Route-based performance evaluation of Taiwanese domestic airlines using data envelopment analysis

This study employs data envelopment analysis (DEA) approach to evaluate the performance of domestic air routes from the perspectives of cost efficiency, cost effectiveness and service effectiveness. A total of 15 routes operated by a Taiwanese domestic airline are examined. Three input variables, two production variables and two service variables are selected from the regression analysis. The results of DEA model demonstrate that ten routes are relatively cost efficient, five routes are relatively cost effective and four routes are relatively service effective. Improvements for all inefficient routes are proposed based on their slack values. Furthermore, 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. The characteristics and directions of improvement for each cluster are analyzed and proposed.