Due to the intense competition among operating airlines globally, airline companies have been compelled to utilize various types of performance measurement tools to improve the quality of their services. The performance indicator is an important factor used in business goal setting and management performance assessment. Since there are very few studies regarding airline performance have integrated BSC and DEA simultaneously. Thus, the basis of this study is to combine BSC and DEA to generate a conceptual in order to develop strategic management system in airline industry. The objectives of this study are to assess the operational performance of the major airline companies in the world and then set the benchmark of performance standards for airline companies in the heightened competitive airline industry. It also aims to identify the root causes of inefficiencies and then propose ways to improve the competitiveness of airline companies. The proposed conceptual framework integrates the Balanced Scorecard (BSC) method with the non-parametric technique known as Data Envelopment Analysis (DEA) by using various interconnected models which try to encapsulate four perspectives of performance (financial, customers, internal processes, learning and growth). The findings of this study demonstrated the directives from the balanced scorecard generated the managerial heuristic necessary for successfully constraining the DEA model to predict managerial decisions to close certain poor performing units. It is expected that the results of this study can serve as a baseline for the academic research. These results are also very helpful for the executives of airline companies to allocate their resources.
