How to establish input and output targets for airlines with heterogeneous production technologies: A nash bargaining DEA approach within the meta-frontier framework

Ming-Miin Yu and Ipsita Rakshit

Journal of Air Transport Management, 2024, vol. 116, issue C

Abstract: In order to take into consideration the presence of technological heterogeneity in the aviation industry, numerous studies over the past ten years have embraced the data envelopment analysis (DEA)-based meta-frontier framework. Since group targets and meta targets are calculated independently to evaluate the technology gap in airlines, there is a possibility of obtaining unrealistic targets. Estimating the projected inputs and outputs of the evaluated units separately at both the group and meta-frontier does not automatically ensure superiority on the meta-frontier compared to the group frontier. Our proposed combined Nash bargaining model that integrates group technology and metatechnology presents a potential answer to the current unreasonable targets issue and gives more reliable outcomes. The results of the empirical application on a dataset of Alliance and Non-alliance airlines show that the proposed approach generates targets for inputs and outputs which are realistic and optimal, as well as a valid and reasonable technology gap. The finding thus validates the utilisation of our suggested model and it can be used by airline managers to improve the airline operational process.

Keywords: Airlines; Data envelopment analysis; Meta-frontier analysis; Target setting (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:116:y:2024:i:c:s0969699724000413

DOI: 10.1016/j.jairtraman.2024.102576

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