Operational performance of Indian passenger airlines using hierarchical categorical DEA approach

Abstract

The challenges faced by the Indian Aviation market are complex and perplexing for the decision-makers in this sector. This industry has faced debilitating losses during COVID-19 pandemic times. The travel restrictions have been gradually lifted worldwide, and therefore the airlines can expect to witness a growth in domestic and international air passenger traffic during 2021–22. The losses incurred during the pandemic times need to be recovered. Thus, there is an urgent need to strategically plan and improve the operations so that the airlines can perform efficiently and earn revenues. Airlines in India work under heterogeneous environments depending upon their segment of operations. Some of the airlines operate for only domestic passengers and others for both domestic and international passengers. Therefore these airlines must be assessed as per their homogeneous peer group to obtain substantial results. The proposed study has discussed an approach to study airlines' operational performance using hierarchical categorical data envelopment analysis (DEA). The airlines have been categorized based upon their segment of operations. The efficiency of the airlines has been evaluated for the period 2014–19 as per their categorical input value. Window analysis has also been performed for a meaningful analysis of the results. The outcomes of the study will be helpful for policymakers to improvise the present working model of the industry and alleviate their performance.