Measurement of airlines’ capacity utilization and cost gap: Evidence from low-cost carriers

Ming-Miin Yu, Yu-Chun Chang and Li-Hsueh Chen

Journal of Air Transport Management, 2016, vol. 53, issue C, 186-198

Abstract: The aim of this paper is to evaluate the capacity utilization and cost gap between actual and global long-run minimum costs. Based on the data for thirteen low-cost carriers around the world for the year 2010, an input-oriented data envelopment analysis model is used to estimate the physical capacity utilization and cost gap between actual and global long-run minimum costs. The empirical results show that more than half of low-cost carriers should improve their capacity utilization, and all low-cost carriers should enhance their market efficiency and reduce their excess costs. Of the thirteen low-cost carriers, three should improve their technical efficiency, four should re-distribute the mix of variable inputs, all thirteen should pay lower prices for all variable inputs, and ten should enhance the utilization rate of their fixed factors.

Keywords: Low-cost carriers; Data envelopment analysis; Efficiency; Capacity utilization (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:53:y:2016:i:c:p:186-198

DOI: 10.1016/j.jairtraman.2016.03.005

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