Persistent and transient productive efficiency in the African airline industry

Airline efficiency growth is considered one of the key factors for aviation sustainability in Africa and, in turn, for creating a successful relationship between aviation activities and economic development in the continent. This paper proposes estimating the efficiency of African airlines in the period 2010-2019 using a state-of-the-art stochastic frontier model disentangling persistent, transient efficiency, and unobserved heterogeneity. We also examine the impact of (i) ownership structure, (ii) political stability, and (iii) geographical location exerts on both persistent and transient efficiency, and confirm the importance of the optimal use of durable capital inputs for African airlines. We also find evidence of decreasing returns to scale and of average levels of persistent and transient efficiency relatively low. On the basis of these results, some policy implications are derived and discussed in the direction of increased (i) liberalization and (ii) the presence of private capital in African airlines.