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A Non-parametric Efficiency Measure Incorporating Perceived Airline Service Levels and Profitability

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  • Rico Merkert
  • James Pearson

Abstract

Customer service influences satisfaction, loyalty, repeat business, and hence potentially profitability. This paper investigates whether airline customer service impacts upon the profitability of airlines (the top 150 worldwide). As our results suggest that this impact is limited, we then apply DEA models and develop, for the first time, a single-efficiency measure that combines the typical airline targets of maximisation of RPKs, customer satisfaction, and profitability. We further use second-stage truncated regressions and show that only the share of cabin crew (but neither fleet age nor LCC operation) has a significant impact on overall airline efficiency. © 2015 LSE and the University of Bath

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  • Rico Merkert & James Pearson, 2015. "A Non-parametric Efficiency Measure Incorporating Perceived Airline Service Levels and Profitability," Journal of Transport Economics and Policy, University of Bath, vol. 49(2), pages 261-275, April.
    • Handle: RePEc:tpe:jtecpo:v:49:y:2015:i:2:p:261-275
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