Abstract: This work studies the technical efficiency of fifty European airline companies over the period 2003-2012. In the period under study, European airlines have suffered a decline in profits due to the 2007 crisis and rising oil prices in Europe. These phenomena have increased competition in the airline industry. Using stochastic frontier methods, this paper contributes to the literature by comparing the efficiency of two Models of Knowledge Management : legacy carriers and low-cost carriers. Furthermore, this paper contributes to the literature by analysing the effects other topics of airline literature including deregulation/liberalisation, the importance of the European hubs, and the impact on efficiency of the time and timeliness management. The results show that Low Cost model were, on average, 13 per cent more efficient in the period under study, which has led low cost carriers to increase their market share through more competitive prices.

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