Route-based performance evaluation for airlines – A metafrontier data envelopment analysis approach

Abstract

The international aviation industry is essential for both passengers and commodities. Previous literature tends to evaluate aviation performance from the perspective of airlines or airports. However, each route faces a different operating environment and thus has a different profit portfolio. Therefore, a route-based performance evaluation can better reflect the range of operating characteristics by considering the differing characteristics of routes. This study conducted an empirical analysis of 112 international routes from two Taiwanese airlines. To first identify the key variables that have a significant impact on airline performance, a systematic literature review was conducted using a meta-analysis approach. This study then used those key variables to measure route-based performance with data envelopment analysis (DEA) modeling. Finally, k-medoids cluster analysis was used to explore successful factors for air route performance as complementary research to the DEA modeling. Model results show three groups of routes can be clearly identified by considering route efficiency. Each group has very distinct route characteristics (e.g., Asian routes vs US routes) and some route planning recommendations can be developed. The results of this study can help operators and policy makers improve operating performance and identify key factors for route development and planning.