Service Quality and Financial Performance Analysis in Low-Cost Airlines: An Integrated Multi-Criteria Quadrant Application

Abstract

This study aims to evaluate the financial performance and service quality of major low-cost carriers (LCCs) operating in Europe. For this purpose, 6 LCCs were evaluated based on 7 service quality and 10 financial attributes. Due to the multidimensional nature of the performance phenomenon, integrated multi-criteria decision making (MCDM) methods, including the criteria importance through intercriteria correlation (CRITIC), technique for order preference by similarity to ideal solution (TOPSIS), and evaluation based on distance from average solution (EDAS); were adopted in the study. After the performance evaluation, the airlines were positioned on the Quadrant matrix according to their performance in two measurements. The study shows that Ryanair is located in region A, which is the best region in the matrix. In addition, it is found that the increase in service quality has an adverse effect on financial performance. Finally, a sensitivity analysis was conducted to test the robustness of the calculation and the stability of the ranking. As a result of the analysis, the applicability of the proposed approach was confirmed.