Heliyon (Oct 2024)
Airline performance measurement using bias-corrected network data envelopment analysis estimates: Evidence from a turbulent era
Abstract
This study's objective is to estimate airline performance and identify the most resilient business model during periods affected by global crises, including financial crises, natural disasters, pandemics, terrorist attacks, and post-crisis periods. A balanced panel of 80 airlines, classified into full-service carriers (FSC), low-cost carriers (LCC), high perceived quality, and low perceived quality, during 2008–2021 is used in this work. The data is sourced from the ICAO Data+ and Skytrax databases. Following the recent literature on airline efficiency, we consider airlines' internal structure, which unfolds into three stages: (a) operations, (b) services, and (c) sales. Also, we employ a novel three-stage multi-parametric bias correction (MPBC) slacks-based measure (SBM) network data envelopment analysis (NDEA) approach to estimate system- and stage-specific efficiencies. It has been proven that the MPBC estimates are consistent, while the MPBC-SBM-NDEA approach addresses the limitations of conventional NDEA and SBM-NDEA models. This work highlights that airline passengers have become more price-sensitive, selecting value-for-money airline products and services after the Global Financial Crisis. Given this trend and the remainder of the study's findings, LCCs offering value-for-money products and services and operating smaller-scale networks with smaller plane capacities are less vulnerable to external shocks and are easier to rebound during post-crisis periods.
