Using a Bayesian meta-frontier approach to evaluate airline performance: The nexus between airline efficiency and customer satisfaction

Abstract

A balanced panel of 83 airlines during 2011–2019, classified into (a) high perceived service quality and (b) low perceived service quality, was incorporated into the Bayesian meta-frontier framework. Our findings were obtained from applying a novel method to data sourced from the ICAO Data+ and Skytrax databases. We obtained consistent efficiency and meta-technology efficiency estimates, shedding light on airlines’ business models, products, and services to improve their efficiency and customer satisfaction. Specifically, we did not identify a trade-off between customer satisfaction and airline efficiency. However, larger firms were more likely to achieve this dual objective. Airlines classified as having high service quality reported greater allocative inefficiency than their low-quality service counterparts. During periods with or without minor external shocks (e.g., 2011–2019), airlines could offer premium products at reasonable prices or with a better quality and cost-of-service balance (e.g., premium economy cabins, extra legroom, inflight entertainment, and Internet).