6. Conclusion
This paper presents an analysis of the efficiency of Latin American airlines, using VDRAM DEA modelling and Simplex regression. VDRAM makes it possible to rank airline efficiency, and it turns out there is much variation between airlines, with Sky Airline ranking first, with a score of 0.95 in 2010. Relative to the frontier of best practices, in which values equal to 1 signify full efficiency, this airline presents an inefficiency level of 1e0.95 ¼ 0.05. The least fficient airline is LATAM, which scored 0.21 in 2014. Based on the Simplex regression results, drivers of efficiency are fleet mix and public ownership. Fleet mix has shown some impact on efficiency, meaning that operating certain types of aircraft can represent an additional cost to airlines, thus affecting their efficiency. Additionally, smaller aircraft, such as those manufactured by Embraer and Bombardier, have a positive impact on efficiency. Public ownership is also a positive influence on efficiency, which indicates that small markets are one of the major problems of Latin American airlines, which face tough regulation and enjoy public subsidies. This, however, maybe one of the major causes that helps in explaining why low cost airlines are as efficient as their full service counterparts are. With the exception of the learning curve, the airline market of Latin America resembles that of Africa with respect to economic fundamentals. Further research is necessary to confirm these results.