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VOL. 10, ISSUE 4 (2025)
Exploring operational efficiency and scale of production in Indian aviation sector: A data envelopment analysis (DEA) approach
Authors
Dr. Siddhartha Sankar Saha, Sreetama De, Dr. Mitrendu Narayan Roy
Abstract
The current study evaluates the technical and
scale efficiency of airlines companies operating in Indian. An attempt has been
made to evaluate how efficiently the operating cost and its components are
utilized by each airline companies relative to its peers. The study was
conducted from the financial year 2004-05 to 2018-19 on six major airline
companies operating in India covering both the full service and low-cost
carriers using secondary data drawn from various sources. An input-oriented
Data Envelopment Analysis (DEA) is used to estimate the efficiency of select
airline companies. The analysis begins with constant returns to scale (CRS) and
later extends to variable returns to scale (VRS) following the CCR (Charnes,
Cooper, and Rhodes) Model and BCC (Banker, Charnes, and Cooper) Model
respectively. The empirical estimates show that airlines are operating with
Overall Technical Efficiency (OTE) between 62.2 per cent and 92.7 per cent. It
is observed that Jet Airways is the most efficient unit during the period of
study. It is also observed that major source of the overall technical
inefficiency for the select aviation companies is scale inefficiency and not
pure technical efficiency. Additionally, Scale Deficiency Index (SDI) indicates
that aviation companies experiencing DRS is more than the percentage of
aviation companies experiencing IRS. Hence, the findings suggest that the
majority of Indian airline companies are too small to achieve economies of
scale. Therefore, to reap the benefits of economies of scale, most of Indian
aviation companies need to scale up their production to achieve efficiency.
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Pages:81-91
How to cite this article:
Dr. Siddhartha Sankar Saha, Sreetama De, Dr. Mitrendu Narayan Roy "Exploring operational efficiency and scale of production in Indian aviation sector: A data envelopment analysis (DEA) approach". International Journal of Advanced Research and Development, Vol 10, Issue 4, 2025, Pages 81-91
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