Exploring comparative efficiency and determinants of efficiency for major world airlines

Abstract

Purpose– For strategic and competitive insights, this paper aims to measure and benchmark comparative operating efficiencies of major airlines in Asia, Europe, and North America.Design/methodology/approach– The authors employ data envelopment analysis for measuring the relative efficiency of 90 airlines in Asia, Europe, and North America. In addition, the authors use Tobit regression analysis for finding determinants of the efficiency.Findings– Results indicate that the efficiency of the airlines in Europe is the lowest among the airlines in these three regions. Efficiency differences between the airlines in Europe and the airlines in the two other regions (Asia and North America) are statistically significant in terms of technical efficiency and pure technical efficiency, but not significant between the airlines in Asia and North America. For the determinants of efficiency, the authors identified that revenues and expenses were significant for explaining efficiency scores of airlines.Research limitations/implications– Further research is needed to explain the findings that airlines in Europe were less efficient than airlines in Asia and North America. In addition, including variables on customer satisfaction in a future study is desirable.Originality/value– Major contributions of this study include measuring the comparative efficiency of major airlines in Asia, Europe, and North America and finding determinants of the efficiency for strategic insights.