Evaluation of Airline Efficiency and Environmental Impacts Using Data Envelopment Analysis

242 Pages·2017·2.59 MB·English

by  Arun Paul Saini

Dissertations and Theses
8-2018
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Arun Paul Saini
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EVALUATION OF AIRLINE EFFICIENCY AND ENVIRONMENTAL
IMPACTS USING DATA ENVELOPMENT ANALYSIS
By
Arun Paul Saini
A Dissertation Submitted to the College of Aviation
in Partial Fulfillment of the Requirements for the Degree of
Doctor of Philosophy in Aviation
Embry-Riddle Aeronautical University
Daytona Beach, Florida
August 2018
© 2018 Arun Paul Saini
All Rights Reserved.
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ABSTRACT
Researcher: Arun Paul Saini
Title: EVALUATION OF AIRLINE EFFICIENCY AND ENVIRONMENTAL
IMPACTS USING DATA ENVELOPMENT ANALYSIS
Institution: Embry-Riddle Aeronautical University
Degree: Doctor of Philosophy in Aviation
Year: 2018
Airline efficiency has been a focus of research since the birth of the airline industry.
Data envelopment analysis has become a highly accepted methodology for performing
efficiency analysis and assessing relative differences between comparable business
entities; over the last decade, airline efficiency research has proliferated into this linear
programming domain. While early airline efficiency research focused primarily on
revenue generation and profitability, growing commercial social responsibility is driving
greater investment into understanding and improving the environmental impact of airline
operations. This study is intended to partially fill a gap in exigent literature. While
limited data envelopment analysis including environmental impacts has been conducted,
the models treat environmental impacts as an output, never as an input or intermediate
variable in the decision-making models.
This study constructed a linear programming model utilizing the data
envelopment analysis methodology to assess the relative efficiencies of thirteen airlines.
The model consumes operational and financial performance indicators of the airlines, as
well as abatement success measured as a function of the carbon dioxide emissions
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produced by the airline operations. The study analyzed airline activities from 2013 to
2015.
The results of the study indicated that the linear programming model was
successful in measuring airline operational efficiency, inclusive of: (a) different capacity
and cost components of airline operations, (b) carbon dioxide emissions abatement, (c)
differing airline business models associated with service levels, and (d) the implications
of different routes and networks. Airline-specific recommendations are presented, based
on analysis of their 2013-2015 operational performance reviewed in conjunction with
airline strategy disclosures included in annual reports.
The study provides theoretical and practical contributions to airline efficiency
research. The study is the first to include environmental impact abatement expense as an
input into airline decision-making for an overall airline efficiency model, as opposed to
an output which is calculated as part of an optimization strategy focused on capacity or
revenue generation.

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DEDICATION
I dedicate this work to my mother and father.

Mom, your support and perpetual reinforcement have been the wind beneath my
wings through this seven-year journey. Thanks for seeing this through with me.

Dad, your memory and achievements continue to influence the course I plot. I
will forever be blessed to have so much advice available to me, long after I lost the
opportunity to ask you for it.

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ACKNOWLEDGEMENTS
I would like to acknowledge everyone that made this dissertation possible. This
doctoral program has encompassed a seven-year period, and I would not be at this point
without extraordinary support in my academic, professional, and personal life.
First, I must recognize my dissertation chair, Dr. Dothang Truong, for his
mentorship and guidance over the last two years. His inputs have been invaluable to my
strategy and execution of this dissertation. I would also like to express my gratitude to
my dissertation committee members – Dr. Ahmed Adelghany, Dr. David Esser, and Dr.
Matthew Fischer – for their feedback, thought-provoking input, and support.
My career has carried me through three very different jobs at Gulfstream
Aerospace during this program. In the positions I have held, it has required
understanding and accommodation from my leaders for me to survive this journey.
Chronologically, I must recognize the support of Mark Sells & Bill Bradley; Greg
Collett, Becky Elliott, Jonathan Ringham, & Melissa Grant; and Steve Ritchie.
My family and friends have accepted my absence over the last several years while
continuing to provide love and understanding. My mother’s support has never wavered.
The Saini-Shea’s have accepted my aberrant attendance to family gatherings; I hope my
two nieces are too young to remember. The Atkinsons, Fosters, Pearlmans, and Shepards
continued to include me as the friend they see every day, though I seemed to decline 95%
of their invitations.
Finally, a special thanks to Andrea Burkhardt for her support of the dissertation.
In the last year of this program, she has literally taken on the responsibility of my
day-to-day survival so I could focus on this work.
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TABLE OF CONTENTS
Page
Abstract ............................................................................................................................. iv
Dedication ......................................................................................................................... vi
Acknowledgements .......................................................................................................... vii
List of Tables .................................................................................................................. xiii
List of Figures ................................................................................................................. xiv
Chapter I Introduction ................................................................................................ 1
Statement of the Problem ............................................................... 5
Purpose Statement .......................................................................... 6
Significance of the Study ............................................................... 6
Research Questions ........................................................................ 8
Delimitations .................................................................................. 8
Limitations and Assumptions ...................................................... 10
Definitions of Terms .................................................................... 13
List of Acronyms ......................................................................... 15
Chapter II Review of the Relevant Literature ........................................................... 16
Review of Research in Airline Efficiency ................................... 16
Airline Efficiency Utilizing Total Factor Productivity
(TFP). ............................................................................... 16
Application of DEA in Measuring Airline Efficiencies. . 19
Environmental Impacts in Aviation ............................................. 28
Environmental Motivations in Aviation. ......................... 28
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