Evaluating airline operational performance: A Luenberger-Hicks-Moorsteen productivity indicator

Abstract

This study proposes a by-production Luenberger-Hicks-Moorsteen indicator that includes undesirable outputs, here CO2 emissions, in airline performance analysis. We use capital and staff as inputs and tonnekilometres available as a desirable output to evaluate operation stage efficiency and productivity of the world's major airlines between 2007 and 2013. Our results demonstrate European airlines are relatively stronger performers in terms of both pollution-adjusted operational efficiency and productivity. Middle-Eastern airlines have made gains in terms of output growth but perform poorly in terms of pollution-adjusted productivity, evidence that ETSs may produce greener airlines.

Have Asian airlines caught up with European Airlines? A by-production efficiency analysis

“…TKA, defined as the number of tonnes available for the carriage of revenue load (passengers, freight and mail) on each flight multiplied by the flight distance, is used as the good output in this study. According to Barla and Perelman (1989), Coelli et al (1999) and Inglada et al (2006), TKA is not influenced by the efficiency of airline marketing and is a capacity indicator; therefore, TKA can be seen as a reliable output measure (Greer, 2009;Seufert et al, 2017). Notes: Number of employees is measured as full-time equivalent staff expressed in thousands.…”

“…Turkish Airlines, even though geographically located in Europe, is not included in this study, as it is not a member of the EU and therefore not subject to the EU ETS.12 Also see recent study ofSeufert et al (2017) which highlights that it is meaningful to study the efficiencies of major international airlines during this period. 13 SeeCoelli et al (1999) andGreer (2008) for an in-depth explanation of this input.…”

Analysis of Environmental Total Factor Productivity Evolution in European Agricultural Sector

“…In the latter approach, inputs and undesirable outputs are treated in the same manner. Further on, Seufert, Arjomandi, and Dakpo (2017) presented yet another instance of the environmental LHM indicator relying on the by‐production approach (Murty et al., 2012; Ray, Mukherjee, & Venkatesh, 2018). The indicator proposed by Seufert et al.…”

“…The indicator proposed by Seufert et al. (2017), indeed, is output oriented (i.e., desirable and undesirable outputs are optimized). In this article, we contribute to the discussion on the environmental LHM TFP indicators by proposing a nonoriented measure, which also considers inputs throughout the optimization.…”

The Determinants of Airline Operational Performance: An Empirical Study on Major World Airlines

“…Other studies like that by Dinçer et al (2017), however, considered performance in its entirety. The vast majority of these studies evaluated performance on the basis of efficiency with the most widely applied methodologies being Data Envelopment Analysis (Chiou & Chen, 2006;Assaf & Josiassen, 2012;Min & Joo, 2016;Yu et al, 2017;Seufert et al, 2017), Network Data Envelopment Analysis (Zhu, 2011;Lozano & Gutierrez, 2014), Total Factor Productivity (Barbot et al, 2008;See & Rashid, 2016;Scotti & Volta, 2017) and TOPSIS (Feng & Wang, 2000;Perçin & Aldalou, 2018). Other methods that have been used to determine the performance of airlines include ANOVA (Gilbert & Wong, 2003), multi-criteria decision making (Hsu & Liou, 2013;Pineda, 2018), and the Structural Equation Model (Jenatabadi & Ismail, 2012;.…”