Evaluating airline efficiency: An application of Virtual Frontier Network SBM

• A new theoretical framework of airline efficiency is built.
• A Virtual Frontier Network SBM is proposed.
• The efficiencies of 22 airlines from 2008 to 2012 are evaluated.

In this paper, airline efficiency is divided into three stages: Operations Stage, Services Stage and Sales Stage. The new three-stage strategic operating framework of airline efficiency is a modification of existing models. A new model, Virtual Frontier Network SBM, is proposed to evaluate the efficiency of 22 international airlines from 2008 to 2012. The results demonstrate the following: 1. The new model can apply to a new benchmarking airline such as Scandinavian Airlines. 2. Although passenger traffic, cargo traffic and revenue decreased from 2008 to 2009, most airlines’ overall efficiency increased in the period.