The global airline industry: an assessment of the impact of low-cost carriers on the technical efficiency of full-service airlines

• Autor(a) principal: Pinho, Bernardo Almeida
• Data de Publicação: 2017
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/15785
• topic: Two-stage Data Envelopment Analysis; Air transportation; Low-cost and full-service carriers; Análise estratégica; Modelos de negócio; Companhia aérea

Since the emergence of the first low-fare airline, Southwest Airlines, we have witnessed the spread of the low-cost phenomenon in different regions of the world. The simplicity, the low fares and the focus on core business (flying) have been the critical basis for their success, and the concern of traditional operators who see their market positioning threatened. To remain competitive, full-service operators have been forced to redefine their business model. With great interest in the innovative nature of low-cost carriers, literature has covered inter-business model comparisons of efficiency, as well as on the analysis of the strategies carried out by full-service to adapting to the increased competition. However, there seems to be no study on the impact of low-cost operators on the technical efficiency of full-service airlines. Thus, this thesis aims to analyse the impact of the low-cost regional market share on the technical efficiency of full-service airlines domiciled in the same region. In order to pursue this analysis, a two-stage Data Envelopment Analysis was implemented. Initially, bootstrapped efficiency scores were estimated for a set of 137 passenger airlines. Subsequently, the estimated efficiency measures were used as a dependent variable in a truncated bootstrap regression to identify the determinants of the technical efficiency. Results suggest that larger low-cost market shares are associated with lower input uses for the same full-service carriers’ output levels based on that region. This relationship might be explained by the adoption of better management practices that approach the full-service model to the low-cost model.