Evaluating airline competitiveness using multiattribute decision making

This paper presents an objective approach to the evaluation of airline competitiveness. The evaluation problem is formulated as a multiattribute decision making model and solved by three widely used methods (the simple additive weighting method, the weighted product method and the technique for order preference by similarity to ideal solution) based on multiattribute value theory. A new empirical validation procedure is developed to deal with the inconsistency problem of evaluation outcomes produced by the three methods. The procedure selects the evaluation outcome which has a minimum expected value loss. An empirical study on Taiwan's five major domestic airlines is conducted to demonstrate the effectiveness of the approach. To measure and compare overall competitiveness of the airlines, five competitiveness dimensions and their associated objective performance measures on both efficiency and effectiveness are identified. The result of empirical validation for the three methods suggests the use of the simple additive weighting method. The evaluation outcome helps an airline identify its competitive advantages relative to its competitors. The objective approach presented is particularly applicable when subjective judgements on performance ratings and attribute weights are not reliable, or suitable decision makers are not available.

[1]  G. W. Fischer.  Range Sensitivity of Attribute Weights in Multiattribute Value Models , 1995 .

[2]  Robin C. Sickles,et al.  Airline efficiency differences between Europe and the US: Implications for the pace of EC integration and domestic regulation , 1995 .

[3]  Peter Nijkamp,et al.  Impact Assessment and Evaluation in Transportation Planning , 1994 .

[4]  D. Good,et al.  PRODUCTIVE EFFICIENCY, TECHNOLOGICAL CHANGE AND THE COMPETITIVENESS OF U.S. AIRLINES IN THE PACIFIC RIM , 1991 .

[5]  Milan Janic,et al.  AN ASSESSMENT OF RISK AND SAFETY IN CIVIL AVIATION , 2000 .

[6]  Lars-Hendrik Röller,et al.  Efficiency and productivity growth comparisons of European and U.S. Air carriers: A first look at the data , 1993 .

[7]  Thomas L. Saaty,et al.  How to Make a Decision: The Analytic Hierarchy Process , 1990 .

[8]  Ralph L. Keeney,et al.  Decisions with multiple objectives: preferences and value tradeoffs , 1976 .

[9]  Doug Vogel,et al.  Data and Model Management in a Generalized MCDM‐DSS* , 1991 .

[10]  Rakesh K. Sarin,et al.  Measurable Multiattribute Value Functions , 1979, Oper. Res..

[11]  Kazem Chaharbaghi,et al.  Defining Competitiveness: A Holistic Approach , 1994 .

[12]  Adel Guitouni,et al.  Tentative guidelines to help choosing an appropriate MCDA method , 1998, Eur. J. Oper. Res..

[13]  Tae Hoon Oum,et al.  COST COMPETITIVENESS OF MAJOR AIRLINES: AN INTERNATIONAL COMPARISON , 1998 .

[14]  Chenjie Yu,et al.  A PRODUCTIVITY COMPARISON OF THE WORLD'S MAJOR AIRLINES. IN: AIR TRANSPORT , 1995 .

[15]  Benjamin F. Hobbs,et al.  Does choice of multicriteria method matter? An experiment in water resources planning , 1992 .

[16]  Mark Goh,et al.  Multi-criterion models for higher education administration , 1996 .

[17]  C. Hwang.  Multiple Objective Decision Making - Methods and Applications: A State-of-the-Art Survey , 1979 .

[18]  Chung-Hsing Yeh,et al.  Multi-criteria analysis for dredger dispatching under uncertainty , 1999, J. Oper. Res. Soc..

[19]  Komaragiri Srinivasa Raju,et al.  Multicriterion decision making in river basin planning and development , 1999, Eur. J. Oper. Res..

[20]  R. Dawes.  Judgment under uncertainty: The robust beauty of improper linear models in decision making , 1979 .

[21]  Ching-Lai Hwang,et al.  Fuzzy Multiple Attribute Decision Making - Methods and Applications , 1992, Lecture Notes in Economics and Mathematical Systems.

[22]  Martin Weber,et al.  Behavioral influences on weight judgments in multiattribute decision making , 1993 .

[23]  R. L. Keeney,et al.  Decisions with Multiple Objectives: Preferences and Value Trade-Offs , 1977, IEEE Transactions on Systems, Man, and Cybernetics.

[24]  Ralph E. Steuer,et al.  Multiple Criteria Decision Making, Multiattribute Utility Theory: The Next Ten Years , 1992 .

[25]  Chung-Hsing Yeh,et al.  Inter-company comparison using modified TOPSIS with objective weights , 2000, Comput. Oper. Res..

[26]  Bruce E. Barrett,et al.  Decision quality using ranked attribute weights , 1996 .

[27]  E. Triantaphyllou,et al.  A Sensitivity Analysis Approach for Some Deterministic Multi-Criteria Decision-Making Methods* , 1997 .

[28]  R. Green,et al.  Judging Relative Importance: Direct Rating and Point Allocation Are Not Equivalent , 1997, Organizational behavior and human decision processes.

[29]  Yannis Siskos,et al.  Intelligent multicriteria decision support: Overview and perspectives , 1999, Eur. J. Oper. Res..

[30]  Muhittin Oral,et al.  A methodology for competitiveness analysis and strategy formulation in glass industry , 1993 .

[31]  C. Parkan,et al.  On the equivalence of operational performance measurement and multiple attribute decision making , 1997 .

[32]  P. Buckley,et al.  Measures of International Competitiveness: A Critical Survey*† , 1988 .

[33]  L. J. Truitt,et al.  Evaluating service quality and productivity in the regional airline industry , 1994 .

[34]  Komaragiri Srinivasa Raju,et al.  Multicriterion decision making in performance evaluation of an irrigation system , 1999, Eur. J. Oper. Res..

[35]  Chung-Hsing Yeh,et al.  A survey analysis of service quality for domestic airlines , 2002, Eur. J. Oper. Res..

[36]  M. Schefczyk.  Operational performance of airlines: An extension of traditional measurement paradigms , 1993 .

[37]  Stelios H. Zanakis,et al.  Multi-attribute decision making: A simulation comparison of select methods , 1998, Eur. J. Oper. Res..

[38]  Stephen Shaw,et al.  Airline Marketing and Management , 1985 .

[39]  T. Stewart.  A CRITICAL SURVEY ON THE STATUS OF MULTIPLE CRITERIA DECISION MAKING THEORY AND PRACTICE , 1992 .

[40]  David L. Olson,et al.  Multi-attribute utility methods in group decision making: Past applications and potential for inclusion in GDSS , 1997 .

[41]  L. F. Cunningham,et al.  Assessing Service Quality as an Effective Management Tool: The Case of the Airline Industry , 1994 .

[42]  Chung-Hsing Yeh,et al.  Fuzzy multicriteria analysis for performance evaluation of bus companies , 2000, Eur. J. Oper. Res..

[43]  John E. Prescott,et al.  A Manager's Guide for Evaluating Competitive Analysis Techniques , 1988 .

[44]  David Encaoua,et al.  Liberalizing European airlines: Cost and factor productivity evidence , 1991 .

[45]  Celik Parkan,et al.  Measurement of the performance of an investment bank using the operational competitiveness rating procedure , 1999 .

[46]  David L. Olson,et al.  Consistency and Accuracy in Decision Aids: Experiments with Four Multiattribute Systems* , 1995 .

[47]  J. Voogd,et al.  Multicriteria evaluation for urban and regional planning , 1982 .

[48]  M. Dresner,et al.  A NOTE ON PRODUCTIVITY COMPARISONS BETWEEN AIR CARRIERS , 1995 .

[49]  Chung-Hsing Yeh,et al.  Task oriented weighting in multi-criteria analysis , 1999, Eur. J. Oper. Res..

[50]  Peter Nijkamp,et al.  Multi-Criteria Analysis and Regional Decision-Making , 1977 .