IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v43y2009i9-10p779-789.html
   My bibliography  Save this article

Is it the labor unions' fault? Dissecting the causes of the impaired technical efficiencies of the legacy carriers in the United States

Author

Listed:
  • Greer, Mark

Abstract

Data envelopment analysis is used to evaluate the technical efficiencies of a number of major passenger airlines in the United States at transforming their inputs (labor, fuel and fleet-wide seating capacity) into available seat-miles. A tobit regression model is then used to identify the underlying drivers of airline efficiency, as measured by the data envelopment analysis efficiency score. The impact of unionization on airline efficiency is found to be statistically insignificant, controlling for the influences of other hypothesized determinants of airline efficiency: the average age of an airline's fleet, the average size of its aircraft, its average stage length, the extent to which the airline relies of hubbing within its route structure, the percent of its passenger enplanements that are international, and whether the airline is a legacy carrier. The statistically significant drivers of airline efficiency, at a ten percent level of significance, are average aircraft size, average stage length and the extent to which the airline relies on hubbing and connecting flights within its route structure. The stage length variable is not significant at a five percent level of significance, however. An increase in average aircraft size or in average stage length enhances an airline's efficiency whereas an increase in hubbing reduces it.

Suggested Citation

  • Greer, Mark, 2009. "Is it the labor unions' fault? Dissecting the causes of the impaired technical efficiencies of the legacy carriers in the United States," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 779-789, November.
  • Handle: RePEc:eee:transa:v:43:y:2009:i:9-10:p:779-789
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965-8564(09)00083-4
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Evangelia Desli & Subhash C. Ray, 2004. "A Bootstrap-Regression Procedure to Capture Unit Specific Effects In Data Envelopment Analysis," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 39(1), pages 89-110, January.
    2. Coelli, Tim & Grifell-Tatje, Emili & Perelman, Sergio, 2002. "Capacity utilisation and profitability: A decomposition of short-run profit efficiency," International Journal of Production Economics, Elsevier, vol. 79(3), pages 261-278, October.
    3. Barry T. Hirsch, 2008. "Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 153-176, Winter.
    4. Gary Chaison, 2007. "Airline Negotiations and the New Concessionary Bargaining," Journal of Labor Research, Springer, vol. 28(4), pages 642-657, September.
    5. Hirsch, Barry T & Macpherson, David A, 2000. "Earnings, Rents, and Competition in the Airline Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 125-155, January.
    6. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    7. Scheraga, Carl, 2006. "The Operational Impacts of Governmental Restructuring of the Airline Industry in China," 47th Annual Transportation Research Forum, New York, New York, March 23-25, 2006 208022, Transportation Research Forum.
    8. Scheraga, Carl A., 2006. "The Operational Impacts of Governmental Restructuring of the Airline Industry in China," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 45(1), pages 1-17.
    9. Chiou, Yu-Chiun & Chen, Yen-Heng, 2006. "Route-based performance evaluation of Taiwanese domestic airlines using data envelopment analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(2), pages 116-127, March.
    10. Scheraga, Carl A., 2004. "Operational efficiency versus financial mobility in the global airline industry: a data envelopment and Tobit analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(5), pages 383-404, June.
    11. Charnes, A. & Cooper, W. W. & Golany, B. & Seiford, L. & Stutz, J., 1985. "Foundations of data envelopment analysis for Pareto-Koopmans efficient empirical production functions," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 91-107.
    12. Chilingerian, Jon A., 1995. "Evaluating physician efficiency in hospitals: A multivariate analysis of best practices," European Journal of Operational Research, Elsevier, vol. 80(3), pages 548-574, February.
    13. Peter Kuhn, 1998. "Innis Lecture: Unions and the Economy: What We Know; What We Should Know," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1033-1056, November.
    14. Capobianco, Heloisa Márcia Pires & Fernandes, Elton, 2004. "Capital structure in the world airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(6), pages 421-434, July.
    15. Robin Sickles & David Good & Lullit Getachew, 2002. "Specification of Distance Functions Using Semi- and Nonparametric Methods with an Application to the Dynamic Performance of Eastern and Western European Air Carriers," Journal of Productivity Analysis, Springer, vol. 17(1), pages 133-155, January.
    16. Greer, Mark R., 2008. "Nothing focuses the mind on productivity quite like the fear of liquidation: Changes in airline productivity in the United States, 2000-2004," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 414-426, February.
    17. Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Seufert, Juergen Heinz & Arjomandi, Amir & Dakpo, K. Hervé, 2017. "Evaluating airline operational performance: A Luenberger-Hicks-Moorsteen productivity indicator," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 104(C), pages 52-68.
    2. Li, Ye & Wang, Yan-zhang & Cui, Qiang, 2015. "Evaluating airline efficiency: An application of Virtual Frontier Network SBM," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 1-17.
    3. Li, Ye & Wang, Yan-zhang & Cui, Qiang, 2016. "Has airline efficiency affected by the inclusion of aviation into European Union Emission Trading Scheme? Evidences from 22 airlines during 2008–2012," Energy, Elsevier, vol. 96(C), pages 8-22.
    4. Wanke, Peter & Barros, C.P., 2016. "Efficiency in Latin American airlines: A two-stage approach combining Virtual Frontier Dynamic DEA and Simplex Regression," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 93-103.
    5. Mallikarjun, Sreekanth, 2015. "Efficiency of US airlines: A strategic operating model," Journal of Air Transport Management, Elsevier, vol. 43(C), pages 46-56.
    6. Huang, Fei & Zhou, Dequn & Hu, Jin-Li & Wang, Qunwei, 2020. "Integrated airline productivity performance evaluation with CO2 emissions and flight delays," Journal of Air Transport Management, Elsevier, vol. 84(C).
    7. Barros, Carlos P. & Liang, Qi Bin & Peypoch, Nicolas, 2013. "The technical efficiency of US Airlines," Transportation Research Part A: Policy and Practice, Elsevier, vol. 50(C), pages 139-148.
    8. Chiou, Yu-Chiun & Lan, Lawrence W. & Yen, Barbara T.H., 2012. "Route-based data envelopment analysis models," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 415-425.
    9. Arjomandi, Amir & Dakpo, K. Hervé & Seufert, Juergen Heinz, 2018. "Have Asian airlines caught up with European Airlines? A by-production efficiency analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 389-403.
    10. Cui, Qiang & Wei, Yi-Ming & Li, Ye, 2016. "Exploring the impacts of the EU ETS emission limits on airline performance via the Dynamic Environmental DEA approach," Applied Energy, Elsevier, vol. 183(C), pages 984-994.
    11. Barros, Carlos Pestana & Wanke, Peter, 2015. "An analysis of African airlines efficiency with two-stage TOPSIS and neural networks," Journal of Air Transport Management, Elsevier, vol. 44, pages 90-102.
    12. Cui, Qiang & Li, Ye & Yu, Chen-lu & Wei, Yi-Ming, 2016. "Evaluating energy efficiency for airlines: An application of Virtual Frontier Dynamic Slacks Based Measure," Energy, Elsevier, vol. 113(C), pages 1231-1240.
    13. Tsionas, Mike G. & Chen, Zhongfei & Wanke, Peter, 2017. "A structural vector autoregressive model of technical efficiency and delays with an application to Chinese airlines," Transportation Research Part A: Policy and Practice, Elsevier, vol. 101(C), pages 1-10.
    14. Cui, Qiang & Li, Ye, 2017. "Airline efficiency measures under CNG2020 strategy: An application of a Dynamic By-production model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 130-143.
    15. Kuljanin, Jovana & Kalić, Milica & Caggiani, Leonardo & Ottomanelli, Michele, 2019. "A comparative efficiency and productivity analysis: Implication to airlines located in Central and South-East Europe," Journal of Air Transport Management, Elsevier, vol. 78(C), pages 152-163.
    16. Devicienti, Francesco & Manello, Alessandro & Vannoni, Davide, 2017. "Technical efficiency, unions and decentralized labor contracts," European Journal of Operational Research, Elsevier, vol. 260(3), pages 1129-1141.
    17. Arjomandi, Amir & Seufert, Juergen Heinz, 2014. "An evaluation of the world's major airlines' technical and environmental performance," Economic Modelling, Elsevier, vol. 41(C), pages 133-144.
    18. Losa, Eduardo Tola & Arjomandi, Amir & Hervé Dakpo, K. & Bloomfield, Jason, 2020. "Efficiency comparison of airline groups in Annex 1 and non-Annex 1 countries: A dynamic network DEA approach," Transport Policy, Elsevier, vol. 99(C), pages 163-174.
    19. Cui, Qiang & Li, Ye, 2017. "Airline efficiency measures using a Dynamic Epsilon-Based Measure model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 121-134.
    20. Wanke, Peter & Pestana Barros, Carlos & Chen, Zhongfei, 2015. "An analysis of Asian airlines efficiency with two-stage TOPSIS and MCMC generalized linear mixed models," International Journal of Production Economics, Elsevier, vol. 169(C), pages 110-126.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Greer, Mark R., 2008. "Nothing focuses the mind on productivity quite like the fear of liquidation: Changes in airline productivity in the United States, 2000-2004," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 414-426, February.
    2. Seufert, Juergen Heinz & Arjomandi, Amir & Dakpo, K. Hervé, 2017. "Evaluating airline operational performance: A Luenberger-Hicks-Moorsteen productivity indicator," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 104(C), pages 52-68.
    3. Li, Ye & Wang, Yan-zhang & Cui, Qiang, 2015. "Evaluating airline efficiency: An application of Virtual Frontier Network SBM," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 1-17.
    4. Mallikarjun, Sreekanth, 2015. "Efficiency of US airlines: A strategic operating model," Journal of Air Transport Management, Elsevier, vol. 43(C), pages 46-56.
    5. Li, Ye & Wang, Yan-zhang & Cui, Qiang, 2016. "Has airline efficiency affected by the inclusion of aviation into European Union Emission Trading Scheme? Evidences from 22 airlines during 2008–2012," Energy, Elsevier, vol. 96(C), pages 8-22.
    6. Arjomandi, Amir & Seufert, Juergen Heinz, 2014. "An evaluation of the world's major airlines' technical and environmental performance," Economic Modelling, Elsevier, vol. 41(C), pages 133-144.
    7. George E. Halkos & Nickolaos G. Tzeremes, 2015. "Measuring Seaports' Productivity: A Malmquist Productivity Index Decomposition Approach," Journal of Transport Economics and Policy, University of Bath, vol. 49(2), pages 355-376, April.
    8. Yu, Ming-Miin & Chang, Yu-Chun & Chen, Li-Hsueh, 2016. "Measurement of airlines’ capacity utilization and cost gap: Evidence from low-cost carriers," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 186-198.
    9. Kottas, Angelos T. & Madas, Michael A., 2018. "Comparative efficiency analysis of major international airlines using Data Envelopment Analysis: Exploring effects of alliance membership and other operational efficiency determinants," Journal of Air Transport Management, Elsevier, vol. 70(C), pages 1-17.
    10. Cui, Qiang & Li, Ye, 2017. "Airline efficiency measures under CNG2020 strategy: An application of a Dynamic By-production model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 130-143.
    11. Xu, Xin & Cui, Qiang, 2017. "Evaluating airline energy efficiency: An integrated approach with Network Epsilon-based Measure and Network Slacks-based Measure," Energy, Elsevier, vol. 122(C), pages 274-286.
    12. Heshmati, Almas & C. Kumbhakar, Subal & Kim, Jungsuk, 2016. "Persistent and Transient Efficiency of International Airlines," Working Paper Series in Economics and Institutions of Innovation 444, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    13. R. Amy Puenpatom & Robert Rosenman, 2006. "Efficiency of Thai provincial public hospitals after the introduction of National Health Insurance Program," Working Papers 2006-2, School of Economic Sciences, Washington State University.
    14. Wanke, Peter & Barros, C.P., 2016. "Efficiency in Latin American airlines: A two-stage approach combining Virtual Frontier Dynamic DEA and Simplex Regression," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 93-103.
    15. Cavaignac, Laurent & Petiot, Romain, 2017. "A quarter century of Data Envelopment Analysis applied to the transport sector: A bibliometric analysis," Socio-Economic Planning Sciences, Elsevier, vol. 57(C), pages 84-96.
    16. Cui, Qiang & Li, Ye, 2017. "Airline efficiency measures using a Dynamic Epsilon-Based Measure model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 121-134.
    17. Zou, Bo & Elke, Matthew & Hansen, Mark & Kafle, Nabin, 2014. "Evaluating air carrier fuel efficiency in the US airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 306-330.
    18. Tavassoli, Mohammad & Faramarzi, Gholam Reza & Farzipoor Saen, Reza, 2014. "Efficiency and effectiveness in airline performance using a SBM-NDEA model in the presence of shared input," Journal of Air Transport Management, Elsevier, vol. 34(C), pages 146-153.
    19. Assaf, A. George & Josiassen, Alexander, 2012. "European vs. U.S. airlines: Performance comparison in a dynamic market," Tourism Management, Elsevier, vol. 33(2), pages 317-326.
    20. Dewita, Yulia & Yen, Barbara T.H. & Burke, Matthew, 2018. "The effect of transport cost on housing affordability: Experiences from the Bandung Metropolitan Area, Indonesia," Land Use Policy, Elsevier, vol. 79(C), pages 507-519.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:43:y:2009:i:9-10:p:779-789. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.