firm and that which is required by law (McWilliamson & Spiegel, 2001). CSR is often

viewed as activities not directly associated with efforts to increase profits, rather it is

sometimes being considered by many firms as a charity (Sheehy, 2012). In this interpretation

firms that are somehow engaging in charity donations may be claimed to practice CSR.

However, this view appears rather incomplete. Sheehy (2012) conducted an empirical study

in which he interviewed employees in three MNEs in order to understand their ideas of CSR.

He found that most employees thought of CSR as much more than just charitable donations,

rather they viewed CSR as a form of corporate citizenship – an overall ethical behaviour in

the community. This implies that a firm, in order to pursue CSR, must play an active role in a

society with duties and responsibilities. On the other hand, Friedman (1970) critique on this is

that only people, and not firms, can have responsibilities, and thus businesses should not

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engage in CSR. This indicates that it is rather difficult to pinpoint an exact definition of CSR

which would be globally accepted.

However, this study will focus more on the particular content of CSR practices of the

respective airlines studied. So rather than searching for only one all-encompassing CSR

definition, it might be more useful to look for common patterns in most CSR definitions.

Dahlsrud (2008) has identified five components underpinning most of them:

The voluntary aspect of CSR initiatives;

Stakeholder engagement;

Economic dimension;

Social dimension;

Environmental dimension.

Carroll (1991) went further and developed a pyramid of corporate social responsibility,

as depicted in Figure 1 in Appendix 1. In this pyramid, Carroll breaks down the concept of

CSR into separate components. It starts from the premise that first business has its economic

responsibilities that it needs to fulfil. Next, it needs to obey the law, which represents

demarcation between acceptable and unacceptable behaviour in a society. Next level stands

for doing business in an ethical way and to do what is right, in order to avoid or minimize

harm to the environment and various stakeholders, such as consumers, employees, and etc.

Finally, the last level expects business to be a good corporate citizen, meaning that it is

expected to contribute financial and human resources to the community and to improve the

quality of life. These components of Carroll’s CSR pyramid can be related to the three

dimensions – economic, social, and environmental – as identified above by Dahlsrud (2008).

These also match the concept of the triple-bottom line outlined further below.

Similarly to CSR, there is no universally agreed upon definition on what sustainability

means. According to the World Economic Forum (2013) each year until 2030, more people

will be entering the middle class reaching 5 billion people globally. This means that most of

the world’s population will be within a middle income bracket. Over the same period , energy

usage is projected to increase by 40% and water demand is projected to exceed supply by

40%. Such increase in consumption will place enormous pressure on natural resources.

Therefore, production in sustainable manners for the next generation presents both a

challenge and an opportunity. Businesses can reposition themselves in this changing

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environment by redefining and reconsidering their strategies – with their new products,

services and value chains embracing sustainability.

The concept of sustainability is broad and stands for many interrelated issues other than

just global warming, recycling, or saving of the rainforests which are often perceived as the

major issues in general public’s eyes when sustainability is mentioned. This implies that

sustainability is often viewed as concerned with environmental issues only. Nevertheless,

there are many different views on what it is and how it can be achieved. The idea of

sustainability comes from the concept of sustainable development which was first introduced

in the famous Brundtland Report from 1987 and further developed at the World's first Earth

Summit in Rio in 1992 (Meakin, 1992). Subsequently, the concept of sustainable production

and consumption was first introduced and recognized in the Johannesburg Plan of

Implementation, which was adopted in 2002 at the World Summit on Sustainable

Development (United Nations, 2002). It was recognized that in order to foster economic and

social development, sustainable consumption and production, together with eradication of

poverty and careful management of Earth’s natural resources, form one of the three

overreaching objectives for sustainable development. In order to achieve such a sustainable

development fundamental changes in the way societies produce and consume need to be

introduced. The Johannesburg Plan of Implementation further called for all countries

(especially developed which were meant to lead the way) to promote sustainable practices in

both their production and consumption. Furthermore, it also appealed to governments,

international organizations, the private sector, various societies, and all major groups to be

proactive and take part in changing their patterns of unsustainable production and

consumption patterns.

Overall, the concept of sustainability is being broadly defined as meeting the needs of

the present without compromising the ability of future generations to meet their needs

(Heizer & Render, 2013). Thus, the notion of sustainability takes into account the wide-scope

environment in which the business operates and, similarly to CSR, embraces three main areas

– economic, environmental, and social. This is often known as the concept of the triple-

bottom line.

2.2. The Triple-Bottom Line

Generally today, the two concepts of CSR and sustainability overlap in many areas and

are often defined in similar ways (Loew et al., 2004). This may also result in individual

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airlines either talking about CSR or sustainability in their disclosures, and therefore, in this

study, both concepts will be used interchangeably and the focus will be predominantly on the

three dimensions of the triple-bottom line. In the business environment, the concept of the

triple-bottom line often refers to sort of an overall business model relating to sustainability

and/or CSR. Sometimes it is also known as the three Ps – being people, planet, and profit.

The concept of the triple-bottom line was first introduced by John Elkington (1998), who

argued that in a complex business environment of the modern era, sustainable growth of a

firm cannot be pursued through narrow and single-minded financial objectives. Rather he

suggested that it is best achieved through following an integrated framework of economic,

social and environmental goals and objectives – he called this the triple-bottom line (see

Figure 2 in Appendix 1). In other words, the triple-bottom line is an abstract accounting

framework that is concerned with and incorporates three dimensions of performance –

economic, environmental, and social (The Economist, 2009). These dimensions are:

The first one is the traditional measure of corporate profit—the “bottom line” of the

profit and loss account;

The second is the bottom line of a company's “people account”—a measure in some

shape or form of how socially responsible an organisation has been throughout its

operations (e.g. in relation to its employees, customers, communities, business

partners, and other stakeholders);

The third is the bottom line of the company's “planet account”—a measure of how

environmentally responsible it has been.

The economic dimension includes more than just recorded profits though. It also holds

that a firm has a number of financial or economic responsibilities other than just pure profit

maximization. Issues such as economic performance, market presence, indirect economic

impacts, and procurement practices are all considered within the economic dimension.

Additionally, it also includes initiatives and actions such as providing local communities or

regions with opportunities for economic growth, for example thorough creation of

employment (Wilson, 2015). Social dimension generally stands for the accordance of firm’s

actions with the ethical and moral standards and norms widely perceived by society to be

acceptable or desirable. Issues such as labour practices, decent work conditions (e.g. health

and safety), human rights (e.g. child labour), society (e.g. local communities), and

product/service responsibility can all be grouped under social dimension (Wilson, 2015).

Lastly, environmental dimension’s aim is to take into consideration the environment in which

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the particular business operates and to minimize its adverse impacts on it. Environmental

dimension deals with for example materials, energy, water, biodiversity, emissions, waste,

transport, supplier environmental assessment, and similar (Wilson, 2015).

According to Henriques and Richardson (2004) when the triple-bottom line of a

particular firm is positive then it leads to an increase in the firm’s value, not only in its

profitability but also in regard to its shareholder value. Similarly, its social and environmental

capital is increased. Robèrt et al. (2012) argue that the triple-bottom line should be

understood in a specific way – they argue that the framing or boundary conditions for success

are composed of environmental and social sustainability dimensions. Firms should then

follow an economic step-wise approach as a strategic element to earn more money from

doing the right things. They see economic system as means which should be dealt with in

order to arrive at a goal – in this case environmental and social sustainability.

Heizer and Render (2013) argue that sustainable policies and/or CSR could be

implemented into every aspect of business or any organization. However, it is often said that

in each firm it is mainly operations and supply-chain managers who have the critical role in a

firm’s sustainability/CSR objectives. Therefore, it is up to them to ensure that such policies

and objectives are implemented and followed in their firms or organizations in order to

enable them to meet their obligations and improve the triple-bottom line. This claim is

particularly interesting for this study as the main difference between LCCs and FSCs is their

operational model. Nevertheless, it is marketing which communicates any organization’s

CSR efforts to its consumers and public, thus it plays an important role there too and can be

even misused, giving rise to the phenomenon of greenwashing.

2.3. Greenwashing

Nowadays, an increasing number of companies try to implement CSR initiatives into

their businesses. However, they struggle when they think about it independently of their

brand identity. Making CSR a core part of the business makes the company more authentic,

thus for MNEs, CSR or sustainability initiatives are the focus of their marketing campaigns.

However, there is a risk of being accused of greenwashing (Vizard, 2013). According to

Marciniak (2009) the idea of greenwashing is connected with the ecological marketing,

which includes product modification, changes to the production processes, packaging

changes, as well as modifying advertising, in order for an organization to be more sustainable

in its actions. Greenwashing as a term was not fully recognized until after the Earth Summit

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in Rio de Janeiro in 1992, but the idea has existed in corporate context since the 1960s

(Marciniak, 2009). According to the Greenwashing Index (2016), greenwashing means when

an organization spends more time and resources claiming to be “green” through advertising

and marketing than actually implementing concrete business practices that minimize

environmental impact.

The problem in consumer’s perspective is the fact that it is quite difficult to know

whether an organization is as “green” as it claims, which has already caused consumers to

question corporate honesty. Environmentally aware consumers may become confused by

companies that use greenwashing in their communications, and may not knowingly support

such “greenwashing” companies, instead of the ones that are actually sustainable in their

practises (Furlow, 2009). Even if some companies are genuinely concerned about the

environmental issues, many companies use the ecological marketing or greenwashing to

create a false image that meets the social expectations of consumers (Marciniak, 2009).

2.4. Views of CSR

Nonetheless, there have also been numerous debates about the purpose of business

organizations in relation to CSR. There are views advocating that there is a justifiable place

for CSR in a business, while others view CSR related activities as a sacrifice of some profits

to achieve social good. Sheehy (2012) views CSR as a global movement of self-regulation

utilised by MNEs with mixed outcomes. He argues that often firms reporting on CSR are

large MNEs with large impact on global economy. At the same time, due to their large size

their actions are difficult to be regulated and controlled by ordinary law, which is often

national and not global. Therefore, this discordance is to a certain extent solved by CSR since

it can be seen as a global self-regulation imposed by MNEs themselves. Furthermore,

Bénabou and Tirole (2010) discuss three views of CSR. The first vision – win-win – stands

for “doing well by doing good” and advocates that by engaging in CSR and being a good

corporate citizen, firm can also become more profitable. The essence of the first vision is that

firms often suffer from a short-term bias as largely discussed in literature in finance.

Managers are generally too much focused on short-term performance (Narayanan, 1985).

However, to reap benefits from CSR, focus needs to be on long-term in order to maximize

profits. The second vision – delegated philanthropy – posits the firm as a channel through

which citizens’ values are being expressed. This means that some stakeholders, such as

customers, employees or various investors, are often willing to provide or sacrifice money in

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order to further some social good. Some stakeholders want firms to engage in philanthropic

activities on their behalf. This is mainly because large firms have lower transaction costs and

are better positioned to engage in such activities than individual stakeholders would be alone

themselves. In the third vision – insider-initiated corporate philanthropy – contrary to the

second vision, the desire to engage in prosocial behaviour is not coming from stakeholders

but is originating from within the firm itself. Here it is the firm management’s or board

members’ own motivated decision to engage in CSR activities. This type of CSR engagement

had been strongly criticized by for example Milton Friedman (1970) who held views that

firms should not do charity with others’ money, and rather managers or board members

should pursue such activities with their own personal funds. Related to this, Chin et al. (2013)

conducted a research investigating how CEOs’ political ideologies and their personal values

influence their decisions to engage in CSR. Their study confirms upper-echelon theory

advocating that executives inject their personal biases into their strategic decision making.

Chin et al. (2013) found that CEOs who are liberals are far more likely to pursue CSR, even

regardless the recent financial performance of the firm. Whereas, CEOs who are

conservatives with regard to their political ideology, will only pursue CSR if there is money

to do so – arguably their view of CSR might be more in accordance with the first vision of

CSR as described by Bénabou and Tirole (2010) above. Therefore, if conservative CEOs seek

to primarily increase firm profits, they might engage in CSR more willingly should they see a

profitable opportunity in doing so.

Although, there are positive views of CSR, there is also a negative view, advocating

that the only responsibility of a business should be to seek profit, and which considers CSR

more as a misallocation of firm’s resources and sees it more as “stealing” from the firm’s

owners (Friedman, 1970). The empirical research findings on the relationship between CSR

and firms’ performance and their competitiveness are mixed. Despite some findings

concluding that CSR has a positive effect on financial performance, major methodological

problems and a number of potential moderators have been identified and pointed out (Chin et

al., 2013). However, increasingly, it is being recognized that CSR is no longer an optional

extra, but instead a crucial part of business strategy that comes under close scrutiny from

various stakeholders and pressure groups (Kolk, 2007; Muller, 2006). Firms are more often

expected to tackle and address issues such as climate change, social equity, human rights, and

other issues connected with sustainable development in general. This can be seen in practice,

as leading consumer-focused businesses are increasingly recognizing the need to centre their

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focus on CSR and/or sustainability efforts and activities, in order to preserve their reputation

and stay respected by their consumers all over the world (World Economic Forum, 2013).

Similarly, there are calls for more explicit values and greater transparency, leading to the

growth in firms’ social reporting. Bottom line is that there appears to be a relationship

between CSR and firm’s performance and subsequent competitiveness, but the particular

nature of this observed relationship remains somewhat unclear (Vilanova et al., 2008; Porter

& Kramer, 2006).

2.5. Stakeholder Theory

Stakeholder theory is often discussed in relation to the social dimension of CSR,

however, it also closely relates to the other two dimensions. The theory, developed by

Freeman (1984), identifies and points to the array of different individuals, groups, and

interests that affect the company or that the company is affecting by its actions. In its general

sense, stakeholder theory holds that companies, recently increasing in size, and thus receiving

greater levels of attention, are more than just individual entities concerned solely with

themselves. On the contrary, the companies are playing an important role in their surrounding

environment and society at large, and thus having obligations, responsibilities, and limitations

on their actions. This implies that companies should not be concerned only with their

shareholders, but widen their accountability to more actors in society – stakeholders – such as

employees, customers, suppliers, various industry groupings, governments, local

communities, and so on (Solomon, 2013; Wan-Jan, 2006). Freeman (1984) defines

stakeholders as any group or individual which affects or is affected by the achievement of the

organization’s objectives.

Sometimes, it is being claimed that CSR could be either viewed as an ethical stance or

as a business strategy. However, regardless of the perspective, stakeholders always play

central role in regards to the CSR as they will be treated ethically in either way due to

believes that, in the former case, this is the proper way to behave, or that, in the latter case, by

doing so, the company will prosper (Wan-Jan, 2006). Therefore, stakeholders are important

to any firm’s CSR endeavours. There are different ways of identifying and classifying

stakeholders for each firm. Often they are classified depending on their relationship with the

firm. For example, Clarkson (1995) distinguishes between primary stakeholders (those

crucial for firm’s survival) and secondary stakeholders (those who are not crucial for the

firm’s day-to-day interests and activities). Similarly, stakeholders can be categorized

according to the strength of the power and influence that they have over the firm. Some of

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these stakeholders, such as employees and shareholders, are categorized as internal to the

firm, while communities, customers, suppliers and other business partners, on the other hand,

are considered to be outside the firm itself, even though they might be considered important

from a strategic point of view (Morrison, 2011). It has also been found that the intensity of

stakeholder power has an influence on levels of CSR disclosures (Roberts, 1992).

Furthermore, often conflicting interests are found among various stakeholders that pose

significant challenges on the firm’s management, and consequently its CSR strategy. In

addition, Mitchell et al. (1997) also argue that it is rarely possible to take into account every

single stakeholder of a given firm, and therefore, the firms will always need to compromise

and prioritize their stakeholders to a certain extent while interacting with them. Consequently,

it can be expected that this will also have an impact on the content of CSR disclosures of

individual firms.

2.6. Airline Business Models

The commercial passenger airline industry has evolved from a market setting formerly

controlled by state-owned carriers and characterized by low levels of competition, to a more

deregulated market, where multiple airlines with varying business models compete

intensively. Today’s civil aviation market is characterized by slim profit margins and high

competition, with airlines often recording significant losses (Cento, 2009). The literature

identifies three main business models for airlines, which differ by their operational model

characteristics and services offered to passengers (Lordan, 2014; Cento, 2009). These are:

Full-service carrier (FSC);

Low-cost carrier (LCC);

Charter carrier (CC).

The focus of this study will be on FSCs and LCCs, which operate scheduled flights,

rather than on CCs traditionally operating only charted flights. A brief outline of the main

characteristics of the two business models follows.

2.6.1. Full Service Carriers (FSCs)

The most prominent and well-known type of airlines is called “legacy” or “full service”

carrier or sometimes also called “hub-and-spoke/network” airline, indicating the type of

routing model that it operates. Such an airline’s focus is to provide a wide range of pre-flight

and on-board services. These services are often offered in different classes, e.g. economy,

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first-class, and business class (DLR, 2008). In most of the European countries, FSCs have

developed from what used to be the national flag carrier. Such examples of FSCs are

Lufthansa, British Airways, KLM, Iberia, LOT or Scandinavian. Most of the former national

carriers in Europe are now fully or almost fully privatized, but some countries still hold

equity interests in their national carriers. Besides the former national carriers there are other

independently owned FSCs, e.g. Virgin Atlantic, Air Europa, or Aegean Airlines (Cento,

2009). In Europe, FSCs represent around 55% of all flights (European Commission, 2013).

Table 1 outlines key characteristics of the full-service business model.

Table 1 – Key characteristics of FSC business model

Concept/Focus Focus is on passengers, cargo and maintenance

Pricing strategy Complex yield management and price

discrimination pricing strategies

Network

- FSCs operate predominantly hub-and-spoke

network – all destinations are linked to a

main airport called the hub

- Both regional and global reach – FSCs

operate short-, medium-, and long-haul

flights, domestically, across regions, and

even across continents

- Cooperation in airline alliances – in order to

reach more destinations and develop a global

network

Fleet Heterogeneous fleet varying in aircraft types

and sizes

Operations Multiple classes (e.g. economy, first, business)

Operating mainly primary airports

Sales channels

Use of multi-channel sales – selling via

multiple distributional channels and systems

such as sales agents and other intermediaries as

well as directly

Source: Cento, 2009; DLR, 2008; Lordan, 2014

2.6.2. Low-Cost Carriers (LCCs)

Porter (1985) suggests that there are three generic strategies that an organization can

adopt to achieve a competitive advantage: cost-leadership, differentiation and focus. The low-

cost airline model is trying to achieve cost-leadership by offering the lowest fares. The low-

cost business model can be also described through the use of strategy clock described by

Bowman and Faulkner (1995) – since LCCs target predominantly price-sensitive audience,

offering basic service with low perceived benefits, it is in compliance with the “no-frills”

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strategy. LCCs’ customers are “bargain seekers” with low switching costs, and thus offering

low fares is paramount (Johnson et al., 2012). The low-cost airline business model is not

homogenous though. For example, some LCCs operate predominantly main airports and try

to target price sensitive business travellers (e.g. easyJet), whereas others focus on leisure

travellers and operate predominantly cheaper secondary airports (e.g. Ryanair). Nevertheless,

all LCC models are trying to achieve efficiencies through aggressive cost reductions in their

operations (Wald et al., 2010). Table 2 outlines key characteristics of the low-cost business

model.

Table 2 – Key characteristics of LCC business model

Concept/Focus

- Concept based on price elasticity of demand

- Low fares appealing to price-conscious

customers

- No-frills

- Competing with other means of transport

such as trains and buses with low fares

Network Operating short-haul point-to-point routes

Additional revenues

Ancillary services (e.g. extra legroom, priority

boarding, in-flight purchases, on-board

advertisement, etc.)

Operations

- Fast turn-around times and increased

utilisation of aircrafts

- Operating secondary airports

- High density single-class seating

Fleet

- Homogenous fleet of aircrafts

- The use of mainly new or young aircrafts

(savings on maintenance and fuel as they are

more efficient)

Sales channels Bypassing travel agents and selling directly to

customers

Source: CAPA, 2015; Morrell, 2008; Kloeg & Schaal, 2014; Amadeus (2014); Wald et al.

(2010)

2.6.3. Growing Importance of LCCs

Low-cost carriers are increasingly growing in popularity with travellers and steadily

gaining market share. They are currently estimated to represent about 40% of the European

air traffic, measured as share of total seats (CAPA, 2015), see Figure 3 in Appendix 1.

Europe is the largest and apparently the most attractive market for LCCs, with reported 250

million passenger trips per year. North America is the second largest with 173m, followed by

Asia with over 117m passenger trips per year (Amadeus, 2014).

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This signifies the importance of the low-cost model in current and future aviation

industry. So far though, LCCs’ growth has been achieved only on short-haul point-to-point

routes within their regional operations. Nevertheless, in the current economic climate, with

ever more price-conscious consumers, there undoubtedly is a growing market for an airline

which would offer similarly low prices on long-haul routes, now being operated primarily by

FSCs (Nanji, 2013). The idea of low-cost long-haul flights is not necessarily a new one.

There have been attempts to develop such a type of routes in the past, but it has never reach

fruition as most of them failed in their early stages (The Economist, 2014). Nonetheless, with

the right mixture of expertise, innovation and advanced technology, this may soon become

reality. This trend is increasingly visible with some European airlines, such as Norwegian and

Wow Air, who slowly start to experiment with such types of routings. Similar endeavours are

undertaken even by FSCs, who might want to follow the lead of their low-cost counterparts

(Dastin, 2015). Such efforts are seen for example with Lufthansa, a premium full-service

carrier, who wants to battle competition on the grounds of no-frills service. Recently,

Lufthansa announced that it wants to launch a low-cost long-haul service airline under its

brand and it could be in operation soon (Bryan & Maushagen, 2014). On the other hand, from

the consumer’s perspective, what may be an acceptable offering by LCCs on short-haul

flights may not be acceptable on long-haul flights (Whyte, 2011). In addition, LCCs are

predicted to be presented with further opportunities over the next 10 years with the

introduction of large numbers of new middle class travellers from emerging economies. This

suggests a growing importance and impact of LCCs and the low-cost model in aviation

industry in general.

2.7. Working Propositions

To conclude, LCCs increasingly seem to set trends and extensively influence the entire

industry and the more successful they become, the more likely they are to increase their share

of the market (Amadeus, 2014). However, with all these facts in mind, questions arise about

whether or not LCCs consider CSR practices as part of their “no-frills” strategies. As already

outlined in the Introduction section, this study will seek to gain better understanding of this

problematic. The aim of this exploratory study is to contribute to the general understanding of

how CSR is being tackled in commercial aviation industry in a more complex way than

extant literature – by looking at both LCCs and FSCs at the same time – trying to unveil how

these two possibly differ or coincide in their respective approaches to CSR practices.

Therefore, the purpose of this study is to evaluate the CSR content in annual reports, in

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separate CSR reports, and on corporate websites, in order to identify the prevalent CSR

dimensions, themes, and initiatives employed by European LCCs and FSCs. The qualitative

content analysis will address the individual CSR dimensions as depicted in the model

presented in Figure 4 in Appendix 1.

Given the above discussion, it is expected that both FSCs and LCCs may weigh up the

importance of CSR overall and its dimensions differently. Thus, the following propositions

are formulated:

Proposition 1: The extent of CSR reporting will vary between LCCs and FSCs – LCCs are

expected to report less on CSR.

Proposition 2: LCCs are expected to engage in CSR initiatives to a lesser extent than FSCs

as reflected in the content of their disclosures.

Proposition 3: Both LCCs and FSCs are expected to address the individual dimensions of

CSR to an unequal extent – with the most attention paid to the environmental dimension.

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3. Methodology

For the purposes of this exploratory study a qualitative research strategy was found

appropriate, as the study sought understanding of various airlines’ CSR activities, which are

not so easy to be quantified in purely numerical data and may be interpreted in multiple ways.

Furthermore, qualitative research tends to be more open-ended than is the case with

quantitative research (Ritchie et al., 2014). Moreover, qualitative research process is more

associated with the inductive approach, with theories and concepts being more viewed as

outcomes of the process, and often using an interpretivist model allowing the existence of

multiple subjective perspectives (Quinlan, 2011). Thus, qualitative research strategy, guided

at all stages by the above specified research question, was found to be appropriate for

purposes of this exploratory study (Agee, 2009).

3.1. Research Design

Research designs are types of inquiry that provide a specific direction for procedures in

a research and frameworks for the collection and analysis of data (Creswell, 2003). As this

study aimed to provide a general account of the CSR related activities as reported by the

individual airlines studied, with the aim of subsequently comparing those accounts, this

research used a comparative design.

Comparative design is predominantly found to be used for comparison and contrasting

of different types of mostly social and/or cultural entities (Lewis-Beck et al., 2004), and can

be used in both qualitative and quantitative research. It is somewhat of a hybrid research

design, in the sense that in quantitative research it is often considered as an extension of a

cross-sectional design and in qualitative research it is often an extension of a case study

design (Bryman & Bell, 2011). The logic of comparison can be applied to a variety of

situations and it signifies that one can understand phenomena better when they are compared

in relation to two or multiple meaningfully contrasting cases. Furthermore, comparative

design is found appropriate when there are at least two cases and when data are collected

from each, usually within a cross-sectional design format. Moreover, a crucial aspect of

comparative design is its ability to allow the distinguishing characteristics of two or more

cases to act as a starting point for theoretical reflections about contrasting findings (Bryman

& Bell, 2011). Therefore, as this research sought to collect data from multiple airlines, while

focusing on and seeking understanding of their CSR practices, and used the subsequent data

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for analysis, comparison, and drawing of conclusions, the research was based on comparative

research design.

3.2. Methods

Research methods refer to the specific means or activities designed to collect or

generate data needed to solve a problem, carry out an investigation, and ultimately leading to

answers to the research questions (Greener, 2008). For the purpose of this study, data were

collected from annual reports, dedicated CSR websites, and separate “stand-alone” CSR

reports issued directly by the airlines studied and available online in English on their

websites. Such an approach of using multiple sources of data is believed to increase

reliability of the subsequent findings (Yin, 2003).

The collected data were subsequently analysed using qualitative content analysis

technique (i.e. looking for emergent CSR related themes, goals and initiatives addressed by

individual airlines). Such choice of methods is often considered common practice in CSR

related research as alternative methods, such as interviews, would be too difficult to acquire

and could also be prone to interviewee bias, and thus are not used. Qualitative content

analysis seems to be a common practice when analysing CSR related documents in many

studies (Cowper-Smith & de Grosbois, 2011; Holcomb, Upchurch & Okumus, 2007; Kemp

& Vinke, 2012). Similarly, there are number of reasons to use such methods of qualitative

content analysis in this study as well. Firstly, the content of CSR reported by the individual

airlines was expected to vary greatly among different carriers, and thus it would be difficult

to develop a very stringent framework required for a quantitative analysis. Secondly,

individual carriers vary greatly in naming certain CSR aspects or themes, thus making

qualitative approach to analysis less suitable. Lastly, given the fact that CSR reporting in the

airline industry is still relatively in its initial stages of development, a qualitative approach

may generally lead to uncovering some more interesting aspects of CSR which would again

not be possible with a strictly focused quantitative approach.

To maximize the overall trustworthiness, the analysis was based upon a framework

developed in previous studies. Cowper-Smith and de Grosbois (2011), in their study of the

global aviation industry, develop a comprehensive framework to analyse disclosures of CSR

activities in annual reports, encompassing the major dimensions of CSR. The present study

aimed to build upon this framework and identified themes in an analysis and subsequent

evaluation of CSR disclosures by European LCCs and FSCs. Cowper-Smith and de Grosbois

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(2011) created a framework consisting of two main dimensions (covering all three CSR

dimensions), and then divided further into eleven themes. During the analysis one additional

theme was identified and added to the framework – customer wellbeing. The final framework

used consisted of the following dimensions and themes:

1) Environmental dimension: emissions, waste, energy, water, biodiversity, noise, other;

2) Socio-economic dimension: employee wellbeing and engagement, customer wellbeing,

diversity and social equity, community well-being, economic prosperity.

The current study builds on the research conducted by Cowper-Smith and de Grosbois (2011)

and aims to identify specific CSR initiatives/actions implemented by the carriers and

investigate their level of adoption, while using an extended sample of both LCCs and FSCs,

in order to advance understanding of CSR within the airline industry. This study also

broadens data collection strategy from previous studies relying only on a single source

(namely annual reports) and includes websites, separate CSR reports, as well as annual

reports.

3.3. Sample and Data

As it is not normally feasible or effective to include every potential subject in the

research study, sampling is of great importance. It enables the researcher to obtain a

proportion – sample – of the population studied (Quinlan, 2011). Given the nature of the

study, a non-probability sampling, with purposive sampling in particular, with certain criteria

to fulfil was chosen as the most appropriate sampling technique. This is because given the

above research question, population units for the study need to be equally represented in both

categories of LCCs and FSCs. The aim was to sample major airlines from each of the two

business models. Within these two, the sampling criteria were further guided by the size of

the airline in terms of passengers carried and/or fleet size. The aim was to obtain a sample of

the largest carriers within the European industry in order to get the most representative

sample of the key players in the industry. Table 3 presents the airlines included in the sample.

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Table 3 – Study sample composed of LCCs and FSCs

LCCs FSCs

Ryanair Lufthansa Group

easyJet Air France-KLM

Air Berlin International Airlines Group (IAG)

Norwegian Air Shuttle Turkish Airlines

Flybe Aeroflot

Pegasus Airlines SAS Group

WizzAir Alitalia

For each sampled airline data was collected in the following way. The availability of

three data sources was checked for each airline – annual report, separate “stand-alone” CSR

report, and CSR related website/section of a website. A prerequisite was that each sampled

airline makes at least one of these sources available in English and accessible through its

main or corporate website. In the case of annual and CSR reports, the latest report made

available online by the airline at the time of the study was analysed. Similarly, in the case of

the CSR website, the content as available online at the time of the study was analysed. When

gathering data in form of reports as well as websites, a security check was made using

Google search of the airline name in combination with the following key words – “CSR,

sustainability, environmental, social, and responsibility” – in order not to overlook anything.

To ensure consistency a first page of results yield by Google search was checked. Table 4

provides and overview of data collected for each sampled airline which formed the final data

set for subsequent analysis. See Appendix 3 for a brief introduction and background of the

sampled airlines.

Table 4 – An overview of data collected for each carrier creating the final data set

Airlines CSR in annual

report

Stand-alone

CSR report

CSR related

website/website

section

LCCs

Ryanair 2015 no yes

EasyJet 2015 no yes

Air Berlin 2014 no yes

Norwegian Air Shuttle 2015 no yes

Flybe 2014/15 no yes

Pegasus Airlines 2015 no yes

Wizz Air 2015 no no

FSCs

Lufthansa Group 2015 2015 yes

Air France-KLM 2014 2014 yes

British Airways 2015 2013 yes

Turkish Airlines 2014 2014 yes

Aeroflot 2014 no yes

SAS Group 2014/15 2014/15 yes

Alitalia no no yes

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4. Analysis and Findings

4.1. Main Empirical Findings

The main empirical findings of this study are summarized in Table 5 below. For each

proposition, empirical findings, summary of main conclusions, with the respective sections

and tables, where the results are discussed in more detail, are indicated.

Table 5 – Summary of main empirical findings

Propositions Empirical

finding Conclusions Sections Tables

P1: LCCs report less extensively

on CSR than

FSCs.

Accepted

FSCs used significantly more pages and

words in their CSR disclosures than LCCs;

Majority of FSCs, in contrary to LCCs,

generally made use of all three types of CSR disclosures studied, including extensive

“stand-alone CSR reports;

LCCs did not report on CSR via extensive

“stand-alone” CSR reports at all, they only

used rather short sections in annual reports and/or websites.

4.2. – 4.5. 4, 6 – 8

P2: LCCs engage in CSR initiatives

to a lesser extent than FSCs, as

reflected in the

content of their disclosures.

Accepted

LCCs reported much lower levels of commitment to the specific CSR themes and

goals than FSCs in their disclosures;

LCCs reported significantly lower numbers

of individual CSR initiatives supporting each theme and goal;

The adoption levels of individual initiatives and the provision of measurements or

progress indicators was considerably lower in the case of LCCs than in the case of FSCs.

4.6. 9 – 12

P3: Both LCCs

and FSCs will address the three

dimensions of

CSR to an unequal extent, with the

most focus on the environmental

dimension.

Partially accepted

Both types of carriers addressed the three dimensions of CSR to an unequal extent;

Environmental dimension received a considerable attention from both LCCs and

FSCs, but the greatest amount of initiatives

supporting individual CSR themes and goals were reported by both types of carriers for the

social dimension;

The economic dimension of CSR was the

least often addressed by both types of carriers.

4.6. 9 – 12

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4.2. Annual Reports

As of April 2016, all sampled carriers, with an exception of Alitalia, made their annual

reports available online in English at their websites. These 13 annual reports were checked

for inclusion of CSR related section or content. Once the CSR content was identified, a page

and word count was performed to get an indicative understanding of the scope of CSR

reporting in annual reports of individual carriers in the sample. The word count was

performed through the use of MS Word by copying and pasting the CSR content into a new

document. Out of the 13 carriers, which made annual reports available, only British Airways

did not dedicate any pages/words to CSR content in its annual report. Table 6 provides an

overview of CSR content in annual reports in terms of number of pages and words. When

looking at the amount of CSR reporting in annual reports, easyJet is a clear winner among

both LCCs and FSCs with 16 pages and 11,471 words spent on CSR content in total. On the

other end of the scale, besides British Airways with no words, Wizz Air only spends 381

words on CSR in its annual report.

Table 6 – CSR content in annual reports of airlines

Airlines Number of pages Number of words

LCCs

Ryanair 3 1,642

easyJet 16 11,471

Air Berlin 8 2,770

Norwegian Air Shuttle 4 2,182

Flybe 8 3,462

Pegasus Airlines 1 422

Wizz Air 1 381

FSCs

Lufthansa Group 2 1,129

Air France-KLM 7 2,679

British Airways 0 0

Turkish Airlines 4 1,069

Aeroflot 10 3,577

SAS Group 2 1,193

Alitalia - -

4.3. “Stand-alone” CSR Reports

Furthermore, only 5 carriers (35%), from the total sample of 14, made separate “stand-

alone” CSR reports available online in English at their websites. All of these 5 carriers were

FSCs. None of the sampled LCCs reports on CSR via “stand-alone” CSR report. Again, to

get an indicative understanding of the scope of reporting in CSR reports, a page and word

count was performed. This time the word count was performed through an online word count

tool available at www.wordy.com/word-count-tool/. Table 7 provides an overview of the

content in CSR reports in terms of number of pages and words. With 120 pages and 44,661

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words, Lufthansa Group reports most extensively from the sample. On the contrary, SAS

Group reports only on 28 pages with 16,427 words. Aeroflot and Alitalia do not report

through a “stand-alone” CSR report at all.

Table 7 – CSR content in separate “stand-alone” CSR reports of airlines

Airline – FSCs Number of pages Number of words

Lufthansa Group 120 44,661

Air France-KLM 87 34,966

British Airways 94 33,132

Turkish Airlines 136 28,869

Aeroflot - -

SAS Group 28 16,427

Alitalia - -

4.4. CSR Related Websites

Lastly, websites of all sampled carriers were checked for inclusion of CSR related

content. All sampled carriers, except for Wizz Air, include information on CSR on their

websites, mostly in a form of a section within their corporate websites. However, some

airlines, such as Pegasus Airlines, Turkish Airlines and partially Ryanair, do not report on

CSR via websites in the same manner as other carriers do. Even though these carriers include

a section on CSR on their websites, they do not provide much qualitative information in it,

rather they only include links to external reports (Ryanair) or links to policy statements

and/or CSR reports (Pegasus Airlines, Turkish Airlines). To gain an indicative understanding

of the extent of CSR reporting via websites a word count was performed by copying and

pasting website content into a MS Word document. Table 8 provides and overview of CSR

content on carriers’ websites. Surprisingly, the CSR content on the websites was found to be

much shorter than the content in annual or CSR reports. Also, usually, it was not a more

detailed elaboration on annual or CSR reports, but rather a summary of information reported

by carriers in their respective annual and/or CSR reports, sometimes even using the same text

with little or no new information. Again easyJet uses the most text from LCCs and Lufthansa

Group uses the most text from FSCs. On the other hand, Pegasus Airlines (LCC) and Turkish

Airlines (FSC) provide no substantial information on CSR on their website – both carriers

only provide links to downloadable documents such as the CSR reports or policy statements.

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Table 8 – CSR content on carriers’ CSR-related websites

Airline Number of words

LCCs

Ryanair 1,400

easyJet 9,396

Air Berlin 2,286

Norwegian Air Shuttle 1,239

Flybe 1,379

Pegasus Airlines 0

Wizz Air -

FSCs

Lufthansa Group 11,566

Air France-KLM 5,059

British Airways 7,845

Turkish Airlines 61

Aeroflot 286

SAS Group 4,651

Alitalia 2,460

4.5. Extent of CSR Disclosure

From the results visible in Tables 6-8 it is apparent that the main means of CSR

disclosure differ between LCCs and FSCs. LCCs report on CSR predominantly through

dedicated sections in their annual reports. None of the LCCs make use of “stand-alone” CSR

reports. In 85% of the times they also have a dedicated CSR section on their website. FSCs

were generally found to make use of all three types of disclosures investigated – annual

reports, CSR reports, and websites – for their CSR reporting. 85% of FSCs include a section

on CSR in their annual reports, however, this being mostly brief summary of main CSR

issues with extensive references to CSR reports for further details. Contrary to LCCs, 71% of

FSCs in our sample, report on CSR through a “stand-alone” CSR report, providing more in-

depth information on their CSR strategies than they do in their annual reports. All of the

FSCs have website sections on CSR with varying extent of information. Nevertheless, as

pointed out above, for both LCCs and FSCs, CSR content on the websites was found to be

mostly a summative repetition of CSR content in annual and CSR reports with only little new

information. Overall, these results and findings indicate that proposition 1, which states that

the extent of CSR reporting varies between LCCs and FSCs, with LCCs expected to report

less extensively on CSR than FSCs do, holds true.

4.6. Content Analysis of CSR Disclosures

Next part of the analysis consisted of a qualitative content analysis of the complete data

set – annual reports, CSR reports, and CSR related websites available for airlines in the

studied sample. The CSR content was comprehensively analysed with the aim to identify

concrete themes and goals with corresponding initiatives employed by the airlines in their

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CSR strategies. The identified initiatives were categorised into an enhanced framework

developed by Cowper-Smith and de Grosbois (2011). The framework consists of two main

dimensions, being environmental and socio-economic (covering all three dimensions of

CSR), and further divided into twelve themes. Each of the themes consisted of separate goals,

for which specific initiatives, which contribute to it, were identified. For each goal, the

number of airlines engaged with the goal was recorded. Furthermore, some airlines provided

information about specific initiatives contributing towards achieving a particular goal. All of

these contributing initiatives were identified and recorded. Based on to which goal it

contributes the most and in relation to which dimension it was mentioned by the airline the

most, each initiative was categorised only under one particular goal, even though it may

contribute to more than one goal. For each initiative the numbers of carriers reporting them,

as well as the numbers of carriers providing some measurement (mostly in form of a

percentage or numerical impact) of the particular initiative, were recorded. It is possible that

the number of carriers reporting a particular goal is greater or lower than the number of

carriers reporting a particular initiative categorised within that goal and vice versa. This could

occur when, for example, a carrier reported efforts to achieve a certain goal but did not

provide any information about specific initiatives contributing towards achieving that goal.

For the purposes of comparison the analysis was performed separately for LCCs and FSCs.

The findings from the qualitative content analysis, with the numbers of carriers reporting

each CSR goal and specific initiatives as well as numbers of carriers reporting on their

progress towards those initiatives are presented separately for each type of carrier in Tables

9-12 in Appendix 2.

4.6.1. Environmental Results

The specific initiatives implemented by individual carriers in order to mitigate or lessen

the impact on the environment were organized into seven themes to which they contribute the

most: emissions, waste, energy, water, biodiversity, noise and other. The environmental

results are presented in Tables 9 and 10 in Appendix 2 for LCCs and FSCs respectively.

Emissions

This theme consisted of two main goals – reduction of CO2 emissions and reduction in

air pollution. Efforts to reduce CO2 emissions were among the most popular across the

industry, reported by all LCCs and FSCs in the study sample. Initiatives and actions to reduce

air pollution (mainly local, at the hubs) were less frequent, reported by only three LCCs

(42%) and five FSCs (71%).

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Numerous initiatives and actions to reduce CO2 emissions throughout operations were

reported, such as reducing fuel consumption, introducing new fuel-efficient aircrafts,

improving aerodynamics by installing winglets/sharklets, reducing weight of aircrafts, engine

washing, and optimized flight procedures (e.g. continuous descent approach or one engine

taxing). In reducing CO2 emissions, the differences between the two operational business

models of LCCs and FSCs were the most visible. To reduce emissions and fuel consumption,

LCCs reported initiatives using their low-cost operational model features such as operating

high seat-density configuration of aircrafts, high load factors, using infrastructure of

secondary airports (to avoid congestion), and operating point-to-point routes (reducing the

number of take offs and landings). Also, even though, both LCCs and FSCs were introducing

new fuel-efficient and more eco-friendly aircrafts to their fleets, LCCs were doing this at

significantly larger scale than FSCs. This resulted in LCCs having on average much younger

fleet than FSCs (measured as average age of aircraft in a fleet). Another popular initiative in

this category, predominantly with FSCs, involved research on and use of alternative and bio-

fuels. Six FSCs compared to only two LCCs reported such initiatives. Regarding the

reduction in air pollution, the most commonly reported initiative focused on introduction of

the latest engine technology (reducing NOx emissions). However, FSCs were more active in

pursuing this goal and reported additional initiatives such as climate and air quality research,

use of environmentally-friendly ground vehicles and electric power on ground instead of fuel,

and also encouraging their employees to use electric cars by installing charging stations.

Generally, FSCs provided more information on measuring their progress of individual

initiatives and actions. Almost all carriers provided some indication or measurement of their

reduced fuel consumption and CO2 emissions. However, a comparison between them was

very difficult to make as each carrier reported their progress in a slightly different way with

mostly only FSCs providing information on methodology of their calculations.

Waste

The goal of waste reduction was more often reported by FSCs (85%) than LCCs (42%).

In total, thirteen initiatives were identified, of which only three – paperless cockpit, on-board

recycling and waste reduction, and office recycling – were reported by LCCs. None of the

initiatives were reported by more than four carriers. On-board and office recycling were the

most popular and also most often measured by all carriers who reported them. Interestingly,

some innovative solutions such as paperless cockpit and/or cabin (through the use of

electronic tablets), providing on-board newspapers and magazines in digital form, or

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Lufthansa’s on-board dishwasher (reducing waste from catering with minimum use of water)

were implemented by carriers in order to reduce waste.

Energy

The goal of reducing energy consumption was reported by six FSCs (85%) and only

one LCC (14%). Eight initiatives were identified in airline disclosures as contributing

towards this goal, of which only one – use of LED bulbs – was reported by one of the LCCs.

Generally, the level of adoption of the individual initiatives was relatively low; none of them

was reported by more than three carriers.

Water

The theme of water included two goals – reduction of water usage and reduction of

water pollution. Four FSCs (57%), compared to only one LCC (14%), reported the goal of

reducing the use of water. The goal of reducing water pollution was reported only by three

FSCs (42%). Even though, carriers reported the two goals, only very few specific initiatives

contributing to those goals were identified. Similarly, these initiatives were widely not

measured.

Biodiversity

Within the theme of biodiversity there were two goals – ensuring ecological integrity

and involvement in environmental conservation projects. None of the LCCs studied reported

any engagement with biodiversity theme at all. On the other hand, four FSCs (57%) reported

both goals within biodiversity theme with a number of initiatives in each. For ensuring

ecological integrity, the most popular initiative was the use of responsible catering products,

reported by four carriers and measured by two. The other initiatives included the use of eco-

friendly products such as paper and air-conditioning refrigerants, but these were only

reported by one carrier each. Within the second goal, five initiatives were identified with

sponsorship of or donating to environmental projects and avoidance of deforestation

initiatives being the most popular and most often measured initiatives among FSCs.

Noise

Ten of the fourteen carriers studied, of which seven were FSCs (100%) and three LCCs

(42%), reported that they pursue noise reduction. Introduction of quieter aircrafts and engines

was the most popular initiative reported among both FSCs and LCCs. Interestingly, although

LCCs generally have newer and younger (thus arguably more advanced fleets in terms of

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noise emissions), only four of them reported this particular initiative with only two LCCs

providing measurements of it. Contrary to this, all FSCs reported introduction of quieter

aircrafts and engines (with five providing measurements). Other popular initiatives included

compliance with ICAO Chapter 4 and/or 14 noise levels, working locally with airports and

organisations to reduce noise, and optimized operational procedures (such as flap settings or

curved approach). ICAO Chapter 4 is a standard for aircraft noise emissions. Aircrafts

manufactured after 2006 comply with this, previously manufactured aircrafts can be

retrofitted with corresponding technology to fulfil this standard. Retrofitting older aircrafts

with noise-reducing technologies was implemented by some of the FSCs. Interestingly, some

carriers such as British Airways were already ahead in terms of noise emission standards,

with 50% of its fleet fulfilling even more stringent regulations of ICAO Chapter 14, which is

due to be introduced in 2017. FSCs generally provided more information on measurements of

their noise mitigation initiatives compared to LCCs.

Other initiatives

Some of the FSCs reported initiatives which could not be categorised under only one

theme or goal. These initiatives were – obtaining ISO 14001 certification, providing company

specific CO2 reports for cargo deliveries, UN Global Compact membership, general

stakeholder engagement, and maximizing innovation. ISO 14001 is a widely recognised

family of standards which provide practical tool for firms to manage their environmental

responsibilities. Five of the seven FSCs (71%) reported that their operations (mostly at their

hubs) have been certified according to ISO 14001 standard. Three FSCs (42%) reported their

membership in UN Global Compact, which is a United Nations global initiative to encourage

businesses to adopt sustainable and socially responsible policies, and to report on their

implementation. Five FSCs (71%) stressed the importance of engaging stakeholders in all

their activities in general. Most of them provided stakeholder maps and dedicated significant

space to the topic in their disclosures, with one FSC (Turkish Airlines) even providing a

detailed measurement of stakeholder engagement in terms of frequency of communication.

The two largest FSCs – Lufthansa and Air France-KLM – extensively reported efforts of

maximizing innovation throughout all of their operations as part of their overall CSR

strategies. Lastly, Lufthansa’s initiative to provide their cargo customers with company

specific CO2 reports provides an interesting example of a voluntary initiative reaching

beyond company’s own boarders.

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4.6.2. Social and Economic Results

The specific initiatives implemented by individual carriers in relation to social and

economic dimensions of CSR were grouped into five main themes: employee wellbeing and

engagement, customer wellbeing, diversity and social equity, community wellbeing, and

economic prosperity. The social and economic results are presented in Tables 11 and 12 in

Appendix 2 for LCCs and FSCs respectively.

Employee wellbeing and engagement

This theme was the most widely reported from social dimension among both LCCs and

FSCs. The theme was categorised into four goals – improvement of employee health, safety

and wellbeing, reported by six LCCs (85%) and six FSCs (85%); increase in employee

involvement and empowerment, reported by six LCCs (85%) and six FSCs (85%); increase in

employee involvement in CSR issues, reported by five LCCs (71%) and five FSCs (71%);

and provision of opportunities for employee education and advancement, reported by five

LCCs (71%) and six FSCs (85%). Numerous initiatives supporting these goals were

identified.

For both types of carriers, the most popular initiative supporting the first goal was

ensuring safety standards throughout the supply chain, reported by three LCCs and six FSCs.

Some LCCs reported initiatives unique to their business model – enabling employees live

where they work and providing them with favourable rosters ensuring their evening return to

their home bases so that they can be with their families every day. LCCs can introduce such

initiatives thanks to operating only simple point-to-point network of routes, contrary to FSCs

operating hub-and-spoke networks in combination with often more distant routes when pilots

and crews often have to spend significant amount of time away from their home bases.

Further popular initiatives for FSCs were provision of a comprehensive health and safety

protection/insurance (reported by five FSCs), availability of in-house physicians (reported by

three FSCs), conducting continuous risk assessments (reported by five FSCs), providing

health and safety training (reported by five FSCs), supporting employees with children in

various ways (reported by three FSCs), and promoting and supporting healthy lifestyle and

maintaining adequate work-life balance (reported by five FSCs). Other initiatives of both

LCCs and FSCs were not reported by more than two carriers each. Overall, LCCs, contrary to

FSCs, did not provide almost any measurements or indication of progress of their initiatives

supporting the goal of employee health, safety and wellbeing improvement.

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The most often reported initiatives by both LCCs and FSCs contributing towards the

second goal of increasing employee involvement and empowerment were negotiating with

employees through representative committees and unions (reported by three LCCs and six

FSCs) and providing various opportunities for employee feedback (reported by four LCCs

and five FSCs). Other initiatives within this goal had generally low levels of adoption and

were each reported by three airlines at most.

Nine different initiatives in total were reported by LCCs and FSCs to contribute

towards the third goal of increasing employee involvement in CSR issues. LCCs mentioned

five and FSCs mentioned eight initiatives in their CSR disclosures. The most popular ones

were having an internal code of conduct (reported by four LCCs and five FSCs) and

provision of CSR/ethics training to increase employee awareness (reported by five LCCs and

four FSCs). Although the carriers reported a number of initiatives contributing to this goal,

neither of them extensively measured progress or impact of those initiatives.

The fourth goal of provision of opportunities for employee education and advancement

was supported by eight initiatives in total, with LCCs reporting six of them. The two most

commonly reported initiatives were provision of vocational training (reported by five LCCs

and six FSCs) and provision of career development and opportunities for continuous learning

(reported by five LCCs and six FSCs).

Overall, both LCCs and FSCs implemented many initiatives within this theme,

however, the level of adoption among FSCs is generally higher and they also provide more

measurements towards their progress with individual initiatives than LCCs do.

Customer wellbeing

Within this theme, two goals were identified – ensuring safety and health of travellers

and increasing customer experience and satisfaction. The first goal was reported by three

LCCs (42%) and five FSCs (71%), the second goal then by two LCCs (28%) and four FSCs

(57%). This theme seemed more popular with FSCs as they reported many more specific

initiatives supporting each of the two goals. However, it is questionable to what extent do

these initiatives represent CSR efforts, as some of them could be thought of more as various

marketing offerings than CSR initiatives. This is more valid for initiatives seemingly

supporting the goal of increasing customer experience and satisfaction. Nevertheless, the

carriers studied (mostly FSCs) dedicated significant amount of words, sometimes even whole

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sections, to this theme in their CSR disclosures, thus it was included in the framework to

provide a complete picture of the content of CSR disclosures.

Diversity and social equity

The theme of diversity and social equity encompassed two main goals – increasing

diversity and social equity in the workforce and ensuring universal accessibility for customers

and employees. The first goal was relatively popular with both types of carriers; it was

reported by six LCCs (85%) and five FSCs (71%). In total seven initiatives were identified

that contribute to the goal of increasing workforce diversity and social equity. By far the most

popular initiative reported was being equal opportunities employer (reported by six LCCs and

five FSCs). However, it needs to be born in mind that in Europe, equal employment

opportunities are part of an EU directive from 2000, thus this initiative would not appear to

be voluntary. On the other hand, some airlines offer local contracts outside of the EU at the

same time, thus this may not apply in such cases. Only two LCCs and three FSCs provided a

measure reflecting them as equal opportunities employer though. Other popular initiatives,

reported by four FSCs but only one LCC, were increasing the number of women in

management and enhancing cultural diversity of employees. Interestingly, two airlines, one

LCC (easyJet) and one FSC (Turkish Airlines), went further with their efforts to increase the

number of females in their workforce and reported initiatives to increase the number of

female pilots, an occupation greatly dominated by males.

The second goal within this theme, providing universal access for customers and

employees, was reported by one LCC (14%) and three FSCs (42%). Six initiatives were

identified, but mostly reported by one carrier each only. It should be noted though that

provision of equal accessibility is largely mandatory rather than voluntary, thus carriers may

not feel the need to include such information in their CSR disclosures.

Community wellbeing

Community wellbeing, with three goals, was another highly popular theme with both

LCCs and FSCs. The first goal – involvement in community projects – was equally reported

by five LCCs (71%) and five FSCs (71%) and included both communities at carriers’ hubs

and at destinations to where they fly. It was supported by seven different initiatives. The most

popular ones were partnering with and supporting local organisations or charities (reported by

four LCCs and four FSCs), supporting education for youth (reported by three LCCs and four

FSCs), supporting culture, art and sport (reported by five FSCs), and employee volunteering

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(reported by two LCCs and five FSCs). Interestingly, two FSCs (Lufthansa and SAS)

reported initiatives supporting refugees in reaction to the latest social affairs in the EU.

The second goal – involvement in international projects – was reported by four LCCs

(57%) and five FSCs (71%). Within this goal, four initiatives were identified. Carriers

reported on having partnerships with charitable organizations and/or NGOs (reported by four

LCCs and five FSCs), donating money to charities (reported by three LCCs and four FSCs),

having an on-board charity collection programme (reported by two LCCs and three FSCs),

and being involved in humanitarian aid projects (reported by one LCC and five FSCs). The

on-board charity collection programme took the form of passengers donating spare foreign

currency change on international flights and humanitarian aid consisted of occasional projects

such as, for example, sending an aircraft full of supplies to areas struck by natural disasters,

or providing a specially equipped aircraft for medical evacuation of ebola patients.

The third goal – raising customer awareness of CSR issues – was reported by three

LCCs (42%) and three FSCs (42%). This goal was supported by a number of initiatives;

however, most of them were implemented by one carrier each only. Some of the more

popular ones, predominantly among FSCs, were having CSR initiatives on-board in form of

an announcement or a sustainability themed film, a voluntary option for passengers to offset

their CO2 emissions by making donations while booking a flight, and an option to donate

frequent-flyer miles for various CSR purposes.

Economic prosperity

Economic prosperity groups three goals within it – sustainable procurement practices,

job creation, and contributing to local economic development. For the first goal, reported by

four LCCs (57%) and five FSCs (71%), eleven initiatives were identified, with majority of

them reported by FSCs. Only four initiatives, supporting this goal, were identified in LCCs’

CSR disclosures, with most of them being adopted by only one carrier each. The exception

was having a supplier code of conduct, which was implemented by three LCCs. FSCs

reported a greater variety of initiatives supporting their sustainable procurement practices, but

similar to LCCs they provided only few measurements of those initiatives. The most popular

initiatives among FSCs were having anti-bribery and corruption policy and training, and

assessing and managing risk in the supply chain. Both of these initiatives were reported by

five FSCs but measured only by one each. Interestingly, British Airways reported on its

initiative to ensure on-time payment of its suppliers and even provided a measurement in the

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form of a percentage of on-time payments per year. However, it is questionable to which

extent this is a CSR practice or more of a general business practice that should be implied for

every business.

The second goal – job creation – was supported by three different initiatives and was

mentioned by five FSCs (71%) and none LCCs. Even though, LCCs did not mention the goal

of job creation in their disclosures, five of them (same number as FSCs) reported on

providing internships, graduate and apprenticeship programmes. All carriers reporting this

initiative also measured it. The two other initiatives, implemented by two and one FSCs

respectively, were acquiring local talents and organising workshops, job fairs and various

networking events in general.

The last goal within economic prosperity was contribution to local economic

development. This goal was reported by four FSCs (57%) only. None of the LCCs mentioned

this goal or any related initiatives in their disclosures. On the other hand, five different

initiatives implemented by FSCs were identified to support this goal. The most popular one

was to invest in local infrastructure, reported by four and measured by three FSCs. This

initiative often took the form of investing in airport-related developments and increasing

accessibility of airports from cities by investing in their transportation networks.

Interestingly, some of the airlines, such as Air France-KLM, British Airways, and Turkish

Airlines, reported initiatives of supporting SMEs and start-ups or entrepreneurs and social

enterprise at their hubs or even at some of their destinations.

Overall, the separately performed qualitative content analysis of LCCs’ and FSCs’ CSR

disclosures provided further insight into the differences in extent and volumes of their CSR

reporting practices. As obvious from the results of the analysis, LCCs reported much lower

orientations towards individual themes and goals included in the framework as well as much

lower numbers of specific initiatives supporting individual CSR goals than FSCs did.

Similarly, the adoption levels of individual initiatives as well as the provision of

measurements or progress indicators of the initiatives were both much lower for LCCs than

for FSCs. Therefore, the second proposition – saying that LLCs are expected to engage in

CSR initiatives to a lesser extent that FSCs as reflected in the content of their disclosures –

holds true here.

The third and last proposition states that both LCCs and FSCs are expected to address

the individual dimensions of CSR to an unequal extent, with the most attention paid to the

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environmental dimension. Indeed, an unequal extent of addressing the individual dimensions

of CSR in carriers’ disclosures was found. Surprisingly though, it was not the environmental

dimension which obtained the most attention from both types of carriers. Despite the goal of

reducing the CO2 emissions, within the environmental dimension, being the only goal

pursued by all carriers in the sample, the themes and goals under the social dimension of CSR

received a great amount of attention in both type of carriers’ disclosures as well. In terms of

the number of initiatives and adoption levels, social dimension was more embraced in CSR

disclosures (by both LCCs and FSCs) than either economic or environmental dimension. The

economic dimension was the least often addressed by individual airlines across the entire

sample. Thus, the third proposition of the study holds partially true in the findings in the

sense that carriers address the individual dimensions to an unequal extent but with the most

attention paid to social and not environmental dimension as stated in the proposition initially.

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5. Discussion and Conclusion

This study sought comparison of the extent of CSR reporting between LCCs and FSCs

within the European aviation industry. Furthermore, the study’s aim was to explore the

variations of the CSR content in the two types of carriers’ multiple disclosures and to

ascertain the levels of engagement in and adoption of individual CSR goals and initiatives

related to the three main dimensions of CSR identified in the literature, being environmental,

social and economic.

On a general level, this research reveals that European carriers, including both LCCs

and FSCs, are generally aware of CSR problematic and that they feel the need to address it.

This would appear consistent with recent consumer studies and literature signifying the

increasing pressure coming from consumers and society at large calling for businesses to

address CSR issues in their strategies (Mintel, 2011; Kolk, 2007; McIntosh, 2003; Juholin,

2004). While not necessarily true, in public’s opinion, the airline industry is often perceived

as one of the industries having the greatest negative impact on the environment. This might

be due to its rapidly growing global presence, and thus these calls for sustainability are

especially pressuring airline sector as the engine of the tourism industry and forcing all

carriers to address CSR. It was observed that majority of carriers are trying to offset these

pressures and come across as environmentally-friendly airlines by making bold claims of

being industry leaders in sustainability or one of the greenest airlines in the industry. For

example, Ryanair, proudly posits itself on its website as the “Europe’s greenest airline”,

similarly, Aeroflot talks about itself as an industry leader in CSR. However, these claims are

often not backed up and if they are it is with some questionable environmental report or index

issued by a not very well-known organisation, and thus arguably verge on greenwashing

practices. The only carrier rightfully positing itself as a leader in CSR was Air France-KLM

clearly backing this up with their extensive reporting on CSR and by being ranked No. 1 in

the airline industry on the widely recognised Dow-Jones Sustainability Index for the 11th

consecutive year. Nevertheless, although all carriers in the study acknowledged their

responsibility towards society at large in some way or another and addressed CSR through at

least one of the three main types of disclosures studied, the study uncovered that the extent

and scope of their reporting on the matter varies significantly both among individual carriers

and overall between LCCs and FSCs.

The study showed that despite the fact that certain CSR activities generate overheads

and additional costs, LCCs, operating a business model that promotes stringent cost

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reductions in every aspect of their business operations, do practice CSR. Thus, it can be said

that LCCs do not consider CSR as part of their “no-frills” strategies. However, generally in

line with the expectations reflected in the study’s propositions, LCCs were found to report on

CSR far less extensively than their counterparts FSCs. While LCCs reported on their CSR

activities mainly via sections in annual reports and their websites, FSCs, in addition to those

two, mostly used “stand-alone” CSR reports as well. It is important to note that the “stand-

alone” CSR reports were FSCs’ main type of CSR disclosures and the readers were directed

to them both in annual reports and on CSR websites.

In addition, FSCs also reported much more extensively on their CSR activities in terms

of pages and words used in their disclosures. FSCs’ disclosures (mainly CSR reports) were

far more informative and included much more text on CSR than LCCs provided in their

annual reports or websites. While on average LCCs used 3,190 words in their main type of

CSR disclosure (being annual reports), FSCs used on average 31,611 words in their main

type of disclosure (being CSR reports). Similar results were found for the CSR related

websites which could be considered to be the most common type of a medium through which

a company’s CSR related information is disseminated to the wider public. All carriers in the

sample, with an exception of Wizz Air, were found to report on CSR through their websites.

Again, FSCs were found to report more extensively on CSR issues through their websites

than LCCs, although the difference here was not so large. LCCs used on average 2,612

words, compared to 4,561 words used by FSCs. The analysis revealed that the content of

carriers’ CSR websites is mostly a summative repetition of the content in other CSR

disclosures studied with only little new information. This was valid for both LCCs and FSCs.

There were some exceptions though, carriers, such as Lufthansa, made a good use of its CSR

related website and provided interesting and interactive information (e.g. audio recordings of

aircrafts landings before and after it was fitted with noise mitigating technology), providing

the reader with a greater detail on some initiatives.

Reasons for these significant differences in the amount of reporting might be that LCCs

are trying to avoid the additional costs associated with preparation of such extensive CSR

reports or that their CSR strategies and subsequently its reporting practices are still in its

initial stages and are yet to evolve into more elaborate ones. For example, content of Wizz

Air’s short CSR disclosure in its annual report, saying basically that their CSR strategy is

currently under development with only few initiatives already in place, would speak in favour

of the latter reason. However, to uncover whether this is applicable across all LCCs in the

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industry, further research would be needed. Nerveless, as far as the extent of CSR reporting is

concerned, the bottom line is that to this date, the stringent cost-reducing approach to

business operations of LCCs is partially reflected in their rather monosyllabic CSR

disclosures in general.

Another important finding of the study was that although generally there was a

relatively high commitment among the studied carriers (mainly from FSCs though) to the

individual themes and goals within the main CSR dimensions, the level of adoption of

specific initiatives supporting those themes and goals was rather low. This was particularly

evident from LCCs’ results. In the environmental dimension alone, none of the specific

initiatives supporting the environmental goals was implemented by more than 80% of LCCs

and only six initiatives were reported by more than 80% of FSCs. Similarly, within social

dimension, only one initiative reported by LCCs and four initiatives reported by FSCs were

adopted by more than 80% of carriers from each category. Regarding the economic results,

only three initiatives surpassed an adoption threshold of 70%. The results showed that most

of the initiatives identified in CSR disclosures were on average implemented by one or two

carriers only. A summary of the most popular initiatives and their adoption levels is presented

in Table 13 in Appendix 2.

Interestingly, simple initiatives, such as the use of LED bulbs, supporting goals

reported by multiple carriers (in this case reduction of energy consumption, reported by seven

carriers in the entire sample), were implemented by few carriers only (in this case two). One

would think that such seemingly simple initiatives would be implemented by more carriers

committed to the respective CSR goal. However, it is not clear whether this occurs because

these kinds of initiatives are considered to be too small to be included in CSR disclosures by

the carriers or whether they are actually indeed implemented only by such a small number of

them. Either way, there is no way for the reader of these disclosures to know. Similarly, the

study showed that some carriers chose to include initiatives that are required by law as

opposed to being voluntary while others did not. An example could be initiatives such as

being an equal opportunities employer or providing assistance to passengers with reduced

mobility or disability which are at least in Europe required by law. This is in contradiction

with Dahlsrud (2008) claiming that CSR initiatives should be voluntary. This implies that the

choice of content of the CSR disclosures by individual carriers may have a significant impact

on the reader’s perceptions of their CSR strategies.

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In terms of measuring progress of individual initiatives, even though this was observed

to be low across both types of carriers, FSCs generally provided measurements more often

than LCCs. The problem with this was that each carrier used slightly different measurements

or units, with only few FSCs providing methodologies of their calculations as part of their

disclosures. Thus, any comparison of the impact of CSR initiatives across carriers would be

difficult to achieve. These issues, together with the choices individual carriers make

regarding the information they include in their disclosures, raise concerns about the cross-

sectional comparability of information reported by individual carriers.

Overall, when comparing the two types of carriers, it can be concluded that FSCs

reported greater levels of commitment to individual CSR themes and goals as well as greater

levels of adoption of specific supporting initiatives and their measurements across all three

dimensions of CSR. In addition, LCCs in general reported fewer specific initiatives

supporting individual goals than FSCs did. This was especially visible in the environmental

dimension. For example, the goal of waste reduction was found to be supported by only three

initiatives in LCCs’ disclosures, compared to FSCs’ disclosures, where the same goal was

supported by fourteen initiatives. Thus, as expected, the analysis of carriers’ CSR disclosures

proved that even content-wise, LCCs engage in CSR activities less than FSCs do.

Finally, since environment is the area where airlines are being pressured the most, it

was expected that the carriers would focus heavily on the environmental dimension of CSR in

their disclosures and neglect the other two, being economic and social. However, this turned

out to be only partially true. Although, it was found that carriers addressed the three CSR

dimensions to an unequal extent as expected, the greatest amount of reporting was observed

for the social dimension of CSR. Needless to say though, the carriers still paid great amount

of attention to the environmental dimension as well, especially to the goal of reduction of

CO2 emissions which was the only goal reported by all carriers in the study. The reason for

this is that reduction in CO2 emissions is predominantly being achieved through reducing fuel

consumption and fuel is the single biggest cost item in operational expenditures of all

carriers, thus any reductions in its consumption bring along significant savings. This, to a

certain extent, shows that carriers can do well by doing good as suggested by Bénabou and

Tirole (2010). The economic dimension of CSR was the least often addressed dimension,

with mostly only FSCs reporting their commitment to goals and respective initiatives

contributing towards economic prosperity.

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5.1. Added Value of This Study

This exploratory study has provided further insights into the understanding of CSR in

the rapidly evolving airline industry by providing a firm-based view of the main CSR

dimensions and their levels of adoption and reporting as reflected in airlines’ disclosures.

The study has provided a detailed analysis of multiple CSR disclosures of fourteen

major European airlines equally representing LCCs and FSCs. The analysis used Cowper-

Smith and de Grosbois’ (2001) adjusted framework and demonstrated so its usefulness and

applicability for analysing CSR disclosures in the airline industry and provided further

account of specific CSR initiatives implemented by the airlines which may well serve for

both academic as well as professional purposes. Generally, the current research aims to serve

as groundwork for further investigations and signify the importance of LCCs in the

contemporary aviation industry.

CSR and its reporting in the airline industry remains an area which is largely

unexplored and suffers from lack of research (Wang et al., 2014; Coles et. al, 2014; Kemp &

Vinke, 2012; Cowper-Smith & de Grosbois, 2011). This research seeks to contribute to

closing this gap. The small amount of previous studies conducted largely focused on

traditional FSCs only. However, with the emergence of the low-cost model, LCCs are rapidly

gaining market share and are influencing the entire airline industry globally and thus,

inherently have significant impact on the environment and society at large which is

reinforced by the growing consumers concerns about and interests in this area (Clayton &

Hilz, 2015; Kolk, 2007; McIntosh, 2003; Juholin, 2004). Therefore, this study took and

innovative approach and filled a critical gap in research by seeking comparison of traditional

FSCs and LCCs in terms of their CSR reporting practices and levels of adoptions of

individual CSR themes, goals and initiatives, in order to see how much are LCCs influenced

by their “no-frills” mind-set in terms of CSR practices. The findings of this research may

serve as a reference point for airlines’ managers, academics conducting further research in

this area, and other interested groups as well as wider public. The implications for theory,

practice and policy, as well as future research are discussed next.

5.1.1. Theoretical Implications

This study has implications for theory on CSR and sustainability. Firstly, reflecting the

discussion in section 2.1. of the Literature Review above, the overall findings of the content

analysis reflect large variations in understanding and conceptualisation of CSR/sustainability

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among both individual carriers and among LCCs and FSCs overall. Large variations in the

qualitative content of the carriers’ CSR disclosures were observed. Therefore, it is apparent

that there is no unified approach to CSR or its understanding among companies. This

signifies the need to develop a clear definition of CSR and provide theoretical guidance to the

implementation of CSR which would serve for the benefit of companies wanting to pursue

sustainable development.

Secondly, the present study also has implications for the theory development on the

concept of the triple-bottom line introduced by Elkington (1998) which is central to

understanding of CSR. The findings indicate that individual carriers do not prioritize the three

dimensions of the triple-bottom line, being social, environmental and economic, to an equal

extent. Compared to social and environmental, the economic dimension was largely

neglected in carriers’ disclosures, especially by LCCs. Similarly, authors, such as Wilson

(2015), discuss themes and goals often addressed under each dimension. However, the

present study indicates that many of the suggested themes and goals are either entirely

missing or that their adoption levels are extremely low. Therefore overall, the findings

provide slightly contrary indications to what seems to be the case in the literature, which

generally implies that companies embracing sustainable development would follow the

approach of the triple-bottom line and would balance their CSR efforts across all three

dimensions. However, despite the carriers being reportedly committed to sustainable

development, no such balanced approach by them was observed in the present study. Thus,

questions arise about the equal importance of the three dimensions in the triple-bottom line

for CSR and sustainable development of individual companies. Although it seems that

features of all three dimensions may be found in companies’ CSR efforts, some dimensions

and themes are prioritized over others. Finding reasons for this would require further

research.

Lastly, the findings of the study are generally in line with the stakeholder theory

advocating that companies are more than just individual entities concerned solely with

themselves (Freeman 1984). Most of the carriers in the study indeed explicitly recognize the

importance of their individual stakeholder groups. The prioritization of stakeholders as

advocated by, for example, Clarkson (1995) or Morrison (2011) was indeed apparent in the

disclosures. This suggests that there might be a connection to the prioritization of particular

dimensions of CSR, as discussed above, depending on the particular importance of respective

stakeholder groups for the business in question. Such relationship could explain the varying

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importance of the three dimensions, put forward by the triple-bottom line, for different

companies. For example here, the carriers focused mostly on stakeholder groups of

employees and customers – arguably corresponding most to the social dimension. To confirm

this relationship and establish its potential implications for theory on the triple-bottom line,

further research would be needed though.

5.1.2. Implications for Practice and Policy

This research generally corroborates the findings of previous studies demonstrating that

despite carriers are self-declaring themselves as being an industry leader or being the greenest

airline, there are still on average low levels of CSR reporting in the airline industry, with

LCCs showing even lower levels of CSR reporting than FSCs.

However, the study reveals that LCCs generally recognize the growing need to engage

in CSR. Nevertheless, even though they do not consider CSR as a waste of money, as could

be arguably suggested by the nature of their business model, they are still falling behind FSCs

in terms of reporting and adoption levels of individual initiatives. Based on the conducted

analysis, it would appear that LCCs are only in their initial stages of adopting CSR strategies

and so far their CSR efforts could be described as mimetic isomorphism, meaning they are

largely copying FSCs’ practices (DiMaggio & Powell, 1983). However, as pointed out above,

some of the LCCs’ CSR initiatives were also observed to be driven by the unique operational

features of their business model, but not too many. Nonetheless, the results of the present

study may inform managers of individual airlines responsible for CSR strategies at their

organisations and act as a useful benchmarking and inspirational tool for them to see where

they stand in terms of their CSR efforts compared to their competition, both on the level of a

carrier type as well as industry wide, and what to do in order to catch up with the

competition.

Furthermore, the research bears an implication for policy makers and/or proactive

airlines themselves. Generally, the study pointed out the issues with cross-sectional

comparison of carriers’ disclosures. As also pointed out by a number of previous studies, the

extensive variation in structures, provided measurements, and choices of information

included in the individual disclosures, all run the risk of leaving the reader confused about the

state of CSR of particular carriers. The varying and inconsistent reporting practices of

different carriers are making it difficult to make any meaningful comparisons. This situation

calls for the use of some sort of standardized guidelines on CSR reporting, in order to allow

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more elaborate comparison of corporate performance. Some carriers already make efforts to

use such standardized guidelines (e.g. Turkish Airlines following Global Reporting

Initiative’s guidelines), however, those were extremely rare. On the other hand, one

characteristic of CSR is its voluntary nature, thus arguably certain flexibility in its reporting

is pertinent. Nevertheless, this study may inform policy makers and managers by drawing

their attentions to this problematic and encouraging them to seek a solution.

5.1.3. Limitations and Implications for Future Research

This study is not without limitations. At the same time, the study bears a number of

implications and opportunities for future research. One important limitation of this study

would be the scope of it, and thus the resulting limited generalizability of the findings. The

research sample consisted of only a limited number of airlines within Europe. Further

research with much larger samples would be needed to obtain results which could be

generalized across the entire industry. However, as outlined above, Europe is one of the

largest markets and the focus of the study was on the key players within it, thus arguably, to a

certain extent the findings might provide a good indicative overview of the standards in the

commercial aviation industry in general. Notwithstanding, this research can serve as a point

of reference for comparison purposes to future similar studies investigating airlines in regions

other than Europe. It would be interesting to see how European LCCs and FSCs compare in

terms of their CSR reporting to carriers in other regions.

Also, it should be acknowledge that the focus of this study was to look at CSR activities

as reported by the individual airlines from their own perspectives in their respective

disclosures. However, these sources and their content do not necessarily represent an

exhaustive source of all applicable CSR activities practiced by the carriers. Hence, another

limitation of the study concerns the data used. Possible additional information on CSR

activities may be made available to public by carriers and other bodies through sources other

than investigated by this study. Thus, further research is well advised to take into account all

sources available. For example, it would be interesting to compare the results of this study

with findings from airlines’ PR disclosures and/or external sources such as independent

reports and studies, newspaper articles and similar available media coverage related to

airlines’ CSR practices. By doing so and comparing the results with the present study, it

could be established to what extent airlines’ official CSR-related reporting differs to external

sources available.

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Furthermore, the goals and initiatives identified in this research are not an exhaustive

list of all CSR activities practised in the industry. Rather they represent activities practiced

and reported by the carriers in this study’s sample. In a similar vein, it needs to be born in

mind that low levels of CSR reporting of a particular carrier do not necessarily mean that the

carrier is not practising CSR or is practising it only to a limited extent. Hooper and Greenall

(2005) found that airlines may under-report their CSR practices even though they engage in

them, due to, for example, the additional costs associated with data collection and its

reporting. However, this study’s aim was to scrutinise the main official CSR disclosures

made available to public, in order to unveil the carriers’ reporting practices, thus the choice of

data was appropriate in this case. Similarly, the current study is based on an assumption that

information about CSR activities, as published by the airlines in their disclosures, is correct

and accurate. The emphasis of this study is on CSR reporting and not on the airlines’ CSR

initiatives per se, and thus the study did not aim to identify discrepancies between what is

reported by the airline and what is actually being done. Nonetheless, further research is

encouraged to address CSR as actually practiced by individual carriers. This would require

collecting data through other methods than used in this study, such as personal interviews and

survey of company managers, employees and industry experts. The present study may again

serve as a reference point for comparisons of findings to such future studies, in order to point

out any discrepancies between what is reported by the carriers in their disclosures and what is

actually being done.

Lastly, in a similar fashion, as the current study focused on CSR as reported by the

individual carriers only, future research is recommended to address the actual performance of

the particular fourteen airlines in this study in terms of their CSR programmes overall as well

as the performance of the specific CSR initiatives identified in this study. The joint results of

the present and such future study could further delineate differences between airlines

reporting extensively on CSR (mostly FSCs) and airlines reporting less extensively (mostly

LCCs). In addition, customers’ perceptions of CSR performance of the individual carriers

could be researched and subsequently compared to findings of this study to establish the

effectiveness and influence of varying levels of CSR reporting.

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Appendices

Appendix 1 – Figures

Figure 1 – Carroll’s pyramid of CSR

Figure 2 – The triple-bottom line

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Figure 3 – Growth of European LCCs

Figure 4 – Visualization of the study model

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Appendix 2 – Tables

Table 9 – Environmental initiatives and their adoption among LCCs

THEME & GOALS INITIATIVES Emissions

Reduce CO2 emissions (7)

Reduce fuel consumption (5/4); introduce new fuel-efficient aircrafts (5/4); reduce carbon emissions per passenger (5/5); install winglets/sharklets (4/3); operating high-seat density configuration (2/2); high load factors (3/1); better use of existing infrastructure of secondary airports (1/0); point-to-point routes reducing number of take offs and landings (2/0); reducing weight of aircrafts (3/2); optimized flight procedures (e.g. continuous descent, one engine taxing, etc.) (4/1); engine washing (3/2); clean aircrafts’ surface (2/2); block time optimisation and fuel-efficient flight plans (1/1); research on and use of alternative/bio- fuels (2/0)

Reduce air pollution (3)

Introduce latest engine technology (reducing NOx) (3/1); climate and air quality research (aircrafts fitted with special research equipment) (1/0)

Waste Reduce waste (3) Paperless cockpit (2/1); on-board recycling and waste reduction (2/1); office

recycling (2/0)

Energy Reduce energy consumption (1)

Use LED bulbs (1/0)

Water

Reduce water use (1) Use rainwater/greywater (1/0)

Reduce water pollution (0)

-

Biodiversity Ensure ecological integrity (0)

-

Involvement in environmental conservation projects (0)

-

Noise

Reduce noise (3) Introduce new quieter aircrafts and engines (4/2); no late-night departures (1/0); compliance with ICAO Chapter 4 and/or Chapter 14 noise level (2/2); work locally with airports and organisations to implement noise mitigation activities (3/0); optimize operational procedures (continuous descent, flap setting, curved approach etc.) (2/0)

Other - Note: The first number in each bracket stands for the number of carriers that reported their commitment towards a given goal or initiative. The second number in each bracket stands for the number of carriers that provided some sort of measurement of their progress towards each initiative.

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Table 10 – Environmental initiatives and their adoption among FSCs

THEME & GOALS INITIATIVES Emissions

Reduce CO2 emissions (7)

Reduce fuel consumption (7/7); introduce new fuel-efficient aircrafts (6/5); reduce carbon emissions per passenger (7/7); install winglets/sharklets (3/3); install carbon breaks (1/1); optimized utilization of capacity (2/0); reducing weight of aircrafts (5/5); optimized flight procedures (e.g. continuous descent, one engine taxing, etc.) (6/3); engine washing (4/3); clean aircrafts’ surface (1/1); block time optimisation and fuel-efficient flight plans (4/2); research on and use of alternative/bio- fuels (6/4); improve aircrafts’ aerodynamics (2/2); set up fuel efficiency department (3/1); improve airport and airspace infrastructure (2/1); partnership with rail and other transports (2/0)

Reduce air pollution (5)

Introduce latest engine technology (reducing NOx) (4/4); climate and air quality research (aircrafts fitted with special research equipment) (3/2); environmentally friendly ground vehicles (4/2); charging station for employee electric cars (2/1); use electric power on-ground (3/1)

Waste

Reduce waste (6) Paperless cockpit (2/1); paperless cabin (2/1); on-board recycling and waste reduction (4/4); office recycling (4/4); dishwasher on-board (1/1); recycle hazardous waste (3/2); recycle aircraft parts (2/1); optimize transportation of waste management process (1/0); eco-design product specifications (2/0); reduce printing (e.g. electronic baggage receipt) (2/1); reusable products on-board (e.g. blankets, headphones) (1/1); provide digital newspapers and magazines on-board (3/1); promote circular economy (1/0); convert waste into fuel (1/1)

Energy Reduce energy consumption (6)

Use LED bulbs (1/0); energy efficient buildings (3/2); reduce energy usage during on-ground handling (3/1); taxing and towing with electrical power (2/2); use green energy (2/2); install energy-efficient air-conditioning (1/1); adjust heating and cooling systems on-ground (1/1); automatic turn off of equipment (1/1)

Water

Reduce water use (4) Use rainwater/greywater (1/0); reduce use of water in cleaning (1/1) Reduce water pollution (3)

Reduce use of special cleaning fluids (2/0)

Biodiversity Ensure ecological integrity (4)

Responsible catering products (4/2); use environmentally-friendly refrigerants in air-conditioning (1/0); use eco-friendly paper (1/1)

Involvement in environmental conservation projects (4)

Sponsor/donate to environmental projects (3/3); endangered species initiative (1/1); avoidance of deforestation initiative (3/3); set up/join environmental forum (2/0); efforts towards achieving global climate agreement (2/0)

Noise Reduce noise (7)

Introduce new quieter aircrafts and engines (7/5); compliance with ICAO Chapter 4 and/or Chapter 14 noise level (4/4); work locally with airports and organisations to implement noise mitigation activities (4/1); optimize operational procedures (continuous descent, flap setting, curved approach etc.) (5/3); noise research (2/1); retrofit aircrafts with noise-reducing technologies (3/3); optimised runway usage schedule (3/1)

Other Obtain ISO 14001 certification (5/2); provide company specific CO2 reports for cargo (1/0); UN Global Compact member (3/0); stakeholder engagement (5/1); maximize innovation (2/2)

Note: The first number in each bracket stands for the number of carriers that reported their commitment towards a given goal or initiative. The second number in each bracket stands for the number of carriers that provided some sort of measurement of their progress towards each initiative.

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Table 11 – Social and economic initiatives and their adoption among LCCs

THEME & GOALS INITIATIVES Employee wellbeing and engagement

Improve employee health, safety and wellbeing (6)

Comprehensive health and safety protection/insurance (1/0); in-house physicians (1/0); favourable rosters for pilots and cabin crew to ensure an evening return to their home base every day (1/0); employees live where they work (1/0); new or refurbished office buildings/lounges (2/0); travel concession and discounted travel (2/0); introduce safety and fatigue management system throughout operations (1/0); conduct continuous risk assessment (1/0); ensure safety standards throughout supply chain (3/0); peer support network (1/0); stress management help (1/0); living wage pay (1/1); health and safety training (2/0)

Increase employee involvement and empowerment (6)

Negotiating with employees through representative committees and unions (3/0); comprehensive induction training (1/0); opportunities for employee feedback (4/1); possibility to buy shares (2/0); provision of personal pension plans (2/0); reward/award scheme (1/1); provide a variety of work-time models (job-sharing, flextime, etc.) (1/1); staff newsletter (1/0); letters to employees from CEO (1/0); employee engagement programme (1/0); save as you earn scheme (2/0); team building activities (1/0); annual events for employees (1/0)

Increase employee involvement in CSR issues (5)

CSR/ethics training to increase awareness (5/1); gifts and hospitality policy (1/0); eco-efficient flying training (1/0); employees donate part of their salary to charity (1/0); internal code of ethics (1/0)

Provide opportunities for employee education and advancement (5)

Provision of vocational training (5/1); career development and continuous learning (5/1); promotion opportunities (1/1); partnership with educational institutions (3/2); mentoring (2/0); performance management system (1/0)

Customer wellbeing Ensure safety and health for travellers (3)

Defibrillators on-board (1/1); helping people to overcome fear of flying (1/0); first aid training for crew (1/1)

Increasing customer experience and satisfaction (2)

Better use of technology and social media (1/1); on-time performance (1/1); customer satisfaction survey (1/1)

Diversity and social equity Increase diversity and social equity in the workforce (6)

Equal opportunities employer (6/2); increase number of women in management (1/1); increase the number of female pilots (1/1); enhance cultural diversity of employees (1/1); equal pay policy (1/1); offer local contracts (even abroad) (1/1)

Universal accessibility for customers and employees (1)

Assistance for passengers with reduced mobility or disability (1/1); cabin layout adjustments for disabled (1/1); making adjustments to workplace for disabled (1/0)

Community wellbeing Involvement in community projects (5)

Partnership with and supporting local organisations/charities (4/2); support education for youth (3/3); employee volunteering (2/0); host charitable events (2/0)

Involvement in international projects (4)

Partnerships with charitable organisations and NGOs (4/1); donations to charitable organisations (3/1); on-board charity collection programme (2/1); involvement in humanitarian aid and relief/rescue/medical projects (1/0)

Raise customer awareness of CSR issues (3)

Inflight magazine (1/0); livery (1/0); CSR initiatives on-board (e.g. films on sustainability, announcements, etc.) (1/0); donations while booking flights option (1/1); environmental rating of aircrafts communicated to customers while booking and on-board (1/0)

Economic prosperity Sustainable procurement

Supplier relationship management (1/0); anti-bribery and corruption policy/training (2/1); supplier code of conduct (3/0); providing feedback to suppliers (1/0)

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practices (4) Job creation (0) Internship, graduate and apprenticeship programme (5/5)

Contribute to local economic development (0)

-

Note: The first number in each bracket stands for the number of carriers that reported their commitment towards a given goal or initiative. The second number in each bracket stands for the number of carriers that provided some sort of measurement of their progress towards each initiative.

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Table 12 – Social and economic initiatives and their adoption among FSCs

THEME & GOALS INITIATIVES Employee wellbeing and engagement

Improve employee health, safety and wellbeing (6)

Comprehensive health and safety protection/insurance (5/4); in-house physicians (3/0); new or refurbished office buildings/lounges (1/0); travel concession and discounted travel (1/0); conduct continuous risk assessment (5/2); ensure safety standards throughout supply chain (6/5); health and safety training (5/2); support for employees with children (3/1); social counselling (1/1); provide uniforms without harmful substances (1/1); safety newsletter (2/0); decrease absenteeism rate (1/1); stress management help (2/1); promote and support healthy lifestyle and maintain work-life balance (5/0)

Increase employee involvement and empowerment (6)

Negotiating with employees through representative committees and unions (6/2); opportunities for employee feedback (5/3); possibility to buy shares (2/1); provision of personal pension plans (3/0); reward/award scheme (3/0); staff newsletter (2/0); employee engagement programme (2/1); annual events for employees (1/0); non-monetary incentives for performance (2/1); provide a variety of work-time models (job-sharing, flextime, etc.) (2/2); offer severance pay (1/0)

Increase employee involvement in CSR issues (5)

CSR/ethics training to increase awareness (4/3); employee award for sustainability innovation (1/0); compliance office (1/0); eco-efficient flying training (4/0); employees donate part of their salary to charity (1/1); executives’ remuneration tied to CSR performance (1/0); promote eco-friendly commute (2/0); internal code of ethics (5/0)

Provide opportunities for employee education and advancement (6)

Provision of vocational training (6/6); career development and continuous learning (6/3); promotion opportunities (2/2); partnership with educational institutions (2/2); mentoring (2/1); performance management system (4/1); career advice and assistance (3/2); learning centre for past accidents (2/0)

Customer wellbeing

Ensure safety and health for travellers (5)

Defibrillators on-board (1/0); helping people to overcome fear of flying (1/1); improve safety procedures (3/1); independent assessment of safety (3/3); voluntary special assistance team (1/1); offer passenger medical care (1/0); medical transports (1/1); provide health and safety travel guide (3/0); cabin air quality research (1/0); safety and risk management system (4/2); advanced aircraft tracking system (1/1); protect personal data (4/0)

Increasing customer experience and satisfaction (4)

Better use of technology and social media (3/2); on-time performance (1/0); customer satisfaction survey (3/3); customer satisfaction targets incorporated into the remuneration of executives (1/0); organised visitor programmes to headquarters (1/1); greater comfort for passengers (e.g. modernization of cabin interiors ) (3/3); optimized service offerings (3/0); increase customer experience at the airports (2/1); customer analysis efforts (1/1); lost & found imitative (2/2); entertainment system for kids (1/0); ensure effective CRM (2/2); improve catering (1/1); enhanced entertainment system (wifi, TV, etc.) (1/1); customer forum and events (1/0)

Diversity and social equity

Increase diversity and social equity in the workforce (5)

Equal opportunities employer (5/3); increase number of women in management (4/4); increase the number of female pilots (1/1); enhance cultural diversity of employees (4/3); offer local contracts (even abroad) (2/2); equal pay policy (1/0); increase number of employees with disabilities (2/2)

Universal accessibility for customers and employees (3)

Assistance for passengers with reduced mobility or disability (3/0); making adjustments to workplace for disabled (1/0); training on unconscious bias, diversity and inclusion (1/0); cultural sensitivity initiative (1/0); support LGBT community (1/0)

Community wellbeing

Involvement in community projects (5)

Partnership with and supporting local organisations/charities (5/5); support education for youth (4/4); support of culture, art and sport (5/5); employee volunteering (5/4); initiative to integrate/help refugees (2/0); host charitable events (3/2); employee

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blood donation (1/1) Involvement in international projects (5)

Partnerships with charitable organisations and NGOs (5/3); donations to charitable organisations (4/4); on-board charity collection programme (3/1); involvement in humanitarian aid and relief/rescue/medical projects (5/4)

Raise customer awareness of CSR issues (3)

Dialogue with stakeholders and interested groups (3/1); inflight magazine (1/1); donations while booking flights option (1/1); organisation of an environmental conference (1/0); voluntary CO2 compensation scheme by passenger donations (3/2); CSR initiatives on-board (e.g. films on sustainability, announcements, etc.) (3/3); donate frequent-flyer miles initiative (4/1); study customers’/stakeholders’ visions of CSR (2/1); environmental education (1/1)

Economic prosperity

Sustainable procurement practices (5)

Supplier relationship management (3/0); anti-bribery and corruption policy/training (5/1); supplier code of conduct (3/1); providing feedback to suppliers (2/0); ombudsman system/whistle-blower procedure (4/2); training of purchasers (2/0); assess and manage risk in supply chain (5/1); ensure fair competition (2/1); assess suppliers on their CSR performance (2/1); ensure on time payment (1/1)

Job creation (5) Internship, graduate and apprenticeship programme (5/5); local talent acquisition (2/1); workshops, job fairs and networking events (1/0)

Contribute to local economic development (4)

Support networks of SMEs and start-ups at hub locations (2/0); marketing aimed at local development (3/2); talent exchange and employee mobility programme (2/2); investment in local infrastructure (4/3); support local entrepreneurship and social enterprise (2/1)

Note: The first number in each bracket stands for the number of carriers that reported their commitment towards a given goal or initiative. The second number in each bracket stands for the number of carriers that provided some sort of measurement of their progress towards each initiative.

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Table 13 – An overview of adoption levels of the most popular CSR initiatives implemented

Carrier

type Adoption

CSR dimension

Environmental Social Economic

LCCs

> 80% None Equal opportunities employer None

70-79%

Reduce fuel consumption; introduce new fuel-efficient

aircrafts; reduce carbon emissions per passenger

CSR/ethics training to increase awareness; provision of vocational training; career development and

continuous learning;

Internship, graduate and

apprenticeship programme

50-69%

Install winglets/sharklets; optimized flight procedures;

introduce new quieter aircrafts and engines

Opportunities for employee feedback; partnership wit and supporting local organisations/charities; partnership with charitable organisations and

NGOs

None

FSCs

> 80%

Reduce fuel consumption; introduce new fuel-efficient

aircrafts; reduce carbon emissions per passenger;

optimized flight procedures; research on and use of alternative/bio- fuels; introduce new quieter aircrafts and engines

Ensure safety standards throughout supply chain; negotiating with

employees through representative committees and unions; provision of

vocational training; career development and continuous learning

None

70-79%

Reducing weight of aircrafts; optimize operational

procedures; obtain ISO 14001 certification;

stakeholder engagement

Comprehensive health and safety protection/insurance; conduct

continuous risk assessment; health and safety training; promote and support healthy lifestyle and maintain work-

life balance; opportunities for employee feedback; internal code of ethics; equal opportunities employer; partnership with and supporting local

organisations/charities; support culture, art and sport; employee volunteering; partnership with

charitable organisations and NGOs; involvement in humanitarian aid and

relief/rescue/medical projects

Anti-bribery and corruption

policy/training; assess and

manage risk in supply chain;

internship, graduate and

apprenticeship programme

50-69%

Engine washing; block time optimisation and fuel-efficient flight plans;

introduce latest engine technology (reducing NOx);

environmentally friendly ground vehicles; on-board

recycling and waste reduction; office recycling;

responsible catering products; compliance with ICAO Chapter 4 and/or 14

noise level; work locally with airports and organisations to implement noise mitigation

activities

CSR/ethics training to increase awareness; eco-efficient flying

training; performance management system; safety and risk management

system; increase number of women in management; enhance cultural diversity of employees; support

education for youth; donations to charitable organisations; donate

frequent-flyer miles initiative

Ombudsman system/whistle-

blower procedure;

investment in local

infrastructure

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Appendix 3 – Sample Introduction

Ryanair

Established in 1985, Ryanair is an Irish low-cost airline inspired by Southwest Airlines.

Ryanair operates a low-cost, scheduled-passenger airline serving short-haul, point-to-point

routes between Ireland, the United Kingdom, Continental Europe, and Morocco,

predominantly from secondary airports with one of the largest fleets counting 332 aircrafts.

From January 1994, its chief executive officer is Michael O’Leary, under whose management

Ryanair further developed the low-cost model (also known as no-frills model) originated by

Southwest Airlines. Ryanair is Europe’s largest low-cost carrier and also one of the world's

largest airlines as measured by international passengers carried. The carrier has its largest

base at London Stansted Airport and second-largest base at Dublin Airport (Ryanair, 2016).

easyJet

easyJet Airline Company Limited (stylised as easyJet) is a British low-cost airline

carrier, headquartered at London Luton Airport and operates a fleet of 241 aircrafts. The

parent company, easyJet plc, is listed on the London Stock Exchange. Simultaneously,

easyJet is one of the easyGroup subsidiaries, founded in 1995 by Sir Stelios Haji-Ioannou

who is the owner of the whole Group and still remains a major shareholder in the airline. The

carrier operates a dense network of flights in the European region and contrary to Ryanair it

predominantly uses primary airports (easyJet, 2016).

Air Berlin

Air Berlin is a second largest carrier in Germany with a fleet counting 153 aircrafts. Air

Berlin distinguishes itself from other traditional LCCs in the sense that it operates a global

network rather than just regional, including some long-haul flights. It also has partnerships

with other airlines and is a member of One World alliance (Air Berlin, 2016). This would

appear as typical features of FSCs, but due to its operational model and focus on low-fares,

Air Berlin is still considered as a low-cost carrier. Air Berlin has been assigned the label of a

LCC also in some previous studies (Coles et al., 2014).

Norwegian Air Shuttle (Norwegian)

Norwegian Air Shuttle, trading as Norwegian, was established in 1993. It is one of the

Europe’s largest LCCs measured by passengers-carried and appears to be further growing

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rapidly. It operates over 400 routes to more than 130 destinations. Norwegian has a fleet of

99 aircrafts at its disposal. Its previous focus was on European region and surrounding

destinations, but in 2013 Norwegian was one of the first carriers to start operating long-haul

low-cost flights (Norwegian, 2016).

Flybe

Flybe is a British low-cost airline based in Exeter, UK. Flybe is the largest truly

regional/local airline in Europe. Its focus is on operating routes where there is not a sufficient

demand to attract mainline services from traditional carriers, often to more isolated

destinations. Flybe uses a fleet consisting of 66 smaller aircrafts for this purpose (Flybe,

2016).

Pegasus Airlines

Pegasus Airlines is a Turkish low-cost airline dating back to 1990. It started as a

domestic airline and later on it grew its operations internationally. Pegasus, using a fleet of 69

aircrafts, operates short to medium range routes within its point-to-point network, focusing

predominantly on Europe (Pegasus Airlines, 2016).

Wizz Air

Wizz Air is a relatively young Hungarian low-cost carrier established only in 2003 and

based in Budapest. Thanks to its growth in the past decade it has a solid position as a leading

low-cost airline in Central and Eastern Europe, operating a dense network of point-to-point

routes within European region and few surrounding destinations. Its fleet size is currently 55

aircrafts. Wizz Air also uses predominantly secondary airports (Wizz Air, 2016).

Lufthansa Group

Deutsche Lufthansa, commonly known as Lufthansa, was founded in 1953 and is part

of Lufthansa Group with its main hubs in Frankfurt and Munich. Lufthansa is a German

airline and combined with its subsidiaries it is the largest European airline and the largest

aviation group in the world operating a fleet size of 615 aircrafts. The carrier operates a

world-wide network of routes and is a founding member of Star Alliance. Lufthansa Group

consists of multiple airlines, being 4 flag carriers, 2 cargo carriers and 2 low-cost carriers –

Lufthansa Passenger Airlines, SWISS, Austrian Airlines, Brussels Airlines, Lufthansa Cargo,

Aero Logic, Germanwings, and Eurowings. Additionally, Sun Express is a joint-venture of

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Lufthansa Group and Turkish Airlines (Lufthansa Group, 2016). Lufthansa Group reports

together and only makes group’s reports available online. However, in this study, we treat

Lufthansa Group as a FSC, even though it includes Germanwings and Eurowings which are

LCCs. This is because the majority of Lufthansa Group’s business consists of FSCs and the

two LCCs within it are rather small.

Air France-KLM

Air France-KLM is a French-Dutch airline holding company which was created after

the merger between Air France and KLM in 2004, currently operating a fleet consisting of

573 aircrafts. The group also includes passenger airlines HOP!, Transavia, and KLM

cityhopper (Air France-KLM, 2016). Again the company publishes its reports together for all

the carriers within it. Even though some of its members are LCCs, again as with Lufthansa

Group, we treat Air France-KLM as a FSC in this study as the majority of its business falls

under the characteristics of FSC.

British Airways

British Airways (often shortened to BA) is the flag carrier of the United Kingdom,

established in 1974, and with its main hubs in London. It operates global network of routes

and is part of One World alliance. BA’s fleet comprises of 280 aircrafts. BA belongs to the

International Airlines Group (IAG), which is its parent airline holding company, formed in

2011 by the merger of BA and Iberia (flag carrier of Spain). Currently IAG consists of BA,

Iberia, IAG Cargo, Aer Lingus, and Vueling (British Airways, 2016; IAG, 2016). Unlike

Lufthansa or Air France-KLM, IAG makes separate reports of its member airlines available

on its website, this also includes separate BA’s CSR website. Therefore, in this study only

BA’s reports and CSR website will be part of the data set.

Turkish Airlines

Turkish Airlines is a flag-carrier of Turkey, founded in 1933, with a fleet size of 261

aircrafts. It is a global carrier with over 283 destinations, making it the world’s fourth-largest

carrier measured by number of destinations. Turkish Airlines is a member of Star Alliance

(Turkish Airlines, 2016).

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Aeroflot

Aeroflot, established in 1923 and based at Moscow, is a national flag-carrier of Russia

and one of the world’s oldest airlines. It is a member of Sky Team and operates domestic as

well as international network of routes spanning Europe, Asia, North America and Africa,

with a fleet of 168 aircrafts (Aeroflot, 2016).

Scandinavian Airlines

Scandinavian Airlines, previously Scandinavian Airlines System and commonly known

and stylized as SAS, is the largest airline in Scandinavia and a joint flag carrier of Sweden,

Norway and Denmark. SAS Group’s fleet accounts to 147 aircrafts. The airline was

established in 1946 and is one of the founding members of Star Alliance. The focus of its

network is predominantly on Europe with only few destinations in Asia and the USA (SAS

Group, 2016).

Alitalia

Alitalia - Società Aerea Italiana, operating as Alitalia, is the flag carrier of Italy, with

history dating back to 1999. Currently, Etihad Airways, a national carrier of the United Arab

Emirates, has a 49% stake in Alitalia. Alitalia is a member of Sky Team and operates a global

network of routes spanning 5 continents, using a fleet of 120 aircrafts. It has hubs in Rome

and in Milan (Alitalia, 2016).