CHANGES IN THE WORLD AIR INDUSTRY: AN ANALYSIS OF TECHNICAL EFFICIENCY

Abstract

This article reports on a study that compares technical efficiency in a sample of 19 international airline companies (1992-2000), focusing on changes in technical efficiency that may have occurred as a result of the restructuring of the industry after liberalization (deregulation and privatization) in air transport. The authors first review the methodology used to make the estimations (based on the stochastic model of Battese and Coelli, 1995), then describe the variables and data found. The authors then discuss economic specifications and the functional forms chosen, outline the results of the estimation, and discuss their conclusions. The results show that there has been an improvement in efficiency during the study period. American and Asian companies are found to be most efficient, along with some European countries such as Lufthansa. The authors caution that there are still some markets which are operated under regulatory regimes; in Europe, there are also companies with public ownership.