Technical Efficiency in Airlines Under Regulated and Deregulated Environments*

1997

This paper takes an innovative approach to test the relationship between technical efficiency and the market structure hypothesis which states that competitive pressure enhances relative efficiency. DEA and FDH time series of technical efficiency scores, for a panel of 11 US airlines observed quarterly during 1970-1990, are examined for cointegration and convergence. For almost all firm pairs (>90% for both

Journal of Transport Economics and Policy, 2014

The authors would like to thank the anonymous referees and editor for their helpful suggestions. Special thanks to Benjamin Hampf for his assistance and providing us with the R-codes for generating the ML bootstrapping. We also like to thank the National Library Board of Singapore for their assistance in data retrieval.

Journal of Productivity Analysis, 1993

In this paper we carry out technical efficiency, and productivity growth comparisons among the four largest European carriers and eight of their American counterparts. The time period of our comparisons is 1976 through 1986. This is a particularly interesting period since it begins just after the informal steps toward deregulation in the United States and ends just prior to the introduction of the first wave of reforms by the Council of Ministers in Europe. We also identify the potential efficiency gains of the European liberalization by comparing efficiency differences between the two carrier groups. The reductions in inefficiency describe the amount that inputs can be decreased without altering output.

2013

This study models the joint production of desirable and undesirable output production (that is, CO2 emissions) of airlines. The Malmquist-Luenberger productivity index is employed to measure productivity growth when undesirable output production is regulated and unregulated. The results show that pollution abatement activities of airlines lowers productivity growth which suggests the traditional approach of measuring productivity growth, which ignores CO2 emissions, overstate “true” productivity growth. JEL Classifications: C43; D24; L93; Q50

Journal of Air Transport Management, 2008

This paper analyses airlines' efficiency and productivity using two different methodologies: data envelopment analysis and total factor productivity, and we additionally investigate which factors account for differences in efficiency. Our main findings show that low cost carriers are in general more efficient than full service carriers, efficiency and the dispersion of both data envelopment analysis and total factor productivity indexes amongst airlines differ according to geographical areas, which may be a result of different legislation and deregulation processes, and so of specific competitive conditions, labour is the only input that definitively influences productivity, and larger airlines are more efficient, suggesting the existence of economies of scale.

Journal of Applied Sciences, 2011

During the last years enormous attention has been given to the assessment and improvement of the performance of productive systems. In this context, there are two types of modelling methods of efficiency measurement: a non parametric one, represented by Data Envelopment Analysis (DEA), and a parametric one, represented by Stochastic Frontier Analysis (SFA). The main objective of this empirical study is to evaluate the operational performance of an Italian airline for the year 2007 by using these two alternative methodologies. Then, the technical efficiency estimates obtained from the two techniques are compared.

Journal of Air Transport Management, 2019

The purpose of the paper is to analyze performance of major carriers across Europe, with particular focus on those operating in Central and South East Europe. With the ultimate aim of becoming fully integrated into the European Union aviation market, these airlines underwent significant transformations in the last two decades. The study utilizes the Fuzzy Theory-based Data Envelopment Analysis to evaluate efficiency of the airlines since some of the indices (e.g. punctuality) could be subject to imprecise measurement. The set of airlines contains several major airlines operating in Western, Central and SouthEast Europe in 2008 and 2012, the years that coincide with the economic crisis and overall financial recovery. The results of the model indicate that Central and SouthEast European carriers tend to be less efficient in comparison to Western counterparts over the period observed, but their overall efficiency has generally improved based on the Malmquist index. Moreover, based on the calculation of the Malmquist index one can reveal that despite the fact that most of the Central and SouthEast Europe airlines succeeded to increase their technical efficiency through adoption of new technologies, they still remained out of the efficient frontier.

In this paper we estimate technical efficiency in International Air Transport, by means of Stochastic Frontier Analysis (SFA) using a panel set of the world's twenty-four (24) largest network airlines, for the period 1991-2000. The results are compared to those from Data Envelopment Analysis (DEA), a popular approach for efficiency measurement in the literature. Findings suggest that airlines experience constant returns to scale, while technical efficiency ranges between 51% and 97% approximately. Furthermore, the level of technology experienced a slight increase, while the privatization of few of the airlines in the data set didn't seem to affect their technical efficiency. Results from SFA and DEA do not vary significantly.

2008

The paper estimates technical efficiency in International Air Transport, within the framework of Stochastic Frontier Analysis. It is based on Panel Data for twenty four (24) companies worldwide, over the time period 1991-2002 and employs the Cobb-Douglas specification of the production function. A first finding of our investigation is that air transportation companies, worldwide, experienced (almost) constant returns to scale. A second interesting result is that technical efficiency of air transportation companies, worldwide, ranged between 37% and 100% with an average equal to about 89%. However, the industry’s performance worldwide in terms of technical efficiency does not follow a clear trend in time, whereas some differences in performance depending on the corporation’s continent of origin are observed. More precisely, the American, Australian and Asian have left behind the European companies. Also, the level of technology experienced a slight increase, while the privatization o...

Higher productivity of airline industry is the key to faster economic growth of an economy. In this backdrop, this study estimates and compares average employee productivity (i.e. partial productivity) of three Asian airlines: Pakistan International Airline; Singapore International Airline; and Air Lanka over the period 1995-2009. According to results of this study, Singapore performed the best in terms of average employee productivity and average stage length. Air Lanka performed the best in terms of unit cost. Pakistan International Airline performed poorly in terms of all the three measures. Pakistan International Air line can improve in all the three fields, Singapore can improve in unit cost terms and Sri Lanka can improve in average employee productivity and average stage length.