A DEA study of airlines in India

Abstract

The objective of this study is to investigate the technical and scale efficiencies of all airlines across service type, size and ownership structures operating in India during 2006–2010. The variable returns to scale (VRS) model of Data Envelopment Analysis (DEA) with two inputs and two outputs is used. For additional insights, Input Efficiency Profiling (IEP) model of DEA is also used. The key findings are: a large majority of budget airlines have been found to be efficient; while smaller private sector airlines have been efficient, both the larger and smaller public sector airlines have also been efficient; the public sector airlines, although incurring financial losses, are also operating at their most productive scale size; of the two inputs, there is greater inefficiency with respect to the operating cost input. These findings are consistent with other studies of airlines that found size, type of service and ownership to impact efficiency.