2010-02: The Relative Efficiency of International, Domestic, and Budget Airlines: Nonparametric Evidence (Working paper)
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Worthington, Andrew C.
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Nguyen, Tom
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15 pages
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Abstract
This study determines whether the inclusion of low-cost airlines in a dataset of international and domestic airlines has an impact on the efficiency scores of socalled 'prestigious' purportedly 'efficient' airlines. This is because while many airline studies concern efficiency, none has truly included a combination of international, domestic and budget airlines. The present study employs the nonparametric technique of data envelopment analysis (DEA) to investigate the technical efficiency of 53 airlines in 2006. The findings reveal that the majority of budget airlines are efficient relative to their more prestigious counterparts. Moreover, most airlines identified as inefficient are so largely because of the overutilization of non-flight assets.
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Copyright © 2010 by author(s). No part of this paper may be reproduced in any form, or stored in a retrieval system, without prior permission of the author(s).
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Economics and Business Statistics
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Subject
D24 - Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
L93 - Air Transportation
Data envelopment analysis
Efficiency
Airlines