Using Operational and Stock Analytics to Measure Airline Performance: A Network DEA Approach

Zhang, Qian; Koutmos, Dimitrios; Chen, Kun; Zhu, Joe

doi:10.1111/deci.12363

Cited by 32 publications

(18 citation statements)

References 63 publications

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“…Research connecting operational efficiency to airlines’ financial performance is still relatively new. Studies in this developing field include Gramani ( 2012 ), Pires and Fernandes ( 2012 ), and Zhang et al ( 2019 ). Gramani ( 2012 ) used a two-phase DEA model to examine the operational and financial performance of four airlines during 1997–2006 and found that airlines based in emerging markets realized better operational performance than financial performance, indicating the need to improve resource allocation.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Pires and Fernandes ( 2012 ) analyzed 42 international airlines’ financial efficiency and discovered that airlines that focused more on reducing their financial leverage saw improvement in profitability. Zhang et al ( 2019 ) investigated the performance of nine international airlines for 2006–2016 using both operational and financial indicators and found that although low-cost carriers achieved higher scores on operational-based metrics, full-service carriers tended to perform better on equity market indicators.…”

Section: Literature Reviewmentioning

confidence: 99%

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An Evaluation of the Operational Performance and Profitability of the U.S. Airlines

Huang

Hsu

Collar

2021

JGBC

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Since 2008, a series of mega-mergers has dramatically changed the U.S. airline industry. Despite the presence of fewer airlines in the market, the competition remains intense, which forces airlines to continually search for ways to increase their efficiency to maintain survival and financial sustainability. To evaluate airline performance and disentangle the causes of inefficiency, this paper applied a two-stage network data envelopment analysis approach and a truncated regression to investigate the performance of nine U.S.-based airlines from 2015 to 2019. Our empirical results reveal that during the sample period, airlines’ operating efficiency steadily improved, but the efficiency in the profitability stage stagnated. Therefore, strategic resource allocations are needed for airlines to see further advances in their overall efficiency. On average, airlines operating in the low-cost business model yielded higher efficiency scores than their peers operating in the full-service framework. While an airline’s size, measured in terms of total assets, has a positive influence on operating efficiency, a larger number of full-time employee equivalents hinders efficiency outcomes, which indicates the importance of enhancing labor efficiency among carriers.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

An Evaluation of the Operational Performance and Profitability of the U.S. Airlines

Huang

Hsu

Collar

2021

JGBC

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“…At the most critical time, LCCs performed significantly worse than FSCs. This phenomenon has already been noted by Zhang et al (2021), Carter and Simkins (2004), and Yun and Yoon (2019): smaller airlines, possibly including LCCs, might be more vulnerable to a serious crisis than FSCs. When the crisis reaches a higher magnitude, then smaller airlines (including LCCs) decline sharply.…”

Section: Discussionmentioning

confidence: 52%

“…However, Zorn (2001) only compared one LCC (Southwest) with two FSCs (Northwest and Continental), thus, based on this small sample, it is not clear, whether this result is the effect of the strong financial position (higher cash/assets ratio, lower level of external financing) or the business model. Contrary to Zorn (2001), Zhang et al (2021) emphasize that it is important to differentiate between operational and financial performance. They conclude that while LCCs maintain higher business-based performance, FSCs earn higher performance scores based on stock market indicators.…”

Section: The Effect Of the Carrier's Business Model On Stock Market Performancementioning

confidence: 81%

Impact of COVID-19 on different business models of European airlines

Kökény

Kenesei

Neszveda

2021

Current Issues in Tourism

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In addition to social damage, the first wave of the COVID-19 pandemic also caused huge economic losses in the beginning of 2020, especially for companies in the tourism sector. The airline market was no exception. This study examines the significance of the business model of European listed airlineslow cost carriers (LCCs), full service carriers (FSCs)for stock market performance. We use event study on the 11 airlines included in the sample. In terms of cumulative average abnormal returns, i.e. the most significant deviations from expected returns, negative phases can be detected in the entire and third stage of the pandemic. FSCs performed significantly better than LCCs at the time of the pandemic on 24 February, when European stock markets suffered the most damage; the business model overwrote financial indicators during the toughest period of the crisis. Although most LCCs had higher cash/ assets ratios, they still produced worse results than the average performance of companies with lower cash/assets ratios. This analysis helps to ensure that, in addition to examining financial indicators, the enumeration of the business model in this industry can also be decisive. The future possibilities of the research are discussed at the end of the study.

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“…However, recently Chen et al [13] pointed out a defect of Chen et al [12] method and proposed an alternative conic relaxation approach for solving multiplier-based network DEA structures in the additive form. In another study using a parametric SOCP approach, Zhang et al [38] proposed a novel approach to solve an AED network model in a two-stage structure.…”

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confidence: 99%

Second order cone programming formulation of the fixed cost allocation in DEA based on Nash bargaining game

Golsefid

Salahi

2022

NACO

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<p style='text-indent:20px;'>A vital issue in many organizations is the fair allocation of fixed cost among its subsets. In this paper, using data envelopment analysis, first we study fixed cost allocation based on both additive and multiplicative efficiency decompositions in the cooperative context for a two-stage structure in the presence of exogenous inputs and outputs. A conic relaxation formulation of multiplicative decomposition is given. Then, fixed cost allocation based on the leader-follower paradigm are presented. In the sequel, for allocating a fair fixed cost between the stages, using the results of the leader-follower model, we present the nonlinear Nash bargaining game model that independent of the efficiency score of each unit, allocates fixed cost to the stages. The nonlinear model is reformulated as a second order cone program which is an imporvement over the parametric linear models in the literature. Finally, two examples are used to illustrate the proposed models and compare their results with the existing models.</p>

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Using Operational and Stock Analytics to Measure Airline Performance: A Network DEA Approach

Cited by 32 publications

References 63 publications

An Evaluation of the Operational Performance and Profitability of the U.S. Airlines

An Evaluation of the Operational Performance and Profitability of the U.S. Airlines

Impact of COVID-19 on different business models of European airlines

Second order cone programming formulation of the fixed cost allocation in DEA based on Nash bargaining game

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