Has airline efficiency affected by the inclusion of aviation into European Union Emission Trading Scheme? Evidences from 22 airlines during 2008–2012

• A new theoretical model of airlines efficiency is built.
• Network Slacks-Based Measure models with weak disposability and strong disposability are proposed.
• The efficiencies of 22 airlines from 2008 to 2012 are evaluated.
• The impacts of including airlines into European Union Emission Trading Scheme are analyzed.

We investigate the impacts of including aviation into European Union Emission Trading Scheme on airline efficiency since 2008. Airline efficiency is divided into three stages: Operations Stage, Services Stage and Sales Stage, and Greenhouse Gases Emission is treated as an undesirable output of Services Stage. Two models, Network Slacks-Based Measure with weak disposability and Network Slacks-Based Measure with strong disposability, are established to evaluate the efficiencies of 22 international airlines from 2008 to 2012. The results show that: (1) Most airlines' efficiencies have increased in the period. (2) The average efficiency of European airlines is much higher than that of non-European airlines. (3) The model with weak disposability is more reasonable in distinguishing the airline efficiency while strong disposability is a more reasonable way in treating undesirable outputs.