h i g h l i g h t sThis study measured the efficiency of the top three cruise lines Network DEA and bootstrapped-truncated regression were used They were efficient at the operating stage, but varied at the non-operating stage Cruise lines attempting high capacity expansion were relatively inefficient Neglected hedging policy over financial risks also contributed to the inefficiency a b s t r a c t Three major cruise lines account for 82% of the total market share. Their financial statements show different results between the operating incomes and net incomes over time. To examine the major causes of the differences, this study measured the efficiency of the top three cruise lines to develop a network DEA model to analyze the cruise operations at two stages, namely operating and non-operating stages. In addition, the determinants of the efficiencies were examined using a bootstrapped-truncated regression model. Overall, cruise lines were efficient at the operating stage, but varied widely in the efficiency of the non-operating stage. Cruise lines attempting high capacity expansion were relatively inefficient because of the heavy interest payments arising from the high debt-to-capital ratio. Moreover, the neglected hedging policy regarding the financial risks also contributed to the inefficiency.

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