An evaluation of European airlines' operational performance

This paper uses data envelopment analysis (DEA) to evaluate the operational performance of a sample of AEA-Association of European Airlines from 2000 to 2005, combining operational and financial variables. In this paper an innovative DEA two-stage procedure proposed by Simar and Wilson [2007. Estimation and inference in two stage, semi-parametric models of productive efficiency. Journal of Econometrics 136, 31-64] is used. In the first stage a DEA model is used to rank the airlines by their overall efficiency. In the second stage a bootstrapped truncated regression is used to evaluate the drivers of efficiency. The regressions test the roles played, respectively, by population and network alliance in the efficiency of the airlines. The implications of this research for managerial purposes are then drawn.