Pollution abatement costs change decomposition for airlines: An analysis from a dynamic perspective

Abstract

In this paper, we define the pollution abatement cost (PAC) as the ratio of the outputs when the undesirable outputs are freely disposed to the outputs when the undesirable outputs are weakly disposed. Then we propose a Dynamic Environmental DEA model to calculate the pollution abatement cost change indexes, which are decomposed into technical change index, input level change index and undesirable output production change index. An empirical study is done based on the actual data of 18 large global airlines from 2008 to 2014. The main findings are: (1) Delta Air Lines has the largest PAC changes. (2) Most airlines' PACs have decreased. (3) The financial crisis of 2008 and the application of biofuel aircrafts have important impacts on the PAC change.