Financial Performance OfAir Transport Companies:An Analysis Of The Non-Pareto-efficient Space InData Envelopment Analysis

This paper studies the financial performance of public air transport companies. Data envelopment analysis (DEA) is applied to three dimensions: financial variables related to capital structure (financial leverage) as input, and firm size and tangible assets as outputs. A discussion between the classical DEA method of variable return of scale and the Russel efficiency is developed in cases where the decision making unit (DMU) lies in non-Pareto-efficient space. The paper shows the method managers may follow to correct the performance index of the DMU, so they may make better decisions about the path to the efficiency frontier, using both approaches, and considering the minimization of inputs and the maximization of outputs.