Measuring efficiencies and economic impact of air transportation sector in the U.S. economy using data envelopment analysis and Leontief analysis

This study investigates both the economic impacts on air transportation using Leontief input-output, and the company's efficiencies of air transportation using Data Envelopment Analysis (DEA). The Leontief model involves 65 sectors of the U.S economy, which gives us a broad view of all sectors' performance. We used historical data from 1998 to 2011 and forecasted data from 2012 to 2015, due to lack of historical data. A three step moving average model was used to forecast the input-output data table. R software was used to forecast the input-output data table, and to calculate the Input-output multipliers.;For the evaluation of the efficiency of individual airlines, Data Envelopment Analysis model (DEA) was used to calculate the companies' efficiency scores . DEA is used to determine the efficiency score of the group of companies, divisions, departments, which are considered in this case as decision-making units (DMUs). DEA analyzes the efficiency of a DMU by comparing it with the best DMU in the group under evaluation.;This study involves ten major, and four regional airline companies. The data used was drawn from 2000 to 2011, using secondary data obtained from U.S. Department of transportation. IBM ILOG CPLEX software was used to perform the Data Envelopment Analysis (DEA).;The air transportation sector is highly dependent on the petroleum and coal product industries. The Federal government enterprises sector is the highest consumer sector of air transportation sources. Data Envelopment Analysis results show which major airlines used their resources more efficiently to maximize their output as compared to all other airlines.;This study has enabled us to determine what are the most relevant sectors in the economy of the U.S., as well as how the interrelations between these sectors are manifested, and in particular, we have learned about the economic impact of the airline industry and its accompanying efficiencies. The key conclusion for this study is whichever policy is adapted by government or the companies' leaders, manufacturing sectors should be considered as major contributors to the U.S. economy. Moreover, miscellaneous professional, scientific, and technical service sectors should be considered because they are the largest new generator of jobs, and are also the highest paid sectors in the U.S. economy today.