An efficiency study of airlines and air cargo/passenger divisions: a DEA approach

In this paper we investigate the question of whether a high degree of cargo business improves the operational efficiency of a mixed passenger/cargo airline. We use Data Envelopment Analysis (DEA) to compute the efficiency scores for major airlines in the world and then carry out non-parametric statistical tests. Using data for 29 airlines during the period 1998-2002, we find that airlines with a high share of cargo business in their overall operations are significantly more efficient than airlines with a low share of cargo business. On the other hand, no statistically significant differences are found between airlines with similar degrees of cargo business. Managerial and policy implications of our results are also discussed.

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