Specific intangible assets in the air transportation sector: a theoretical construct for their identification and valuation

Abstract

This paper focuses on the importance of intangible assets in the entire value creation process. Based on the Portuguese airlines companies, the paper presents a theoretical framework approach about intangible assets identification and valuation for the air transportation sector as a whole. It is now irrefutable that a new perspective has replaced traditional value chains, based on the linear activities alignment: the innovation cycle (recognizing specific intangibles as value key drivers on wealth creation process) dynamically interlinked with the operational cycle. The authors also underline the first step approach for a deep research concerning intangibles, and their identification and valuation.

Davenport and Prusak (1998, p. 5) wrote that "knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experience and information". Since then, several approaches have been followed in order to identify the knowledge scheme inside the organizations. Some have argued that this dynamic scheme is based on intangibles that increase the company's value, and therefore, the stakeholders expect returns. Broadly, intangible assets appear as an important issue in the accounting rules frontier - a tension between those responsible for accounting standards establishment and those who use the information, are indeed evident. Intangibles have a value but due to their volatile nature and difficulties in their measurement, they are normally excluded from the financial statements. However, according to their linkage and contribution to certain businesses, the importance for stakeholders is irrefutable. Traditional financial reports, based on traditional accounting rules that exclude the potential return, seem to be irrelevant for decision-making. Thus, intangibles identification and measurement approaches can contribute to a better decision-making.