A jet engine converts fuel into thrust. One key metric of performance is the thermal efficiency; how much of the chemical energy (fuel) is turned into useful work (thrust propelling the aircraft at high speeds). Like a lot of heat engines, jet engines tend to not be particularly efficient (<50%); a lot of the fuel is "wasted".^{[citation needed]} In the 1970s, economic pressure due to the rising cost of fuel resulted in increased emphasis on efficiency improvements for commercial airliners.

Jet engine performance has been phrased as 'the end product that a jet engine company sells' and, as such, criteria include thrust, (specific) fuel consumption, time between overhauls, power-to-weight ratio. Some major factors affecting efficiency include the engine's overall pressure ratio, its bypass ratio and the turbine inlet temperature. Performance criteria reflect the level of technology used in the design of an engine, and the technology has been advancing continuously since the jet engine entered service in the 1940s. It is important to not just look at how the engine performs when it's brand new, but also how much the performance degrades after thousands of hours of operation. One example playing a major role is the creep in/of the rotor blades, resulting in the aeronautics industry utilizing directional solidification to manufacture turbine blades, and even making them out of a single crystal, ensuring creep stays below permissible values longer. A recent development are ceramic matrix composite turbine blades, resulting in lightweight parts that can withstand high temperatures, while being less susceptible to creep.^{[citation needed]}

The following parameters that indicate how the engine is performing are displayed in the cockpit: engine pressure ratio (EPR), exhaust gas temperature (EGT) and fan speed (N1). EPR and N1 are indicators for thrust, whereas EGT is vital for gauging the health of the engine, as it rises progressively with engine use over thousands of hours, as parts wear, until the engine has to be overhauled.

The performance of an engine can calculated using thermodynamic analysis of the engine cycle. It calculates what would take place inside the engine. This, together with the fuel used and thrust produced, can be shown in a convenient tabular form summarising the analysis.

An introductory look at jet engine performance may be had in a cursory but intuitive way with the aid of diagrams and photographs which show features that influence the performance. An example of a diagram is the velocity triangle which in everyday life tells cyclists why they struggle against wind from certain quarters (and where head-on is worst) and in the engine context shows the angle air is approaching compressor blades (head-on is best for low losses). The use of velocity triangles in compressors and turbines to show the all-important angle at which air approaches the blading goes back to early steam turbines.

Photographs show performance-enhancing features such as the existence of bypass airflow (increased propulsive efficiency) only visually obvious on engines with a separate exit nozzle for the bypass air. They are also used to show rarely seen internal details such as honeycomb seals which reduce leakage and save fuel (increased thermal efficiency), and degrading details such as the rub marks on centrifugal impeller blades which indicate loss of material, increased air leakage and fuel consumption.

Jet engines perform in two basic ways, the combined effect of which determines how much waste they produce as a byproduct of burning fuel to do thrust work on an aircraft. First is an energy conversion as burning fuel speeds up the air passing through which at the same time produces waste heat from component losses (thermal efficiency). Second, part of the power which has been given to the air by the engine is transferred to the aircraft as thrust work with the remaining part being kinetic energy waste in the wake (propulsive efficiency). The two efficiencies were first formulated in the 19th century for the steam engine (thermal efficiency ${\displaystyle \eta _{th}}$) and the ship's propeller (propulsive or Froude efficiency ${\displaystyle \eta _{pr}}$).

A visual introduction to jet engine performance, from the fuel efficiency point of view, is the Temperature~entropy (T~s) diagram. The diagram originated in the 1890s for evaluating the thermal efficiency of steam engines. At that time entropy was introduced in graphical form in the T~s diagram which gives thermal efficiency as a ratio of areas of the diagram. The diagram also applies to air-breathing jet engines with an area representing kinetic energy added to the air flowing through the engine. A propulsion device, a nozzle, has to be added to a gas turbine engine to convert its energy into thrust. The efficiency of this conversion (Froude or propulsive efficiency) reflects work done in the 1800s on ship propellers. The relevance for gas turbine-powered aircraft is the use of a secondary jet of air with a propeller or, for jet engine performance, the introduction of the bypass engine. The overall efficiency of the jet engine is thermal efficiency multiplied by propulsive efficiency ( ${\displaystyle \eta _{o}=\eta _{th}\eta _{pr}}$).