Comparative analysis of efficiency for major Southeast Asia airports: A two-stage approach

Within the past few years, the economy of Southeast Asia has been expanding rapidly with the rise in demand for air transport services. International airports are important driving forces for Southeast Asia countries' economies. Therefore, the competitive ability of these airports is very essential in terms of development and competitiveness within the region. This paper investigates the capabilities of these airports by a two-stage approach. The strengths and weaknesses of each Southeast Asia airport are evaluated by Data Envelopment Analysis – Slack-Based Measurement (DEA-SBM) in the first stage. This is a non-parametric approach to measure the efficiency of 9 major airports in the area including Changi Airport (Singapore), Suvarnabhumi Airport (Thailand), Kuala Lumpur Airport (Malaysia), Soekarno Hatta Airport (Indonesia), Ninoy Aquino Airport (the Philippines), Noi Bai Airport, Tan Son Nhat Airport (Vietnam) and Guangzhou Baiyun Airport (China), Hong Kong Airport (Hong Kong). In the second stage, Tobit regression is used to estimate the influence of multiple factors toward the efficiency of each airport. By generalizing and comparing two stages, the analysis allows us to evaluate each airport's efficiency in seven years, as well as the impact of multiple factors in one airport's performance. The implications for improvement are also obtained and discussed.     

A comparison of service quality at major container ports: implications for Korean ports

This paper presents a comparative evaluation of service quality factors at 15 major container ports in the world. From previous studies and from personal interviews and questionnaires directed to containership operators and logistics managers, the important service quality factors are identified and comparisons among container ports are made. Duncan test analyses suggest that service quality at Northeast Asian ports lags behind that of well-developed major ports elsewhere. The implications of this survey for Korean port development are considered.     

Comparing spatial concentration and assessing relative market structure in air traffic

Traffic distributions of air traffic and their concentration have been measured through Gini, an index that contrasts in many ways with other more established ones, such as Herfindahl's. This research is extended in the sense that it perceives spatial concentration in air transport as an aggregate of complex networks that are subject to multiple constraints, such as geopolitics or technology. We propose a multi-layered analytic approach where network operators are economic agents that behave in strategic ways. It allows for comparing air traffic between airports in Europe with that of the US and, in particular, introduces a normative component by isolating patterns in airlines' strategies that coincide with more or less welfare-oriented degrees of spatial concentration in light of the above constraints.     

Evaluating impacts of institutional reforms on port efficiency changes: Ownership,corporate structure,and total factor productivity changes of world container ports

This paper evaluates how port institutional reforms influenced efficiency gains between 1991 and 2004. We constructed a panel data for port ownership, corporate structure, and port inputs and outputs for 98 major world ports, and we implemented the Malmquist Productivity Index (MPI) model. The MPI provides efficiency measures for input combinations that allow for obtaining the outputs in the presence of institutional reforms, ownership changes, main agent problems, technological progress, efficient scale growth, and many other reasons for efficiency and the lack of it. The results illustrate that ownership restructuring contributed to total factor productivity gains. The restructuring induced optimized operation of container terminals, especially for large ports, as it allowed specialized private entities to concentrate on terminal operation and cargo handling services.     

Effect of concentration in airline market on Spanish airport technical efficiency

This paper tries to measure the effect of airline market concentration on airport technical efficiency. With this aim, a Stochastic Frontier Analysis (SFA) is applied, estimating with a one-step procedure technical efficiency and the effect of airlines' market power on that efficiency. Results suggest that when airports are lowly concentrated increasing concentration reduces such inefficiencies. However, this effect practically disappears when airports are highly concentrated. Additionally, the government's policies to improve airports' performance seems to have a positive effect in the short run.     

Analysis of factors underlying foreign entry strategies of terminal operators in container ports

Port reforms around the world have opened regional container port terminal markets. The emergence of a wide array of global terminal operators has led to a differentiation in entry strategies driven by their respective objectives and by factors exogenous to the firm.This paper looks at antecedent factors that play a role in a company’s entry strategy in a public–private partnership (PPP) setting by performing binomial logistic regression on a large sample of container terminal deals over the period 2002–2010. More specifically, it analyses to what extent firm-specific, external, project and cross-cultural factors play a decisive role in the choice between direct PPPs (i.e. stepping into a new PPP arrangement such as a new concession agreement) and indirect PPPs (i.e. stepping into an existing PPP arrangement through acquisitions).The empirical findings demonstrate the pivotal role of some firm specific characteristics (market experience and business model), external factors (host country development and market openness, government effectiveness, market concentration degree, and market saturation) and project-related factors (project size, number of partners involved, and equity joint venture with the Port Authority), also unveiling some preliminary results in relation to cross-cultural variables.     

Government policies,efficiency and competitiveness: The case of dry ports in India

Rapid economic growth in India demanded quality logistical services, implying that dry ports, often characterized by inefficiency, would play pivotal roles. While the Indian government attempted to address this problem by introducing foreign private participation, at the same time, it upheld its social-democratic tradition where local operators and interests should not be edged out by external competition. Hence, it is the endeavour of this paper to investigate how the Indian government resolved these contradictory issues and provided insight on how political influences could shape an industry's competitive structure, especially in developing economies.     

Time efficiency assessment of ship movements in maritime ports: A case study of two ports based on AIS data

Operational efficiency of a maritime port is an important issue for shipping lines and port authorities. It is desirable to move ships in and out of a maritime port as efficiently as possible. Automatic identification system (AIS) data recording the trajectory of ship movements allow us to assess the operational efficiency as ships move in and out of a port. This study proposes a time efficiency assessment framework that evaluates the amount of time each ship spends in the different areas within a port (i.e., berth, anchorage, and fairway) based on the space-time trajectories of ship movements derived from AIS data. According to the statistical distributions of time spent by different types of ship in each port area, the proposed framework can compare time efficiency across different zones within a port and between different ports. This study uses AIS data of four types of ships (i.e., container, cargo, tanker, and passenger ships) at two selected ports in China, Shanghai Yangshan Port and Xiamen Port, to demonstrate how the proposed approach can effectively assess and compare time efficiency levels of ship movements between the times entering and leaving the vessel traffic service (VTS) lines of a port. This study demonstrates the value of deriving space-time trajectories from AIS data based on the concepts of time geography to assess time efficiency levels of maritime ports and monitor their performance over time, which offer useful information to both shipping lines and port authorities for operations such as efficient scheduling and logistic support.     

Sustainability ranking of the UK major ports: Methodology and case study

Maritime supply chain sustainability has not been widely studied to date. This paper investigates the sustainability performance of five major UK ports. The UK port system is one of the largest and busiest port systems both in Europe and worldwide. The scope of sustainability narrows down to economical and environmental dimensions. A questionnaire is developed to collect data from port managers and logistics experts. The AHP method is utilized to rank the ports using the collected data. Sensitivity analysis is conducted on the obtained data to verify the consistency among data and outcomes.     

Airline hubs in Southeast Asia: national economic development and nodal accessibility

For developing countries, integration into the international airline industry is an important prerequisite to access global flows of money, goods, people, and information. This research examines how patterns of international air transport accessibility changed in Southeast Asia over the period 1979–1997. Particular attention is given to the competition between the major hubs of the region. The paper argues that national governments have used a variety of tools, including airline industry liberalization and airport development, to shape the development of air transport networks. The results of these strategies are assessed using network analysis.     

Impact of high-speed rail on market concentration and Lerner index in China's airline market

China has become the second largest air transport market in the world since 2005. Its total length of high-speed rail (HSR) tracks in operation has been greater than that of all other countries combined since 2012. HSR poses a significant challenge to the Chinese airline industry, especially on major airline routes. The impacts of HSR on two market-competition measures, namely, the Herfindahl–Hirschman Index (HHI) and the Lerner index, are examined in this study. In general, the entry of HSR had the effect of reducing market power measured by both the unweighted and weighted Lerner indexes. However, the Lerner index and HHI of the routes with parallel HSR services remained consistently higher than those of the routes without parallel HSR services.     

Evaluation of passengers' buying behaviors toward low cost carriers in Southeast Asia

The purpose of this paper is to examine how Southeast Asian passengers' attitudes and behaviors affect their buying intention and actual purchase of Low Cost Carrier (LCC) tickets. A research model was developed based on the Theory of Planned Behavior. A survey of 791 passengers was conducted in two major airports in Thailand to test the hypotheses. Results indicated the important role of passengers' attitudes, subjective norms, and perceived behavioral control in LCC passengers' buying behaviors. The paper provides LCCs with useful information about passengers’ attitudes and behaviors toward using LCC services, which will help the carriers form necessary strategies to attract more customers.     

The adaptive capacity of container ports in an era of mega vessels: The case of upstream seaports Antwerp and Hamburg

Port system development is a key theme in port geography literature. Recent decades have brought a rise in container terminal development at estuarine, coastal and offshore port locations, in part driven by scale increases in vessel size. This paper examines how container ports located upstream on rivers use processes of adaptive capacity building in an attempt to remain competitive in port systems. We link the development path of upstream seaports to a range of economic, technological, social and political factors. When combined, these factors shape the willingness and capacity of an upstream seaport to adapt to changing conditions such as an increasing demand for nautical accessibility. The case study results on Antwerp and Hamburg show that the discussion on the future of these upstream seaports cannot be detached from broader public policy and stakeholder management concerns and the influences of retention mechanisms, power, politics and collective action by the port community.     

Constant vs. time-varying hedge ratios and hedging efficiency in the BIFFEX market

This paper estimates time-varying and constant hedge ratios, and investigates their performance in reducing freight rate risk in routes 1 and 1A of the Baltic Freight Index. Time-varying hedge ratios are generated by a bivariate error correction model with a GARCH error structure. We also introduce an augmented GARCH (GARCH-X) model where the error correction term enters in the specification of the conditional covariance matrix. This specification links the concept of disequilibrium (as proxied by the magnitude of the error correction term) with that of uncertainty (as reflected in the time varying second moments of spot and futures prices). In- and out-of-sample tests reveal that the GARCH-X specification provides greater risk reduction than a simple GARCH and a constant hedge ratio. However, it fails to eliminate the riskiness of the spot position to the extent evidenced in other markets in the literature. This is thought to be the result of the heterogeneous composition of the underlying index. It seems that restructuring the composition of the Baltic Freight Index (BFI) so as to reflect homogeneous shipping routes may increase the hedging effectiveness of the futures contract. This by itself indicates that the imminent introduction of the Baltic Panamax Index (BPI) as the underlying asset of the Baltic International Financial Futures Exchange (BIFFEX) contract is likely to have a beneficial impact on the market.     

EU/US Open Skies – Competition and change in the world aviation market: The implications for the Irish aviation market

The EU/US Open Skies agreement became operational on March 29th, 2008. The 23% increase in flights between Ireland and the US in 2008 under the agreement is the highest expected increase under the agreement and is almost three times greater than the expected overall increase in air travel between the EU and the US. Open Skies increases the number of routes between Ireland and the US by 3 to 10 and allows airlines to fly directly to and from Dublin without a compulsory stop at Shannon. There are very strong economic, investment, visitor, political and ethnic ties between Ireland and the US and air travel between the countries per head of population in Ireland is 5.6 times greater than the EU average. The benefits from Open Skies include lower fares, new routes and direct services reducing the need to backtrack over European hubs, in addition to the abolition of the requirement to stopover at Shannon.     

Drivers of operational efficiency and its impact on market performance in the Indian Airline industry

India is considered to be one of the toughest aviation markets in the world, due to high fuel prices, overcapacity and intense price competition. It is therefore important to identify critical drivers of performance, which enable the airlines to survive and succeed in this emerging market with huge growth potential. In the current empirical study, we investigate the linkages between various performance drivers, operational efficiencies and market performance. An extensive data collection using primary and secondary sources enabled us to gather data on all the airlines operating in India, both private and public, for the period 2005–2012, on a variety of important parameters. We carried out a two-stage empirical analysis, which involved estimation of operational efficiencies during the first stage using Data Envelopment Analysis, and determination of performance drivers during the second stage using a two-way random effects GLS regression and also a Tobit model. Our findings suggest that while some of the structural and regulatory factors have an undesirable impact on airline performance, the low cost carriers in India have managed to achieve significant operational efficiencies. In addition, we find that, while cost efficiency is driven by a variety of factors, it is the technical efficiency which brings in better market performance through pricing power in the Indian airline industry.     

The impact of service quality and price on passengers' loyalty towards low-cost airlines: The Southeast Asia perspective

The objective of this study is to examine the impact of service quality by adopting AIRQUAL model and price on passengers' loyalty through the linkage of passengers' satisfaction toward low-cost airlines from the perspective of Southeast Asia. With 200 questionnaires analyzed, the results suggest that service quality and price have a positive significant impact on passenger satisfaction, and as a result lead to passengers’ loyalty. Besides, the findings of this research also confirm the mediating role of customer satisfaction between service quality and loyalty, price and loyalty separately, which implies that customer satisfaction is a vital factor for an LCCs to survive in such a highly competitive aviation market.     

The impact on traffic,market shares and concentration of airline alliances on selected European—US routes

This paper examines the impact of airline alliances on traffic of the constituent airlines using an analysis of US Bureau of Transportation Statistics T-100 International Market Data on a monthly basis for five routes to the US from European hubs. The European hubs are Frankfurt and Paris. The period covered is January 1990–December 2003; a sufficiently lengthy period to enable the derivation of good time-series models before the ‘intervention’ of alliance formation and development. The alliances focussed on are Air France and Delta, part of the SkyTeam Alliance and Lufthansa and United Airlines, part of the Star Alliance. It is possible to distinguish code sharing agreements and then the subsequent immunity from US antitrust legislation. It is also possible to suggest some conclusions on the differences in alliance development in the more liberal open skies environments adopted by many European countries with the more traditional, stricter regulated bilaterals that exist in others such as the UK. Competition is examined using the Hirschman-Herfindahl Index so as to throw light on the impact of alliances on market concentration by route.     

Measuring aeronautical service efficiency and commercial service efficiency of East Asia airport companies: An application of Network Data Envelopment Analysis

Improving operation efficiency has become an important development strategy for many airport companies. However, there is little research on these companies' operating process decomposition or discussing the causes of inefficiency in sub-processes. This study evaluates the overall efficiency and the operational efficiencies of aeronautical service sub-process and commercial service sub-process for 10 East Asia airport companies from 2009 to 2013 using Network Data Envelopment Analysis (NDEA) and identifies the key influencing factors of respective sub-processes efficiency by employing the Panel Data model. The first-stage NDEA results indicate that only Airport Authority Hong Kong in 2012 and 2013 performed efficiently in both sub-processes and achieved overall efficiency. The overall efficiencies of all other companies are not high. During the entire study period, in aeronautical service sub-process, Beijing Capital International Airport Co., Ltd. and Shanghai International Airport Co., Ltd. performed efficiently, while in commercial service sub-process, only Hong Kong airport performed efficiently. The second-stage regression analysis implies the number of airlines served and the number of destinations have significant and positive influences on the efficiency of aeronautical service. Non-aeronautical revenues and service quality have significant and positive influences on commercial service efficiency.