This paper measures and compares the performance of 10 major North American airlines in terms of residual total factor productivity, cost competitiveness, and residual average yields during the period 1990-2001. Our key findings are: (a) the airlines in North American improved productive efficiency by about 12% between 1990 and 2001 despite the fact that there were substantial reduction of residual TFP between 2000 and 2001; (b) airlines need to perform well in both productive efficiency and pricing to be financially successful; (c) significant productivity improvement in the 1990s enabled the airlines to cope with rising input prices and downward pressure on yields; (d) airlines that aggressively expanded fleet in response to the fast growing market during the mid-1990s have suffered loss in productive efficiency; (e) the 9/11 terrorist attack has led to substantial reductions in airlines' yields, and declining productivity and increasing unit cost.
- Cost competitiveness
- Productive efficiency
ASJC Scopus subject areas
- Geography, Planning and Development