European vs. U.S. Airlines

Performance Comparison in a Dynamic Market

A. Georg Assaf, Alexander Josiassen

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

This study measures and compares the efficiency and productivity of European and U.S. airlines, over the period from 2001 to 2008. We measure efficiency by estimating a Bayesian distance frontier model subject to regularity constraints. Productivity estimates are also derived parametrically, based on the estimates of the distance frontier model. We estimate both a constrained (i.e. subject to regularity conditions) and an unconstrained model and we show the importance of imposing the monotonicity and curvature conditions on the distance function. The efficiency and productivity results based on the constrained model indicate that European airlines have slightly higher efficiency and productivity growth than U.S. airlines. A comparison based on the type of airlines indicates that low-cost airlines are on average more productive and efficient than full-service airlines. The decomposition of productivity growth and related market discussions are also provided.
Original languageEnglish
JournalTourism Management
Volume33
Issue number2
Pages (from-to)317-326
Number of pages10
ISSN0261-5177
DOIs
Publication statusPublished - 2012

Keywords

  • Bayesian Distance Function
  • Airlines
  • Productivity Decomposition
  • Efficiency
  • Regularity Constraints

Cite this

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European vs. U.S. Airlines : Performance Comparison in a Dynamic Market. / Assaf, A. Georg; Josiassen, Alexander.

In: Tourism Management, Vol. 33, No. 2, 2012, p. 317-326 .

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

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T2 - Performance Comparison in a Dynamic Market

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AU - Josiassen, Alexander

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N2 - This study measures and compares the efficiency and productivity of European and U.S. airlines, over the period from 2001 to 2008. We measure efficiency by estimating a Bayesian distance frontier model subject to regularity constraints. Productivity estimates are also derived parametrically, based on the estimates of the distance frontier model. We estimate both a constrained (i.e. subject to regularity conditions) and an unconstrained model and we show the importance of imposing the monotonicity and curvature conditions on the distance function. The efficiency and productivity results based on the constrained model indicate that European airlines have slightly higher efficiency and productivity growth than U.S. airlines. A comparison based on the type of airlines indicates that low-cost airlines are on average more productive and efficient than full-service airlines. The decomposition of productivity growth and related market discussions are also provided.

AB - This study measures and compares the efficiency and productivity of European and U.S. airlines, over the period from 2001 to 2008. We measure efficiency by estimating a Bayesian distance frontier model subject to regularity constraints. Productivity estimates are also derived parametrically, based on the estimates of the distance frontier model. We estimate both a constrained (i.e. subject to regularity conditions) and an unconstrained model and we show the importance of imposing the monotonicity and curvature conditions on the distance function. The efficiency and productivity results based on the constrained model indicate that European airlines have slightly higher efficiency and productivity growth than U.S. airlines. A comparison based on the type of airlines indicates that low-cost airlines are on average more productive and efficient than full-service airlines. The decomposition of productivity growth and related market discussions are also provided.

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KW - Productivity Decomposition

KW - Efficiency

KW - Regularity Constraints

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