Efficiency of global airlines incorporating sustainability objectives:A Malmquist-DEA approach

Despite the impact of the COVID-19 pandemic, airline managers are still expected to look beyond financial and operational metrics to include sustainability goals that address key environmental, social, and governance aspects of the airline business. While there is a considerable body of literature addressing airline efficiency in terms of environmental performance, studies that integrate the various dimensions of sustainability are notably scarce. This paper aims to fill this gap by estimating technical efficiency using a sample of 34 airline groups between 2019 and 2022, with a Malmquist-Data Envelopment Analysis (DEA) methodology that includes financial, operational, and sustainability scores (Environmental and Social). Our results show a productivity loss between 10% and 14% during the COVID-19 period, with a better performance once the carriers are credited for their sustainability achievements. Using a second-stage bootstrapped truncated regression, we confirm the positive impact of hubbing operations and also find significant differences across geographical regions

The change of the Spanish tourist model: From the Sun and Sand to the Security and Sand

There is evidence of specialisation in tourism destinations, but also a lack of literature regarding itsimpact on tourism regional performance. This study aims to contribute to the analysis of thedeterminants of tourism performance. To this end, the efficiency of 17 Spanish regions has beenestimated by meta-frontier data envelopment analysis techniques over the 2008-2018 period. In thesecond stage, we adopt the bootstrapping method proposed by Simar and Wilson to measure theimpact of explanatory factors on tourism efficiency. The results suggest that regions specialised intourism may achieve higher efficiency levels. However, there is evidence of a catching-up process inthe tourism technology of the Spanish regions over the last 10 years. Results also suggest thatsand(kilometres of beaches) andinsecurityare the key drivers of tourism efficiency. Moreover,naturalattractionsis the factor that most positively influences efficiency in non-specialised region

Spatial competition and efficiency : an investigation in the airport sector

This paper analyses the potential impact of airport competition on technical efficiency by applying the spatial stochastic frontier approach (SSFA) rather than traditional model (SFA). The SSFA allows to isolate the cross-sectional spatial dependence and to evaluate the role of intangible factors in influencing the airport economic performance, through the inclusion of the distance matrix and the shared destinations matrix, calibrated for different distances. By analysing statistical differences between the traditional and the spatial model, it is possible to identify the competition effects. This study includes 206 airports at worldwide level. First, the results show the existence of the spatial component, that could not be otherwise captured by the traditional SFA. Moreover, airport competition is found to affect the efficiency level with either a positive or a negative effect, depending on the distance considered in the spatial model

The global airline industry: an assessment of the impact of low-cost carriers on the technical efficiency of full-service airlines

Since the emergence of the first low-fare airline, Southwest Airlines, we have witnessed the spread of the low-cost phenomenon in different regions of the world. The simplicity, the low fares and the focus on core business (flying) have been the critical basis for their success, and the concern of traditional operators who see their market positioning threatened. To remain competitive, full-service operators have been forced to redefine their business model. With great interest in the innovative nature of low-cost carriers, literature has covered inter-business model comparisons of efficiency, as well as on the analysis of the strategies carried out by full-service to adapting to the increased competition. However, there seems to be no study on the impact of low-cost operators on the technical efficiency of full-service airlines. Thus, this thesis aims to analyse the impact of the low-cost regional market share on the technical efficiency of full-service airlines domiciled in the same region. In order to pursue this analysis, a two-stage Data Envelopment Analysis was implemented. Initially, bootstrapped efficiency scores were estimated for a set of 137 passenger airlines. Subsequently, the estimated efficiency measures were used as a dependent variable in a truncated bootstrap regression to identify the determinants of the technical efficiency. Results suggest that larger low-cost market shares are associated with lower input uses for the same full-service carriers’ output levels based on that region. This relationship might be explained by the adoption of better management practices that approach the full-service model to the low-cost model.A criação da primeira companhia aérea de baixo-custo, a "Southwest Airlines", impulsionou o desenvolvimento mundial de tantas outras no sector da aviação. A simplicidade, os preços baixos e o foco no principal objetivo da atividade (voar) têm sido a chave do seu sucesso e, simultaneamente, uma ameaça às companhias aéreas tradicionais. Inevitavelmente, os operadores de serviço-completo têm vindo a realizar mudanças no seu modelo de negócio para conseguirem manter-se competitivas. Recentemente, alguns estudos têm-se focado na comparação entre os dois modelos de negócio e na análise das estratégias das transportadoras tradicionais ao aumento concorrencial. No entanto, parece não existir qualquer investigação acerca do impacto dos operadores de baixo-custo na eficiência técnica dos tradicionais. Assim, este estudo foca-se na relação entre a quota de mercado regional das transportadoras de baixo-custo e a eficiência técnica das companhias aéreas tradicionais sediadas nessa região. Para prosseguir esta investigação, foi implementada uma Análise por Envoltória de Dados de duas etapas. Inicialmente, foram estimadas as pontuações de eficiência técnica com métodos de "bootstrap" para 137 transportadoras de passageiros e, posteriormente, as pontuações foram usadas como variável dependente numa regressão "bootstrapped" truncada para identificar as fontes de eficiência. Os resultados sugerem que uma maior concentração de operadores de baixo-custo numa dada região está associada a uma menor utilização de recursos, por parte dos operadores tradicionais dessa região, para o mesmo nível de produção. Esta relação poderá ser explicada por práticas de gestão mais adequadas que aproximam o modelo tradicional do modelo de baixo-custo

Strategy Tripod Perspective on the Determinants of Airline Efficiency in A Global Context: An Application of DEA and Tobit Analysis

The airline industry is vital to contemporary civilization since it is a key player in the globalization process: linking regions, fostering global commerce, promoting tourism and aiding economic and social progress. However, there has been little study on the link between the operational environment and airline efficiency. Investigating the amalgamation of institutions, organisations and strategic decisions is critical to understanding how airlines operate efficiently. This research aims to employ the strategy tripod perspective to investigate the efficiency of a global airline sample using a non-parametric linear programming method (data envelopment analysis [DEA]). Using a Tobit regression, the bootstrapped DEA efficiency change scores are further regressed to determine the drivers of efficiency. The strategy tripod is employed to assess the impact of institutions, industry and resources on airline efficiency. Institutions are measured by global indices of destination attractiveness; industry, including competition, jet fuel and business model; and finally, resources, such as the number of full-time employees, alliances, ownership and connectivity. The first part of the study uses panel data from 35 major airlines, collected from their annual reports for the period 2011 to 2018, and country attractiveness indices from global indicators. The second part of the research involves a qualitative data collection approach and semi-structured interviews with experts in the field to evaluate the impact of COVID-19 on the first part’s significant findings. The main findings reveal that airlines operate at a highly competitive level regardless of their competition intensity or origin. Furthermore, the unpredictability of the environment complicates airline operations. The efficiency drivers of an airline are partially determined by its type of business model, its degree of cooperation and how fuel cost is managed. Trade openness has a negative influence on airline efficiency. COVID-19 has toppled the airline industry, forcing airlines to reconsider their business model and continuously increase cooperation. Human resources, sustainability and alternative fuel sources are critical to airline survival. Finally, this study provides some evidence for the practicality of the strategy tripod and hints at the need for a broader approach in the study of international strategies

Competition and efficiency in the Italian airport system: New insights from a conditional nonparametric frontier analysis

We analyse the effect of competition on technical efficiency of Italian airports by applying a novel conditional nonparametric frontier analysis for the first time to the airport industry. We find that competition affects mostly the frontier of best performers, whilst airports that are lagging behind are less influenced. A novel two stage approach shows that, on average, competition has a negative impact on technical efficiency. We estimate a measure of pure efficiency, whitened from the main effect of the competition, whose distribution has a bi-modal shape, indicating the existence of two differently managed groups of airports

A Comparative Analysis of Three Major Transfer Airports in Northeast Asia Focusing on Incheon International Airport Using a Conjoint Analysis

Due mainly to the privatization and commercialization of airline companies and deregulation of the aviation rules, the demand for air transport has continuously been increasing. Airport authorities state that transfer passengers, who contribute to the large portion of the airports’ profits, are gaining much more importance, particularly in the Northeast Asia region where the air transport industry is very vital. Therefore, this study aims to investigate the competitiveness of IIA (Incheon International Airport) with other major airports located in Northeast Asia in passenger transfers made between Southeast Asia and China to North America using Conjoint Analysis. Results have indicated that airport brand is the most important attribute for the competitiveness of airport, followed by cost, connectivity and duty free shops. In further analysis focusing on brand value of the three airports measured by the use of transfer passengers, it was revealed that IIA needs more effort in developing their brand identity to become the leading transfer hub airport. Based on the results, recommendations for increasing the brand value have also been suggested

A comparative study of airline efficiency in China and India: A dynamic network DEA approach

Using a dynamic network DEA approach, this research examines the efficiency performance of major Chinese and Indian air carriers with a consideration of the airline's internal processes and links as well as the carry-over items that connect consecutive time periods. It is found that two low-cost carriers (LCCs), namely, China's Spring and India's SpiceJet were the most efficient carriers during the period between 2008 and 2015. China's three state-owned airlines performed poorly in both the capacity generation and service stages, particularly the latter. The second-stage regression results confirm that the LCC model and private ownership are significantly associated with better airline efficiency performance. This paper thus calls for continual reforms in China's air transport including further privatisation and policy support for LCCs and private carriers to improve the overall efficiency of this industry

Upgraded data envelopment analysis model application for total productivity comparison in major airports of the European Union

In order to compare the productivity of airports different scientific approaches are used by various authors. Previous research has shown wide application of the data envelopment analysis (D.E.A.) model for productivity comparison. The D.E.A. model may be used to compare both partial and total factor productivity. However, aggregation of the separate partial factors into a single D.E.A. model is still not sufficiently investigated. The purpose of this paper is to suggest the integration of two methods – DEA and Delphi Expert Panel – to solve this problem. A model was developed and experimentally tested with 15 major European Union airports. The results show that the suggested model could be efficiently used to compare the airports’ productivity, which is expressed by a large set of attributes. The main conclusion is that model can be successfully used to compare airports by different criteria through integrating the DEA and Delphi Expert Panel techniques. The model can be used for any set of airports to compare productivity. The research could be useful to airport managers and investors, as well as to researchers in the area of D.E.A. application

The impact of national macro-environment exogenous variables on airport efficiency

Our paper tests the extent to which airport efficiency is affected by national macro-environmental factors. The literature on airport performance measurement is extensive but has tended to focus mainly on estimating the effects on efficiency from what are mostly endogenous variables. We undertake a two-stage analysis of 59 international airports observations in the Europe and Asia-Pacific regions. The first stage involves the use of Data Envelopment Analysis (DEA) to measure the efficiency of these airports. This is followed by a second stage, where we use a Truncated Regression model that incorporates the Simar and Wilson bootstrapping technique to test the extent to which a set of macro-environmental factors affect airport efficiency. Results reveal that a state's air transport sector output, institutional quality and robustness, the macro-economic environment, safety and security, and human development, all have a significant influence on the performance of airports. The result of this study fills the gap in the literature related to the non-discretionary variables affecting the performance of airports. It also suggests that policymakers and airport managers consider the identified factors when benchmarking airports