Financial Efficiency in Airlines During the COVID-19 Pandemic: A DEA Approach

Abstract

The airline industry is a competitive sector in which most airline companies face challenges in retaining passengers and achieving sustainable profitability. To survive in this competitive environment, an airline must be able to offer and sell more air services while using fewer resources. Under the strain of the COVID-19 pandemic, airlines have pivoted toward strategies that optimize their resource usage to develop competitive strategies centered on enhancing their efficiency. Considering this, the present study seeks to evaluate and contrast the efficiency levels of 19 prominent airline carriers, all affiliated with the International Air Transport Association (IATA), during the period spanning 2017 to 2021. Employing the methodologies of Data Envelopment Analysis (DEA), the research endeavors to extract meaningful findings. The study’s outcomes underscore the efficiency of American Airlines, Indigo, and Spirit Airlines throughout the research timeframe. Conversely, Ryanair, LATAM, China Southern Airlines, Air China, British Airways, Emirates, and China Eastern Airlines exhibited relative inefficiency during the analyzed interval. This research underscores the pivotal role of financial efficiency in the resilience and competitive standing of the airline sector, particularly during the formidable challenges posed by the COVID-19 pandemic.

Keywords

• Aviation
• Efficiency
• COVID-19
• Data Envelopment Analysis

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