A structural vector autoregressive model of technical efficiency and delays with an application to Chinese airlines

Abstract

This study reports on the performance assessment of Chinese airlines from 2006-2014 using a stochastic distance function where technical efficiency and a measure of flight delays follow a joint structural autoregressive process. This model is used to investigate whether technical efficiency causes flight punctuality or the other way around. The model, however, yields a non-trivial likelihood function and is not amenable to estimation using least squares or standard maximum likelihood techniques. To estimate the model therefore, we propose and implement maximum simulated likelihood with importance sampling. The results suggest a mutual dependence (feedback) between technical efficiency and delays. Policy implications are derived.

A longitudinal Perspective on Efficiency of Airlines in Europe and the U.S

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A comparative study of airline efficiency in China and India: A dynamic network DEA approach

“…Therefore, there is much room for the state-owned Chinese carriers to improve their efficiency in the service stage. For example, flight delay, a significant dimension of airline service quality, has been confirmed to have a close link with Chinese airlines' technical efficiency performance by Tsionas et al (2017). However, Zhang and Zhang (2016) note that frequent flight delays in China have long frustrated passengers in China, although some of the reasons causing delays are beyond the airlines' control, such as airport congestion and the lack of sufficient airspace for civil aviation flights, which should be addressed at the national level.…”

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