Measuring the network capacity utilization, energy consumption and environmental inefficiency of global airlines

Abstract

While several studies have utilized carbon emissions to analyze airline performance, to the best of our knowledge, there have been limited studies simultaneously examining airline capacity utilization, energy consumption, and carbon emissions. The sample of this study comprises 33 global airlines in 2018. Our proposed model extends the two-stage network data envelopment analysis (DEA) model by adding a capacity utilization metric in a nonconvex metafrontier framework. The results show that there is no difference in performance between alliance and nonalliance airline groups in terms of environmental and network capacity efficiencies. Two-thirds of the selected airlines operate inefficiently in terms of environmental efficiency, while 15 selected airlines experience inefficiencies in network capacity utilization. To reach the technology frontier, these airlines are required to scale their variable inputs to enhance their capacity outputs and mitigate carbon emissions. The results can serve as a guide for industry players and regulators to detect inefficiencies in the overall potential maximum capacity and production technology constraints that affect energy consumption and carbon emissions.