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Service quality and productivity in the U.S. airline industry: a service quality-adjusted DEA model

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  • Kanghwa Choi
  • DonHee Lee
  • David Olson

Abstract

The airline industry faces economic challenges making it paramount that they provide satisfactory service to customers relative to their expectations. This study uses a service quality-adjusted data envelopment analysis (SQ-adjusted DEA) to study US-based airline carrier operational efficiency. We found that airlines can overcome the traditional tradeoff between quality and productivity. Using SQ-adjusted DEA, we were able to find how airlines could set service levels in accordance with their strategic purpose or operational characteristics. Low-cost airlines were found to benefit by marginal improvements in service, often unexpected by their clientele. Network carriers, however, tended to have a harder time meeting service expectations. While there were short-term tradeoffs between service quality and productivity, in the long term a focus on service quality may help increase customer satisfaction, thus improving service productivity and overall organizational performance. SQ-adjusted DEA was found to be better suited to explore service productivity than the standard DEA. Copyright Springer-Verlag Berlin Heidelberg 2015

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  • Kanghwa Choi & DonHee Lee & David Olson, 2015. "Service quality and productivity in the U.S. airline industry: a service quality-adjusted DEA model," Service Business, Springer;Pan-Pacific Business Association, vol. 9(1), pages 137-160, March.
    • Handle: RePEc:spr:svcbiz:v:9:y:2015:i:1:p:137-160
    DOI: 10.1007/s11628-013-0221-y
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