Measuring E¢ ciency: A Kalman Filter Approach (original) (raw)

Accounting for Environmental Influences in Stochastic Frontier Models: With Application to International Airlines

Journal of Productivity Analysis, 1999

The principal aim of this paper is to measure the efficiency of international airlines. We obtain measures of technical efficiency from stochastic frontier production functions which have been adjusted to account for environmental influences such as network conditions, geographical factors, etc. We observe that two alternative approaches to this problem have been proposed in the efficiency measurement literature. One assumes

A nonlinear multivariate error components analysis of technology and specific factor productivity growth with an application to the U.S. Airlines

Journal of Econometrics, 1985

This study outlines a nonlinear model of technology and specific factor productivity growth and uses the model to analyze a new panel of sixteen domestic carriers in the U.S. airline industry over 35 quarters from 1970.1 to 1978.111. We outline mapping procedures which allow construction of the production surfaces implied by the translog cost function used in our analysis. To our knowledge this study is the first to estimate such a general nonlinear multivariate error components model using full-information maximum likelihood. 'For an excellent survey of the literature on panel data models, see Chamberlain (1984). The edited volume by Heckman and Singer (1982) also provides a collection of recent contributions.

Persistent and Transient Efficiency of International Airlines

European Journal of Transport and Infrastructure Research

This paper examines the efficiency of international airlines for the period 1998-2012 using some competing stochastic frontier (SF) panel data models. It estimates a cost function for multi-output airline services, separating passenger and goods transportation at the national and international levels. Our preferred SF model distinguishes airlines heterogeneity from time-invariant persistent inefficiency, and transient (time-varying) inefficiency from random the noise component. This four component SF model is compared with two other competing SF models in which one of the four components is missing. All the models are estimated using the maximum likelihood method. The models give predicted values of persistent, transient and overall efficiency for each airline and time period. The mean and dispersion of cost efficiency amongst airlines differ by model specifications and according to their geographical area of operations. The performance difference may be a consequence of different m...

European vs. U.S. airlines: Performance comparison in a dynamic market

This study measures and compares the efficiency and productivity of European and U.S. airlines, over the period from 2001 to 2008. We measure efficiency by estimating a Bayesian distance frontier model subject to regularity constraints. Productivity estimates are also derived parametrically, based on the estimates of the distance frontier model. We estimate both a constrained (i.e. subject to regularity conditions) and an unconstrained model and we show the importance of imposing the monotonicity and curvature conditions on the distance function. The efficiency and productivity results based on the constrained model indicate that European airlines have slightly higher efficiency and productivity growth than U.S. airlines. A comparison based on the type of airlines indicates that low-cost airlines are on average more productive and efficient than full-service airlines. The decomposition of productivity growth and related market discussions are also provided.

Estimation of Commercial Airline Traffic With Economic Growth Indicator

Zenodo (CERN European Organization for Nuclear Research), 2021

In recent days, it is crucial to calculate the volume of air traffic in line with the economic indicators of the countries and to make the necessary plans to increase efficiency and productivity according to this density type. Although commercial airline traffic is known to be associated with economic growth indicators, the relationship between them cannot be expressed numerically. The purpose of this research is to form an Artificial Neural Network (ANN)-based model to reveal and estimate its relationship with commercial airline traffic, taking as reference economical growth parameters like; the country's Gross National Product (GDP), import and export data. In the ANN model created in the study, gross domestic product, import and export volume values are used for the estimation of commercial airline traffic. Simulation results were analyzed using correlation coefficient (R) determination coefficient (R ^ 2) and mean absolute percent error (MAPE) evaluation methods. It has been seen that the developed model is a successful model that can be used in the prediction of commercial airline traffic.

Airline efficiency performance in the turbulent period before and after economic crisis

Tehnika

The purpose of the paper is to analyze the operational performance of a set of17 airlines that operate across Europe in 2008 and 2012, the period that imposed a burden of challenge to airline industry due to severe global economic crisis occurred in 2008.In addition to major carriers in Europe, the sample contains several airlines located in Central and SouthEast Europe that have been not been broadly investigated in the relevant literature. The study utilizes the standard DEA approach with the inputs consisting of several subsets (resources, costs, capacity, etc), while outputs encompass productivity and economic indices. The results of the model reveal that most of the SouthEast and Central European airlines are inefficient relative to their western counterparts. Still, these large western airlines tend to be inefficient compared to the major low-cost carriers operating in Europe. Moreover, the model enables obtaining insights into the cause of inefficiency of the airlines with particular implications for improvement in the future. Despite severe economic crisis, the model shows that airlines tend to recover faster than one could even expect it.

International Air Transportation Carriers: Evidence from SFA and DEA Technical Efficiency

In this paper we estimate technical efficiency in International Air Transport, by means of Stochastic Frontier Analysis (SFA) using a panel set of the world's twenty-four (24) largest network airlines, for the period 1991-2000. The results are compared to those from Data Envelopment Analysis (DEA), a popular approach for efficiency measurement in the literature. Findings suggest that airlines experience constant returns to scale, while technical efficiency ranges between 51% and 97% approximately. Furthermore, the level of technology experienced a slight increase, while the privatization of few of the airlines in the data set didn't seem to affect their technical efficiency. Results from SFA and DEA do not vary significantly.

Estimation of long-run inefficiency levels: a dynamic frontier approach

Econometric Reviews, 2000

Cornwell, Schmidt, and Sickles (1990) and Kumbhakar (1990), among others, developed stochastic frontier production models which allow firm specific inefficiency levels to change over time. These studies assumed arbitrary restrictions on the short-run dynamics of efficiency levels which have little theoretical justification. Further, the models are inappropriate for estimation of long-run efficiencies. We consider estimation of an alternative frontier model in which firmspecific technical inefficiency levels are autoregressive. This model is particularly useful to examine a potential dynamic link between technical innovations and production inefficiency levels. We apply our methodology to a panel of US airlines.

Long Run Properties of Technical Efficiency in the U.S. Airline Industry

1997

This paper takes an innovative approach to test the relationship between technical efficiency and the market structure hypothesis which states that competitive pressure enhances relative efficiency. DEA and FDH time series of technical efficiency scores, for a panel of 11 US airlines observed quarterly during 1970-1990, are examined for cointegration and convergence. For almost all firm pairs (>90% for both