EFFECTS OF AIRCRAFT LEASED/OWNED ON OPERATIONAL AND WEALTH-CREATION EFFICIENCIES

Date
2021-06
Authors
Kweh, Qian Long
Ting, Irene Wei Kiong
Lu, Wen-Min
Lin, Cheng-Hsien
Journal Title
Journal ISSN
Volume Title
Publisher
Fabrizio Serra Editore Srl
Abstract
This study examines the operational performance and wealth-creation efficiency of 22 global airlines over the period 2005-2017. That is, an airline efficiency evaluation model is proposed and assessed by employing a dynamic DEA model with network structure via a slacks-based measure approach. Moreover, this study performs a DuPont analysis and examines how leasing or owning aircraft in the airline industry explains airline efficiencies. Results corroborate that airlines with more owned aircraft relative to leased aircraft are more efficient than their counterparts in all aspects. DuPont analysis reveals that the former group of airlines' positive return on equity (ROE) on average is attributable to their higher net profit margin and asset turnover ratio, but lower equity multiplier compared with those of the latter group of airlines. The number of aircraft owned (leased) has a significantly positive (negative) effect on airline efficiencies. Taken together, this study offers empirical evidence for the relevance of change in accounting standard, particularly leasing in this study, in the transportation economics. Airlines should manage well not only their resources, but also their aircraft fleet deployment. In addition, this study points out the relevance of the textbook-based DuPont system in analyzing airlines' financial performance. © 2021 Fabrizio Serra Editore Srl. All rights reserved.
Description
Keywords
Aircraft owned, Airline efficiency, Dynamic network slacks-based measure, Operational performance, Wealth-creation efficiency
Citation
Kweh, Q. L., Ting, I. W. K., Lu, W. -., & Lin, C. -. (2021). EFFECTS OF AIRCRAFT LEASED/OWNED ON OPERATIONAL AND WEALTH-CREATION EFFICIENCIES. International Journal of Transport Economics, 48(2), 201-220. http://dx.medra.org/10.19272/202106702004