An outsourcing provider decision model for the airline industry

Abstract

Outsourcing has become the next critical business process that needs to be addressed by airlines. Successful outsourcing depends on the selection of the appropriate provider. However, this practice is not always successful and its theoretical justification has not been fully explored. Some significant efforts have been made based on the transaction cost economics framework. Different from previous studies, we propose a new hybrid Multiple Criteria Decision-Making (MCDM) model, which combines the Decision Making Trial and Evaluation Laboratory and the Analytical Network Process (DANP) method. Our model overcomes problems with previous methods. Our results show that: 1) employees with good knowledge skills contribute to better service quality; 2) a good relationship between airlines and their partners is the foundation of a successful outsourcing activity; and 3) risk plays a major role in the outsourcing evaluation system, and has the greatest effect on the other dimensions. The model can be extended to other service sectors.