Airline efficiency performance in the turbulent period before and after economic crisis

Abstract

The purpose of the paper is to analyze the operational performance of a set of17 airlines that operate across Europe in 2008 and 2012, the period that imposed a burden of challenge to airline industry due to severe global economic crisis occurred in 2008.In addition to major carriers in Europe, the sample contains several airlines located in Central and SouthEast Europe that have been not been broadly investigated in the relevant literature. The study utilizes the standard DEA approach with the inputs consisting of several subsets (resources, costs, capacity, etc), while outputs encompass productivity and economic indices. The results of the model reveal that most of the SouthEast and Central European airlines are inefficient relative to their western counterparts. Still, these large western airlines tend to be inefficient compared to the major low-cost carriers operating in Europe. Moreover, the model enables obtaining insights into the cause of inefficiency of the airlines with particular implications for improvement in the future. Despite severe economic crisis, the model shows that airlines tend to recover faster than one could even expect it.