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Race to the bottom or swimming upstream: Performance analysis of US airlines

Dipasis Bhadra ()

Journal of Air Transport Management, 2009, vol. 15, issue 5, 227-235

Abstract: Data envelopment analysis is used to examine inter-temporal and peer group airline efficiency. Results for the US for 1985–2006 indicate that airline performance is converging over time. In particular, airlines inter-temporal inefficiency peaked earlier and then converged. Furthermore, using Tobit specifications it is seen that while demand intensity matters less in determining airlines inter-temporal inefficiency, their influence is stronger in determining peer group inefficiency. Block time, a representative of operational factors, tends to negatively impact airlines efficiency by imposing burdens on airline operations. Among the structural cost and revenue factors, fuel cost tends to affect inter-temporal inefficiency more robustly than it does to peer group efficiency. Labor pay tends to reduce inefficiency in case of inter-temporal while increasing peer group inefficiency. The events of September 11th had little or no impact on inter-temporal inefficiency but tended to reduce peer group inefficiency in a significant way. Finally, airlines efficiency tends to be robustly affected by block hours; reducing them increases efficiency.

Keywords: Economic efficiency; Low-cost airlines; Data envelopment analysis; US airlines (search for similar items in EconPapers)
Date: 2009
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Handle: RePEc:eee:jaitra:v:15:y:2009:i:5:p:227-235