Efficiency of global airlines incorporating sustainability objectives: A Malmquist-DEA approach

Abstract

Despite the impact of the COVID-19 pandemic, airline managers are still expected to look beyond financial and operational metrics to include sustainability goals that address key environmental, social, and governance aspects of the airline business. While there is a considerable body of literature addressing airline efficiency in terms of environmental performance, studies that integrate the various dimensions of sustainability are notably scarce. This paper aims to fill this gap by estimating technical efficiency using a sample of 34 airline groups between 2019 and 2022, with a Malmquist-Data Envelopment Analysis (DEA) methodology that includes financial, operational, and sustainability scores (Environmental and Social). Our results show a productivity loss between 10% and 14% during the COVID-19 period, with a better performance once the carriers are credited for their sustainability achievements. Using a second-stage bootstrapped truncated regression, we confirm the positive impact of hubbing operations and also find significant differences across geographical regions.