The problem of introducing risk in investment selection criteria: Practical application flight routes from Castellón Airport

Abstract

In this paper we deal with the problem of how to introduce the risk in the investment selection criteria. It goes from simple criteria- that do not take into account the risk- to more complex selection criteria which take into account the uncertainty (risk). We explain the different criteria that exist which serve to decide whether to make an investment project or not. We analyse what we consider the most appropriate and how it has an effect upon the existing variables of the models. After looking how to introduce the risk on these criteria, we will conduct a case study in which we simulate how these methods work in the business world. We base ourselves on a “low-cost” airline that wants to analyse whether it is feasible create flight routes joining Castellon Airport to other airports in the world or not.