Evaluating airline competitiveness using multiattribute decision making

This paper presents an objective approach to the evaluation of airline competitiveness. The evaluation problem is formulated as a multiattribute decision making model and solved by three widely used methods (the simple additive weighting method, the weighted product method and the technique for order preference by similarity to ideal solution) based on multiattribute value theory. A new empirical validation procedure is developed to deal with the inconsistency problem of evaluation outcomes produced by the three methods. The procedure selects the evaluation outcome which has a minimum expected value loss. An empirical study on Taiwan's five major domestic airlines is conducted to demonstrate the effectiveness of the approach. To measure and compare overall competitiveness of the airlines, five competitiveness dimensions and their associated objective performance measures on both efficiency and effectiveness are identified. The result of empirical validation for the three methods suggests the use of the simple additive weighting method. The evaluation outcome helps an airline identify its competitive advantages relative to its competitors. The objective approach presented is particularly applicable when subjective judgements on performance ratings and attribute weights are not reliable, or suitable decision makers are not available.