Airline operating performance indicators towards implications: An analysis of major North American airlines

This paper measures and compares the productivity and cost competitiveness of nine major North American carriers during the period of 1990-2007. The key findings are: (1) Overall, airlines' productivity levels, either measured by Total Factor Productivity (TFP) or Residual Total Factor Productivity (RTFP) has experienced significant improvements over the years. (2) Airlines' productivity levels are clearly correlated with the overall economic business cycle. The 9/11 incidence had a clear impact to airlines' productivity in 2001 and 2002, yet it had little impact to the overall trend of productivity change; (3) Airlines' productivity are not converging, if anything, the efficiency differences may have been enlarged. (4) Labor input price has been the most important determinant for airlines' cost competitiveness, thus a good control of labor cost is still of great importance in the future. (5) Aggressive fleet expansion has resulted in detrimental to the productivity and cost competitiveness of airlines.