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Persistent and transient productive efficiency in the African airline industry
Gianmaria Martini1, Flavio Porta1, Davide Scotti1
1Università degli studi di Bergamo, Bergamo, Italy.
Journal of Productivity Analysis
|June 26, 2023
Summary
African airlines show low efficiency, highlighting the need for better input utilization. Enhanced economic freedom is key to improving airline performance and fostering sustainable aviation development across the continent.
Area of Science:
- Aviation Management
- Transport Economics
- Sustainability Studies
Background:
- Airline efficiency is crucial for Africa's aviation sustainability and economic development.
- Previous studies have not fully disentangled the components of airline efficiency in the African context.
Purpose of the Study:
- To estimate the efficiency of African airlines from 2010-2019.
- To analyze the impact of ownership, political stability, location, economic freedom, and global alliances on airline efficiency.
- To provide policy recommendations for improving African airline performance.
Main Methods:
- Utilized a state-of-the-art stochastic frontier model.
- Disentangled persistent efficiency, transient efficiency, and unobserved heterogeneity.
- Examined the influence of various factors on both persistent and transient efficiency.
Main Results:
- Evidence of relatively low efficiency and decreasing returns to scale among African airlines.
- Protectionism appears to be a significant, albeit context-specific, driver of efficiency.
- Increased economic freedom demonstrated a stronger positive impact on airline efficiencies.
Conclusions:
- African airlines require improved input utilization to enhance operational efficiency.
- Policy interventions promoting economic liberalization are essential for improving airline performance.
- Fostering economic freedom can unlock greater potential for sustainable aviation in Africa.
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