Research Articles Open access Double-blind peer reviewed

A longitudinal Perspective on Efficiency of Airlines in Europe and the U.S

Authors

  • Minh-Anh Nguyen Thi (show author details)

    Minh-Anh Nguyen Thi

    National Taiwan Ocean University, Taiwan, Province of China

    Corresponding author

Cite

How to Cite

Nguyen Thi, M.-A. (2021). A longitudinal Perspective on Efficiency of Airlines in Europe and the U.S. SEISENSE Journal of Management, 4(2), 11-24. https://doi.org/10.33215/sjom.v4i2.591

More Citation Formats

Download Citation

Share

Share

  • 1,000views
  • 820downloads

Abstract

The aviation industries in Europe and the US have been well-established since a very early age and have attracted great attention from both industry practitioners and academics. To derive a different perspective on the efficiency levels of airlines operating in the two matured markets, we adopted dynamic data envelopment analysis (DEA). Using the data of the period 2014 – 2016 of 7 European airlines and 9 US airlines that are publicly traded, the study offers an overall picture of airlines' efficiency in the two regions. Notably, the resource flow between the consecutive periods is incorporated into the measure to yield a longitudinal perspective on airlines' efficiency. The study reveals the two major findings. First, most publicly traded airlines in Europe and the US are efficient, except for Hawaiian airline headquartered in the US. Second, Hawaiian airline's inefficiency is majorly contributed by the overuse of the number of employees, consumed fuel, and the deficit of revenue seat-miles in 2014 and 2015. To improve the efficiency level, Hawaiian airlines could consider increasing employee productivity, using more fuel-efficient aircraft, and implementing new marketing strategies to boost sales.

Keywords

Categories

License

Copyright (c) 2021 Minh-Anh Nguyen Thi

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Published in

Vol. 4 No. 2 (2021): SEISENSE Journal of Management View Issue

Reads, last 12 months

2025-122026-11

Article history

  1. ReceivedFebruary 23, 2021
  2. AcceptedMarch 3, 2021
  3. Published March 6, 2021

References

Alperovych, Y., Amess, K., & Wright, M. (2013). Private equity firm experience and buyout vendor source: What is their impact on efficiency?. European Journal of Operational Research, 228(3), 601-611. https://doi.org/10.1016/j.ejor.2013.01.019 DOI: https://doi.org/10.1016/j.ejor.2013.01.019 CrossrefGoogle Scholar

Arjomandi, A., Dakpo, K. H., & Seufert, J. H. (2018). Have Asian airlines caught up with European Airlines? A by-production efficiency analysis. Transportation Research Part A: Policy and Practice, 116, 389-403. https://doi.org/10.1016/j.tra.2018.06.031 DOI: https://doi.org/10.1016/j.tra.2018.06.031 CrossrefGoogle Scholar

Assaf, A. G., & Josiassen, A. (2012). European vs. US airlines: Performance comparison in a dynamic market. Tourism Management, 33(2), 317-326. https://doi.org/10.1016/j.tourman.2011.03.012 DOI: https://doi.org/10.1016/j.tourman.2011.03.012 CrossrefGoogle Scholar

Barros, C. P., & Couto, E. (2013). Productivity analysis of European airlines, 2000–2011. Journal of Air Transport Management, 31, 11-13. https://doi.org/10.1016/j.jairtraman.2012.10.006 DOI: https://doi.org/10.1016/j.jairtraman.2012.10.006 CrossrefGoogle Scholar

Barros, C. P., & Wanke, P. (2015). An analysis of African airlines efficiency with two-stage TOPSIS and neural networks. Journal of Air Transport Management, 44, 90-102. https://doi.org/10.1016/j.jairtraman.2015.03.002 DOI: https://doi.org/10.1016/j.jairtraman.2015.03.002 CrossrefGoogle Scholar

Cao, Q., Lv, J., & Zhang, J. (2015). Productivity efficiency analysis of the airlines in China after deregulation. Journal of Air Transport Management, 42, 135-140. https://doi.org/10.1016/j.jairtraman.2014.09.009 DOI: https://doi.org/10.1016/j.jairtraman.2014.09.009 CrossrefGoogle Scholar

Chang, Y. C., & Yu, M. M. (2014). Measuring production and consumption efficiencies using the slack‐based measure network data envelopment analysis approach: the case of low‐cost carriers. Journal of advanced transportation, 48(1), 15-31. https://doi.org/10.1002/atr.198 DOI: https://doi.org/10.1002/atr.198 CrossrefGoogle Scholar

Chow, C. K. W. (2010). Measuring the productivity changes of Chinese airlines: the impact of the entries of non-state-owned carriers. Journal of Air Transport Management, 16(6), 320-324. https://doi.org/10.1016/j.jairtraman.2010.04.001 DOI: https://doi.org/10.1016/j.jairtraman.2010.04.001 CrossrefGoogle Scholar

Cui, Q., & Li, Y. (2017). Airline efficiency measures using a Dynamic Epsilon-Based Measure model. Transportation Research Part A: Policy and Practice, 100, 121-134. https://doi.org/10.1016/j.tra.2017.04.013 DOI: https://doi.org/10.1016/j.tra.2017.04.013 CrossrefGoogle Scholar

Cui, Q., Li, Y., & Lin, J. L. (2018). Pollution abatement costs change decomposition for airlines: An analysis from a dynamic perspective. Transportation Research Part A: Policy and Practice, 111, 96-107. https://doi.org/10.1016/j.tra.2018.03.014 DOI: https://doi.org/10.1016/j.tra.2018.03.014 CrossrefGoogle Scholar

Emrouznejad, A., & Yang, G. L. (2018). A survey and analysis of the first 40 years of scholarly literature in DEA: 1978–2016. Socio-Economic Planning Sciences, 61, 4-8. https://doi.org/10.1016/j.seps.2017.01.008 DOI: https://doi.org/10.1016/j.seps.2017.01.008 CrossrefGoogle Scholar

Good, D. H., Nadiri, M. I., Röller, L. H., & Sickles, R. C. (1993). Efficiency and productivity growth comparisons of European and US air carriers: a first look at the data. Journal of Productivity analysis, 4(1-2), 115-125. https://doi.org/10.1007/978-94-011-2200-9_8 DOI: https://doi.org/10.1007/978-94-011-2200-9_8 CrossrefGoogle Scholar

Good, D. H., Röller, L. H., & Sickles, R. C. (1995). Airline efficiency differences between Europe and the US: implications for the pace of EC integration and domestic regulation. European Journal of Operational Research, 80(3), 508-518. https://doi.org/10.1016/0377-2217(94)00134-X DOI: https://doi.org/10.1016/0377-2217(94)00134-X CrossrefGoogle Scholar

Gramani, M. C. N. (2012). Efficiency decomposition approach: A cross-country airline analysis. Expert Systems with Applications, 39(5), 5815-5819. https://doi.org/10.1016/j.eswa.2011.11.086 DOI: https://doi.org/10.1016/j.eswa.2011.11.086 CrossrefGoogle Scholar

Hung, S. W., He, D. S., & Lu, W. M. (2014). Evaluating the dynamic performances of business groups from the carry-over perspective: A case study of Taiwan׳ s semiconductor industry. Omega, 46, 1-10. https://doi.org/10.1016/j.omega.2014.01.003 DOI: https://doi.org/10.1016/j.omega.2014.01.003 CrossrefGoogle Scholar

Kottas, A. T., & Madas, M. A. (2018). Comparative efficiency analysis of major international airlines using Data Envelopment Analysis: Exploring effects of alliance membership and other operational efficiency determinants. Journal of Air Transport Management, 70, 1-17. https://doi.org/10.1016/j.jairtraman.2018.04.014 DOI: https://doi.org/10.1016/j.jairtraman.2018.04.014 CrossrefGoogle Scholar

Lampe, H. W., & Hilgers, D. (2015). Trajectories of efficiency measurement: A bibliometric analysis of DEA and SFA. European Journal of Operational Research, 240(1), 1-21. https://doi.org/10.1016/j.ejor.2014.04.041 DOI: https://doi.org/10.1016/j.ejor.2014.04.041 CrossrefGoogle Scholar

Liu, J., Zhu, J., & Zhang, J. (2018). A DEA-based approach for competitive environment analysis in global operations strategies. International Journal of Production Economics, 203, 110-123. https://doi.org/10.1016/j.ijpe.2018.05.029 DOI: https://doi.org/10.1016/j.ijpe.2018.05.029 CrossrefGoogle Scholar

Lu, W. M., Wang, W. K., & Kweh, Q. L. (2014). Intellectual capital and performance in the Chinese life insurance industry. Omega, 42(1), 65-74. https://doi.org/10.1016/j.omega.2013.03.002 DOI: https://doi.org/10.1016/j.omega.2013.03.002 CrossrefGoogle Scholar

Merkert, R., & Pearson, J. (2015). A non-parametric efficiency measure incorporating perceived airline service levels and profitability. Journal of Transport Economics and Policy (JTEP), 49(2), 261-275. https://www.jstor.org/stable/jtranseconpoli.49.2.0261 CrossrefGoogle Scholar

Merkert, R., & Williams, G. (2013). Determinants of European PSO airline efficiency–Evidence from a semi-parametric approach. Journal of Air Transport Management, 29, 11-16. https://doi.org/10.1016/j.jairtraman.2012.12.002 DOI: https://doi.org/10.1016/j.jairtraman.2012.12.002 CrossrefGoogle Scholar

Morrell, P. S., & Taneja, N. K. (1979). Airline productivity redefined: an analysis of US and European carriers. Transportation, 8(1), 37-49. https://doi.org/10.1007/BF00149850 DOI: https://doi.org/10.1007/BF00149850 CrossrefGoogle Scholar

Omrani, H., & Soltanzadeh, E. (2016). Dynamic DEA models with network structure: An application for Iranian airlines. Journal of Air Transport Management, 57, 52-61. https://doi.org/10.1016/j.jairtraman.2016.07.014 DOI: https://doi.org/10.1016/j.jairtraman.2016.07.014 CrossrefGoogle Scholar

Saranga, H., & Nagpal, R. (2016). Drivers of operational efficiency and its impact on market performance in the Indian Airline industry. Journal of Air Transport Management, 53, 165-176. https://doi.org/10.1016/j.jairtraman.2016.03.001 DOI: https://doi.org/10.1016/j.jairtraman.2016.03.001 CrossrefGoogle Scholar

Tone, K. (2001). A slacks-based measure of efficiency in data envelopment analysis. European journal of operational research, 130(3), 498-509. https://doi.org/10.1016/S0377-2217(99)00407-5 DOI: https://doi.org/10.1016/S0377-2217(99)00407-5 CrossrefGoogle Scholar

Tone, K., & Tsutsui, M. (2010). Dynamic DEA: A slacks-based measure approach. Omega, 38(3-4), 145-156. https://doi.org/10.1016/j.omega.2009.07.003 DOI: https://doi.org/10.1016/j.omega.2009.07.003 CrossrefGoogle Scholar

Tsionas, M. G., Chen, Z., & Wanke, P. (2017). A structural vector autoregressive model of technical efficiency and delays with an application to Chinese airlines. Transportation Research Part A: Policy and Practice, 101, 1-10. https://doi.org/10.1016/j.tra.2017.05.003 DOI: https://doi.org/10.1016/j.tra.2017.05.003 CrossrefGoogle Scholar

Yu, M. M., Chang, Y. C., & Chen, L. H. (2016). Measurement of airlines’ capacity utilization and cost gap: Evidence from low-cost carriers. Journal of Air Transport Management, 53, 186-198. https://doi.org/10.1016/j.jairtraman.2016.03.005 DOI: https://doi.org/10.1016/j.jairtraman.2016.03.005 CrossrefGoogle Scholar

Yu, M. M., Chen, L. H., & Chiang, H. (2017). The effects of alliances and size on airlines’ dynamic operational performance. Transportation Research Part A: Policy and Practice, 106, 197-214. https://doi.org/10.1016/j.tra.2017.09.015 DOI: https://doi.org/10.1016/j.tra.2017.09.015 CrossrefGoogle Scholar

Similar articles

Chosen by the keywords and the section they share with this article.