Environmental sustainability performance of US airlines: implications of financial performance and technical efficiency

Abstract

Air transportation significantly contributes to global CO2 emissions. The US Aviation Climate Action Plan introduced in November 2021 aims to decarbonize the aviation sector by 2050. Aligned with this initiative, our study applies Data Envelopment Analysis and fixed-effect panel regression to empirically explore how financial performance and technical efficiency impact Environmental Sustainability Performance (ESP) in the airline industry. We curated panel data of nine US passenger airlines from 2010 to 2019 to examine three key areas: the impact of financial performance on environmental sustainability performance, the influence of efficiency on environmental sustainability performance, and the relationship between flight stage length and environmental sustainability performance. Our findings indicate that improved Financial Performance, higher technical efficiency, and longer stage lengths positively contribute to enhanced environmental sustainability performance. Our study provides valuable insights for managers and policymakers, emphasizing the pivotal role of financial stability in achieving environmental goals within the airline industry. It underscores the intricate connection between economic viability and sustainability, offering guidance for policymakers seeking to balance financial success with environmental goals.