Cost efficiency in Two-stage FDH networks

A very important subject in Data Envelopment Analysis (DEA) involves performance assessment of airlines based on Free Disposal Hull (FDH) models in pre- and post-flight stages. In this paper, we propose a cost efficiency model for Iranian airlines under the framework of FDH-based two-stage processes with elimination of the convexity constraint. The proposed FDH-based cost efficiency model is technically a nonlinear programming problem that using pairwise comparison, can evaluate the decision-making units (DMUs) through less calculations and determine the standard for inputs based on input prices. In a similar manner, we can arrive at the standard for outputs by considering the output prices. In the end, 13 Iranian airlines are evaluated in a two-stage DEA process with omission of the convexity constraint and their corresponding input and output standards are presented.