Exploring the operational and environmental performance of Chinese airlines: A two-stage undesirable SBM-NDEA approach

Abstract

Rapid economic development in China have resulted in the booming demand for comfortable and fast travel mode, and promoted the rapid development of aviation industry in recent years. As an important source of greenhouse gas emissions, airlines’ operational efficiency and environmental issues have been widely concerned in achieving the goal of cleaner production of aviation industry. Due to the limitations of traditional DEA approach, which known as a black box, the specific reasons for the inefficiency of airlines cannot be explored. This paper contributed to current literature by introducing the two-stage undesirable Network Slack-Based Measure (NSBM) approach to explore Chinese airlines’ multi-stage efficiency: production stage and profit stage, and try to open the black boxes and further explore the characteristics and driving forces of the operational performance in China’s aviation industry. Meanwhile, this paper incorporates CO2 emissions into the calculation by combining the undesirable Slack-Based Measure (SBM) approach and measure the energy efficiency and CO2 emission efficiency to evaluate their environmental performance on the basis of the two-stage framework. The empirical results on nine listed Chinese airlines from 2013 to 2018 showed that all airlines perform better in earning economic profits from carrying capacity, while the low production efficiency in converting production factors into carrying capacity limits the operational efficiency of Chinese airlines. The energy efficiency of Chinese airlines ranks in line with CO2 emission efficiency, while the economic and environmental performance of low-cost airlines remain the best. Further discussion indicated that smaller private airlines tend to achieved better economic and environmental performance through low-cost operations, while the top three airlines in market share need further improvement in operational efficiency and environmental performance. The former should pay attention to the upgrading of flights to ensure a certain market share while maintaining its low-cost operation mode, and the latter needs to improve its management and cost control level to achieve clean development.