Efficiency in Thailand’s air transport industry in the era of air liberalisation policies

Abstract

Air liberalisation and open skies policies have benefited countries by generating economic growth. However, as the sky has become overcrowded, the increasing competition has pressured airlines to control costs in order to maintain profitability. Efficient use of resources is an important topic for the airlines. Thailand’s air transport industry is unique compared with that in its neighbouring countries. The number of low cost airlines operating in the country has made Thailand a major aviation hub in the region. The developments and changes in Thailand’s air transport industry have raised questions as to whether these have brought any significant changes to airline productivity and efficiency. This study adopted the data envelopment analysis model to examine the efficiency of five airlines in Thailand for the nine years from 2011 to 2019. The airlines, of various fleet sizes, pattern of ownership and business models were examined. The study investigated both the technical and scale efficiency of the airlines and concluded that budget airlines are not necessarily more efficient than full service carriers, private airlines are more efficient than state-owned airlines, and small to medium size airlines are more efficient than large airlines.