Route performance evaluation of Taiwanese domestic airlines

Abstract

This study employs data envelopment analysis (DEA) approach to evaluate the performance of domestic air routes. A total of 15 routes operated by a Taiwanese domestic airline are examined from the perspectives of cost efficiency, cost effectiveness and service effectiveness. Three input variables, two production variables and two service variables are selected from the regression analysis. The routes evaluated as relative efficiency are presented and the improvements for all inefficient routes are thereupon proposed. This study also performs agglomerative hierarchical clustering analysis to categorize the routes into four clusters according to their efficiency and effectiveness scores of three perspectives. Moreover, four routes featured in each cluster are respectively selected to have further evaluation of the routes' monthly performance.