Measurement of airlines’ capacity utilization and cost gap: Evidence from low-cost carriers |
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| Institution: | 1. School of Management, University of Science and Technology of China, 96 Jinzhai Road, Hefei, Anhui, 230026, PR China;2. School of Economics and Management, Zhejiang Sci-Tech University, 928 Second Avenue, Xiasha Higher Education Zone, Hangzhou, Zhejiang, 310018, PR China;1. Università degli Studi di Napoli “Federico II”, Via Claudio 21, 80125 Napoli, Italy;2. Università degli Studi di Napoli “Federico II”, Piazzale Tecchio 80, 80125 Napoli, Italy;3. Università degli Studi di Napoli “Federico II”, Via Cinthia 21, 80126 Napoli, Italy;4. Università degli Studi di Salerno, Via Ponte Don Melillo 132, 84084 Fisciano, Salerno, Italy;5. Technische Hochschule Ingolstadt, Esplanade 10, 85049 Ingolstadt, Germany;1. University of Belgrade – Faculty of Transport and Traffic Engineering, Division of Airports and Air Traffic Safety, Vojvode Stepe 305, Belgrade, Serbia;2. ENAC – Ecole Nationale de l''Aviation Civile, Laboratoire de Mathématiques Appliquées, Informatique et Automatique pour l''Aérien (MAIAA), 7 Avenue Edouard-Belin CS 54005, 31055 Toulouse Cedex 4, France;1. Instituto Superior de Economia e Gestão, University of Lisbon, Rua Miguel Lupi, 20, 1249-078 Lisbon, Portugal;2. COPPEAD Graduate Business School, Federal University of Rio de Janeiro, Rua Paschoal Lemme, 355, 21949-900 Rio de Janeiro, Brazil;1. Technopreneurship and Innovation Management, Graduate School, Chulalongkorn University, Bangkok, Thailand;2. Department of Industrial Engineering Faculty of Engineering, Chulalongkorn University, Bangkok, Thailand;3. Department of Marketing, Faculty of Commerce and Accountancy, Chulalongkorn University, Bangkok, Thailand |
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| Abstract: | The aim of this paper is to evaluate the capacity utilization and cost gap between actual and global long-run minimum costs. Based on the data for thirteen low-cost carriers around the world for the year 2010, an input-oriented data envelopment analysis model is used to estimate the physical capacity utilization and cost gap between actual and global long-run minimum costs. The empirical results show that more than half of low-cost carriers should improve their capacity utilization, and all low-cost carriers should enhance their market efficiency and reduce their excess costs. Of the thirteen low-cost carriers, three should improve their technical efficiency, four should re-distribute the mix of variable inputs, all thirteen should pay lower prices for all variable inputs, and ten should enhance the utilization rate of their fixed factors. |
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| Keywords: | Low-cost carriers Data envelopment analysis Efficiency Capacity utilization |
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