The effects of alliances and size on airlines’ dynamic operational performance

Abstract

The purpose of this paper is to examine dynamic efficiency and its determinants in a set of global airlines from several countries by means of a two-stage dynamic network data envelopment analysis (DNDEA). In the first stage, the DNDEA based on a slack-based measure is used to evaluate the dynamic production efficiency, service efficiency and overall operational efficiency of 30 global airlines for the period from 2009 to 2012, which explores the linkages in operations among airlines' internal divisions as well as the dynamic operational performance, with consideration of carry-over activities. In the second stage, the impacts of alliances and size on the operational performance of airlines are explored by adopting a bootstrapped truncated regression model. The empirical results reveal the following: (1) the weight setting on importance of overall operational efficiency on a yearly basis has significant impact on the operational efficiency of airlines; (2) the overall operational efficiency shows a yearly declining trend; (3) joining an airline alliance, the airlines' total assets and the GDP have significant impacts on operational performance.