Efficiency Estimating in Airline Companies: An Application on Asia-Pacific Companies

Abstract

Fuel cost is an important cost factor in civil aviation sector. As fuel prices are determined in global markets, it is not possible for airline companies to intervene in prices. As fuel costs increase, net profit decreases as long as ticket prices remain the same. Firms need to be efficient in their fuel costs in order to compete. This study was performed to evaluate the efficiencies of airline firms taking into consideration the fuel cost and to evaluate financial performance of efficiency airlines. Data Envelopment Analysis was carried out with the purpose of evaluating the efficiencies of 15 airline companies operating in the Asia-Pacific region using data for 2010-2016. Classification Tree from data mining techniques was used to determine the efficiency levels of the companies and the factors being effective on their financial performances by using their financial ratios.