Efficiency Evaluation of Mahan Air Compared to IATA Member Airlines in Middle East and Africa

اقتصاد و توسعه منطقه ای

Article 4, Volume 21, Issue 8, February 2015   

Document Type: Research article

DOI: 10.22067/erd.v21i8.43876

Authors

Mostafa Kazemi^* ; Amir Hossein Bagherieh

Abstract

Abstract
Efficiency concept has a long history in the sciences and its measurement and analysis is a vital importance for firms to achieve the best performance. Hence, the aim of this paper is efficiency evaluation of Mahan air compared to IATA member airlines in Middle East and Africa. For this purpose, the indicators include available ton kilometer, revenue ton kilometer, revenue passenger kilometer, available seat kilometer, number of employee and fleet, operating expense and operating revenue. These data collected by statistical annual reports available in airlines and air transport authorities websites for 15 airlines that analyzed by using standard and two stages DEA approaches. The results show only two Emirates airline and Ethiopian airlines are efficient and Mahan air has acquired third place among surveyed companies that relative increase in revenue passenger kilometer, revenue ton kilometer and operating revenue are required for efficiency of Mahan air. In addition, surveyed companies are less than capacity about 27% in which Middle East airlines are7% more efficient than African airlines.

Keywords: Efficiency, DEA, Mahan Air, Airlines, Air Transport

JELClassification:D22, L93, C02.

Keywords

Efficiency; DEA; Mahan Air; Airlines; Air Transport

References

References

1- Afshar Kazemi, M. A., Toloei Ashlaghi., Charkhchi, R. (2011). Investigating relative efficiency of HOMA compared to the world’s top airlines using DEA. Journal of financial engineering and portfolio management, No. 7, pp. 97-118 (In Persian).

2- Agarwal, S., Yadav, S. S. and Singh, S. P. (2002). Performance Evaluation of Public Sector of UP: An Application of DEA. Vision 2020: The Strategic Role of Operational Research, pp. 509-523.

3- Arjomandi, A., Juergen H. Seufert. (2013). An Evaluation of the World’s Major Airlines’ Technical and Environmental Performance. 26th European Conference on Operational Research. Rome, Italy.

4- Barbot, C., Costa, A., & Sochirca, E. (2008). Airlines performance in the new market context: A comparative productivity and efficiency analysis. Journal of Air Transport Management, Vol.14, No.5, pp.270-274.

5- Charnes A.W., Cooper w., and Rhodes D. (1978). Measuring the efficiency of decision making unit. European Journal of Operating Research, Vol. 2, pp. 429-444.

6- Coeli T. (1996). A guide to DEAP version 2.1,a data envelopment analysis computer program, CEPA working paper 96/08 Department of Econometrics, University of New England, Armidale, Australia.

7- Coeli T., Parsada R., and Battese E. (1998). An introduction to efficiency and productivity analysis, Bostone, Kluwer Academic Pub.

8- Coli, M., Nissi, E., Rapposseili, A. (2008). Efficiency evaluation in an airline company: some empirical results. Methods, Models and Information Technologies for Decision Support Systems, Università delSalento.

9- Fethy, M. D., Jackson, P. M., &Weyman-Jones, T. G. (2000). Measuring the Efficiency of European Airlines: An Application of DEA and Tobit Analysis. Annual Meeting of the European Public Choice Society. Siena, Italy.

10- Hong, S., Zhang, A. (2010). An efficiency study of airlines and air cargo/passenger divisions: a DEA approach. World Review of Intermodal Transportation Research. Vol. 3, pp. 137-149.

11- Lee, B. L., Worthington, A. C. (2010). The Relative Efficiency of International, Domestic, and Budget Airlines: Nonparametric Evidence, Discussion Papers in Economics: 201002, Griffith University, Department of Accounting, Finance and Economics.

12- Lee, B. L., Worthington, A. C. (2011). Operational performance of low-cost carriers and international airlines: New evidence using a bootstrap truncated regression, Discussion Papers and Working Papers Series 271, School of Economics and Finance, Queensland University of Technology.

13- Liang, L., Cook, W. D., & Zhu, J. (2008). DEA models for two-stage processes: Game approach and efficiency decomposition. Naval Research Logistics, No. 55, pp. 643-653.

14- Malhotra, R. (2011). Benchmarking the Operating Efficiency of US Airlines Using DEA. Asia Pacific Decisions Sciences Institute's Annual Meetings. Taiwan.

15- Mehregan, M. R. (2004). Performance appraisal of organizations: quantitative approach using data envelopment analysis. Tehran University publishing (In Persian).

16- Moshiri, Saeid., Rezvan, Mahdi. (2006). Impact of utilizing information and communication technology in efficiency of Iran air transport. Journal of Economic Researches of Iran, Vol. 8, No. 26, pp. 1-24 (In Persian).

17- Oum, T., Yu, C. (1995). A productivity comparison of the world’s major airlines. Journal of Air Transport Management, No. 2, pp. 181–195.

18- Pierce, J. (1997). Efficiency progress in the New South Wales government, NSW Treasury Research & Information, No. TRP 97-8, NSW Treasury, Sydney.

19- Powell II, R. A. (2012). Productivity performance of US passenger airlines since deregulation. Master Thesis. Massachusetts Institute of Technology.

20- Schefczyk, M. (1993). Operational performance of airlines: an extension of traditional measurement paradigms. Strategic Management Journal, No. 14, pp. 301–317.

21- Scheraga, C. (2004). Operational efficiency vs. financial mobility in the global airline industry: a data envelopment analysis and Tobit analysis. Transportation Research A, No. 38, pp. 383–404.

22- Sing, A. K. (2011). Performance Evaluation of Indian Airline Industry: An Application of DEA. Asia Pacific Business Review. Vol. 7, No. 2, pp. 92- 103.

23- Wong, J. T., Chen, C. N. (2005). Efficiency and survivability of new entrant airlines. Journal of the Eastern Asia Society for Transportation Studies, No. 6, pp. 752-767.

24- Zhu, Joe. (2011). Airlines performance via two-stage network DEA approach, Journal of CENTRUM Cathedra, Vol. 4, No. 2, pp. 260-269.

25- Arab Air Carriers Organization Statistical Reports. Available from: http://www.aaco.org. Accessed July 2013.

26- African Airlines Association Annual Reports, Available at: http://www.afraa.org. Accessed July 2013.

27- Air Transport World Statistics, Available from: http://www.atwonline.com, Accessed July 2013.

28- Civil Aviation Organization of Iran Annual Reports, Available at: http://www.cao.ir. Accessed July 2013.