Are the discount airlines actually more efficient than the legacy carriers? : a data envelopment analysis

Abstract

Using Data Envelopment Analysis (DEA), this paper ranks 14 major U.S. passenger airlines in terms of their technical efficiencies at transforming their inputs into their primary output, available seat-miles, in 2004. The inputs are labor, aircraft fuel, and fleet-wide aircraft seating capacity. There is some evidence that the 7 discount carriers included in this research are more technically efficient than the 7 legacy carriers studied. The production cost advantage that the discount carriers have over the legacy carriers appears to stem in part from superior technical efficiency and does not originate solely in paying lower prices for certain inputs, such as labor or fuel costs.