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An outsourcing provider decision model for the airline industry

Author

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  • Hsu, Chao-Che
  • Liou, James J.H.

Abstract

Outsourcing has become the next critical business process that needs to be addressed by airlines. Successful outsourcing depends on the selection of the appropriate provider. However, this practice is not always successful and its theoretical justification has not been fully explored. Some significant efforts have been made based on the transaction cost economics framework. Different from previous studies, we propose a new hybrid Multiple Criteria Decision-Making (MCDM) model, which combines the Decision Making Trial and Evaluation Laboratory and the Analytical Network Process (DANP) method. Our model overcomes problems with previous methods. Our results show that: 1) employees with good knowledge skills contribute to better service quality; 2) a good relationship between airlines and their partners is the foundation of a successful outsourcing activity; and 3) risk plays a major role in the outsourcing evaluation system, and has the greatest effect on the other dimensions. The model can be extended to other service sectors.

Suggested Citation

  • Hsu, Chao-Che & Liou, James J.H., 2013. "An outsourcing provider decision model for the airline industry," Journal of Air Transport Management, Elsevier, vol. 28(C), pages 40-46.
    • Handle: RePEc:eee:jaitra:v:28:y:2013:i:c:p:40-46
    DOI: 10.1016/j.jairtraman.2012.12.009
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    References listed on IDEAS

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    1. Pi-Fang Hsu & Mei-Ghing Hsu, 2008. "Optimizing the Information Outsourcing Practices of Primary Care Medical Organizations Using Entropy and TOPSIS," Quality & Quantity: International Journal of Methodology, Springer, vol. 42(2), pages 181-201, April.
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    5. Ngwenyama, Ojelanki K. & Bryson, Noel, 1999. "Making the information systems outsourcing decision: A transaction cost approach to analyzing outsourcing decision problems," European Journal of Operational Research, Elsevier, vol. 115(2), pages 351-367, June.
    6. Saaty, Thomas L. & Shang, Jennifer S., 2011. "An innovative orders-of-magnitude approach to AHP-based mutli-criteria decision making: Prioritizing divergent intangible humane acts," European Journal of Operational Research, Elsevier, vol. 214(3), pages 703-715, November.
    7. Rieple, Alison & Helm, Clive, 2008. "Outsourcing for competitive advantage: An examination of seven legacy airlines," Journal of Air Transport Management, Elsevier, vol. 14(5), pages 280-285.
    8. Aimao Zhang & Han Reichgelt, 2006. "Product Complexity as a Determinant of Transaction Governance Structure: An Empirical Comparison of Web-Only and Traditional Banks," Journal of Electronic Commerce in Organizations (JECO), IGI Global, vol. 4(3), pages 1-17, July.
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