Kennedy Modugu

The relevance of corporate environmental, social, and governance performance (ESG) has increased significantly during the last few years. The airline industry is susceptible to such environmental, social, and governance practices, which explains its selection for the analysis purposes in this study. This paper analyzes the influence of the Travel & Tourism Competitiveness Index and its constituent factors on environmental, social, and governance performance variables in a sample of leading airline companies worldwide with historical data available from 2013 to 2019. The study required analyzing panel data using a panel-corrected standard error model. The results suggest that airlines headquartered in countries with ideal conditions for operating businesses and outstanding information and communication technology readiness show excellent environmental, social, and governance performance. However, the findings also imply that airline companies headquartered in countries with heavy government influence on the airline industry sector measured by the government prioritization of the domestic travel and tourism sector have poor environmental, social, and governance performance. Similarly, the analysis provided evidence that countries well positioned to join national air service arrangements and subscribe to regional trade agreements have airline companies with excellent environmental, social, and governance performance metrics. The reported results can be priceless for policymakers designing national travel and tourism policies to enhance domestic airline firms’ environmental, social, and governance performance.