US airport ownership,efficiency, and heterogeneity

All US commercial airports are in the public sector yet not all have the same ownership type. For medium and large hub US airports we use stochastic frontier analysis to analyze the efficiency differences for alternative airport ownership types. We find that while form of ownership may matter for cost efficiency, in general its effect is relatively small. Yet type of public sector ownership does have cost efficiency implications in certain environments. Further, when heterogeneity is not controlled, the results change substantially so that type of ownership matters much more which demonstrates the importance of controlling for cross section heterogeneity.     

Changes in airport operating procedures and implications for airport strategies post-COVID-19

Covid-19 is demanding a lot of changes in the realm of our daily lives. The aviation industry is also facing unprecedented changes in the management environment. Financial tensions across the sector are rising. This study suggests that the airport strategy's direction focusing on commercial revenue management. After Covid-19, safety and hygiene will be the top priority. As a result, changes in airport operating procedures are inevitable. The most noticeable difference will be the strengthening of the verification process for passengers' health conditions. Dwell time increase can be the by-products. This study identifies a dwell time increase has a more significant impact on increasing the existing purchasers' spending than creating new buyers. Airport operators can introduce a service differentiation perspective, such as a dedicated service, to utilize the current buyers' dwell time more faithfully. Also, the rise of online channels requires airport operators to change sales strategies, reinforcing emotional promotion to stimulate impulse buyers' willingness-to-buy. Before Covid-19, there was little effort to reconcile operation policies and commercial revenue despite the growing importance of revenue management. However, now it is time to change. Pre-Covid-19, passengers were advised of using off-airport processes, such as online check-in and mobile boarding passes. Now, getting passengers to the airport quickly and securing their dwell time can be financially more beneficial. It is necessary to incorporate the commercial revenue perspective into operation policies post-Covid-19 actively. Our finding indicates that even a passenger with solid purchasing power may lose the purchasing intention when assigned to an unfavorable gate or terminal. Airport operators need a better understanding of passenger and flight characteristics when determining operation policy, such as gate allocation or membership services.     

Determinants of flight delays at East Asian airports from an airport,route and network perspective

Previous studies on determinants of flight delays have been limited to the attributes of departure and arrival airports and routes and experiences in North America and Europe. This research extends the existing discussions by considering a network perspective to explore East Asian airports. A total of 4611 routes among 318 airports in the second half of 2017 are analyzed using panel data regressions. Results show that the attributes of airports and routes linked with the departure and arrival airports of a flight are the essential determinants of flight delays in East Asia. However, the congestion internalization and hubness effect of departure and arrival airports suggested in previous research are not observed in this region. The associations of slot control levels and route attributes with delays are varying between airports inside and outside China and domestic and international routes. This research supplements a new perspective to understand the determinants of flight delays in existing literature and provides a rarely observed knowledge to encourage East Asian airport operators and carriers developing management strategies for minimizing flight delays.     

US airport financial reform and its implications for airport efficiency: An exploratory investigation

This study investigates the effect on airport productive efficiency of two major funding sources used by US airports, namely the Airport Improvement Program (AIP) grants and the Passenger Facility Charges (PFC). A two-stage Data Envelopment Analysis (DEA) modeling approach is employed for this purpose. In the first stage, we estimate airport productive efficiency using a variable returns-to-scale DEA model with both desirable and undesirable outputs. In the second stage, random effects regression models are estimated with airport efficiency scores from the first stage as the dependent variable and PFC and a proxy for AIP grants as two of the explanatory variables. By applying the two-stage DEA model to 42 primary US airports, it is found that PFC use has a positive impact on airport productive efficiency, whereas the impact of AIP grants is negative. Multiple counterfactual scenarios are examined by altering the mix of the two types of funding sources. The results show that simultaneously raising the PFC ceiling and decreasing AIP grants could lead to greater airport productive efficiency. The US federal aviation authority would also benefit from realizing these scenarios, especially given the budgetary constraints it faces.     

Analysing passenger network changes: The case of Hong Kong

Passenger throughput at Hong Kong International Airport (HKIA) has shown steady growth since its opening. Various aspects relating to HKIA have been studied in prior literature. This paper investigated changes in HKIA's passenger network for the period of 2001–2012 and used the gravity model to examine the key factors explaining its passenger traffic flows. The findings suggested that HKIA's passenger network has changed significantly and expanded to many new different destinations. Two regions (East Asia and Southeast Asia) were the most important markets for HKIA, and most key destinations connected by Hong Kong showed healthy growth. Nine factors could explain passenger traffic flows between Hong Kong and its key destinations: Hong Kong GDP per capita, GDP per capita of destinations connected by HKIA, distance, airport hub status of the destination airport, tourist destinations connected by HKIA, numbers of passenger airlines in service, bilateral trade flows, speaking a common language and having strong cultural/colonial links with Hong Kong, and the route presence of Cathay Pacific.     

Pro-competition rules in airport privatization: International experience and the Brazilian case

This article aims to demonstrate the importance of establishing pro-competition rules in the concession of multiple airports to private companies by describing the recent Brazilian experience. More specifically, it addresses: (i) how the economic literature deals with potential competition among different airports, and how this competition was dealt with in the concession programs of Australia, Mexico and the United Kingdom; and (ii) Brazil's recent experience with airport concessions, where international benchmarking led to cross-ownership restrictions. As a conclusion, this paper defends that governments should design regulatory restrictions that account for the existence of competition among airports. Nevertheless, these restrictions must be carefully planned and designed to achieve their goals.     

The effects of service quality dimensions and passenger characteristics on passenger's overall satisfaction with an airport

The objective of this paper is twofold. First, to identify service quality dimensions related to airports. Second, to examine the effects of those dimensions on passenger's overall satisfaction with an airport together with variables related to passenger characteristics. Data from an extensive survey applied in a main Brazilian international airport were used. Exploratory factor analysis was applied to extract dimensions of airport service quality as perceived by the passengers. The effects on the overall satisfaction level were estimated using a probabilistic approach. Findings underline implications regarding the use of meaningful service dimensions instead of a large set of variables as predictors of passenger satisfaction. Moreover, the study stresses the need for considering how passenger characteristics may be related to different perceived levels of service quality.     

An empirical analysis of airport capacity expansion

Theoretical analyses of the impact of airport capacity expansion must model or make assumptions about the effect of capacity on demand, airline competition, aircraft types, fares and other characteristics of a given airport. In this paper, we use empirical data on historical schedules, fares, delays and demand for the busiest 150 airports in 2015 to examine the typical impact of historical capacity expansions. We find significant diversity in outcomes, with over half the expanded airports either using less than their pre-expansion capacity or remaining constrained even at post-expansion capacity by 2016. Many of the expected impacts, such as reductions in typical aircraft size, either do not materialise or are dominated by other effects (for example, recessions; airlines beginning or ending operations at an airport; changes in regulation). Behaviour on expansion is affected by slot control regulations and whether the airport is initially capacity-constrained. In particular, slot-controlled airports typically add new destinations and carriers on expansion rather than making significant changes to existing schedules.     

Passenger facility charge vs. airport improvement program funds: A dynamic network DEA analysis for U.S. airport financing

Passenger Facility Charge (PFC) and the Airport Improvement Program (AIP) are two major sources to finance U.S. airports. This paper develops a novel dynamic network DEA framework to investigate the substitutability between PFC and AIP funds. We find that the studied U.S. airports can substitute PFC for 8–35% of the current AIP funds and contribute significantly to the proposed plan of the US congress to cut AIP funding. In addition, the amount of PFC-for-AIP funds substitution negatively correlates with the productive efficiency of airports. The findings send an important message for future policy reforms on U.S. airport financing.     

An airport operations proposal for a pandemic-free air travel

The aviation industry needs to work on the resilience of air travel against health threats and regain passenger trust. This paper proposes a pandemic-free travel concept based on creating an infectious diseases free zone in the airport terminal building through screening of passengers, crews and airport workers. This research shows that infectious disease detection methods applicable at the airport could be available in a short timeframe, at affordable cost and in scale. The potential location of passenger health screening, facilitation requirements, health responsibilities delegation and appropriate usage of industry standards for regulations are key elements to a potential implementation that would be phased and long term.     

Determinants of Brazilian international flights: The role of hub-and-spoke and infrastructure variables

The objective of this study is to evaluate the determining factors influencing airline companies to operate international origin-destination (O-D) routes from different Brazilian airports. The results are based on a panel data model and support the assumption that statistically significant explanatory variables stem from gravity factors (GDP and an airport competition measure weighted by distance), hub-and-spoke variables and capacity inputs. We find that a composite variable made up by the airport capacity variables – given by the size of the terminal building and the length of runways – and its domestic connections have a positive effect on airport competitiveness. In conclusion, we find that not only well-known demand-side factors, but also supply-side variables – strategic decisions taken by airport management – matter in attracting international flights.     

The impact of airport parking fees on the tourist's airport/airline choice behavior

This paper analyzes the airport/airline choice behavior of tourists for Saxony/Germany. We employ flexible parametric choice methods (mixed logit) in order to test the effect of standard attributes on the choice probability. In addition we extend existing literature with the introduction of parking charges in the choice experiment. Our results show a significant and negative impact of parking charges on airport choice probability. Thus, we can compute high elasticities of parking charges for tourists. These results suggest, that airport managers have in form of parking policies a powerful policy instrument as they can directly affect the size of the airport catchment area.     

Determinants of daily fluctuations in air passenger volumes. The effect of events and holidays on Milan Malpensa airport

Air traffic flows show large seasonal variability, but arrivals and departures may also be significantly influenced by specific events which generate peaks, which generate peaks rising above baseline traffic. While seasonal variations of air flows are well studied in literature, the daily variations and their causes are seldom analysed and quantified. The paper aims at filling this gap by exploring and quantifying the effect of holidays and events (conferences, trade fairs, sport events) in terms of passenger daily fluctuations.We identified the elements affecting these variations and searched for correlations with daily demand fluctuations using an OLS econometric model applied to Milan Malpensa airport. The model allows one to reproduce the observed daily traffic, identifying the baseline component of traffic (depending on the calendar) and the additional effect ascribable to holidays and occasional events.Results show which types of events generate a visible traffic increase. The effect of some of them can be very significant indeed. The largest international design and fashion shows taking place in Milan generate up to more than 20% extra passenger traffic compared to the normal baseline traffic. In addition, the analysis showed that their effect is not limited to the event days, but impacted on the surrounding days as well. Holidays also influence the patterns of demand, creating additional traffic on certain days and more pronounced peaks, which also differ according to seasons.     

Competitive drivers towards improved airport/airline relationships

This paper draws on a recent report from Copenhagen Economics, with which both authors were involved, to argue that the European airport market has changed such that airports are now subject to competitive constraints from a number of sources. While these will bite differentially according to the circumstances of individual airports, airport possession of significant market power can no longer be casually assumed; nor, therefore, can the need for economic regulation. Indeed, the costs and benefits of economic regulation need to be carefully assessed against the extent and nature of the market power it is intended to countervail. In particular, increasing attention needs to be paid to the risks of economic regulation hampering both the further growth of airport competition and the development of more productive commercial relationships between airports and their airline customers which have the potential to create added value for both parties.     

Hub competition and travel times in the world-wide airport network

The aim of this work is to measure the competition between airport hubs based on an analysis of travel times in the world-wide airport network. By considering the minimum travel time required to connect each pair of airports, it is possible to create new measures of hub competition, separating the effects of hub position and temporal coordination. This analysis was carried out at the global level, considering all 232 airports with more than 3 million seats yearly offered in departure flights in 2008, and also in relevant geographic markets. The results show a high level of competition among the most important world airports, but the major airports of Europe have a geographical advantage in relation to world markets over the major American and Asian airports. We also show that airports located in different continents often compete for the same origin–destination markets. Geographical position appears to be the most important variable explaining hub performance. Secondary hubs show a higher degree of specialization towards specific markets.     

Ratio-based design hour determination for airport passenger terminal facilities

To avoid both over-design and under-sizing of airport passenger terminal facilities such as security checkpoints, the infrastructure is designed for a specifically determined design load. As such, the design load is considered for a short period of time, usually an hour of operation, during which peak, though not necessarily maximum, demand occurs. For strategic planning applications, future design loads can be determined by either fictitious flight schedules or ratio-based models which forecast the relationship between design load and annual demand. This study presents two ratio-based methods which allow the direct determination of design hour loads (DHL) for passenger terminal facilities. The unsaturated DHL model considers the relationship between observed passenger flows in the terminal and aggregated annual demand data. The saturated DHL model includes several operational constraints which limit the actual DHL, such as limitations in the runway system or the fleet mix operating at an airport. Both models are applied to two real-world airports, for which the DHL of the security checkpoint facilities is estimated from large datasets covering multiple years. Results are significant at the 5 % level and suggest that the proposed ratio-based methods are appropriate for airport strategic planning applications.     

Antecedents and consequences of passenger satisfaction with the airport

There is a growing interest in the passenger experience at the airport. Particularly, the relevance of passenger satisfaction has been emphasized. However, although different research approaches have been used, there is still a gap related to understanding the several relationships between aspects associated with passenger satisfaction with the airport. In this study, a comprehensive conceptual model, which includes the relationships between key antecedents and consequences of passenger satisfaction, was developed and examined. Using structural equation modeling analysis, several findings concerning passenger expectations, airport service quality, switching costs for changing airports, and passenger loyalty towards the airport are stressed.     

Management style and airport performance in Brazil

The intention to privatize Brazilian public enterprises dates from 1990. As with other enterprises, a board was appointed at the Brazilian Airport Infrastructure Enterprise to prepare it for privatization. Although the enterprise remains public, there are clear signs of substantial changes in the airports it manages. This study uses data envelopment analysis techniques to investigate the impacts of changes in managerial style on airport performance between 1998 and 2001. Despite a decline in operational performance, financial performance improved.     

Spatial evolution of airport traffic and air transport liberalisation: the case of Greece

This paper explores the evolution of airport passenger traffic in Greece over the period 1978–2006. The country is a member of the European Common Aviation Area, but despite air transport liberalisation, spatial concentration of traffic and asymmetry remain high and have not decreased significantly over time. Greece is still short of traffic generated by low-cost carriers especially outside the main metropolitan airports. The paper argues that further dispersion of traffic could be possible primarily in the mainland if low-cost carriers decide to dynamically enter the Greek market. Potential benefits for regional and tourism development should induce policy makers to work towards this direction.     

Impact of pandemic control over airport economics: Reconciling public health with airport business through a streamlined approach in pandemic control

Rapid aviation commercialisation and upsurge in worldwide affluence created a new avenue for disease proliferation across countries at an unprecedented rate. Epidemic and pandemic occurrences over the last decade demonstrate airports' role in disease transmission; while also exhibiting their importance as containment nodes. Tremendous amount of resources and effort are necessary to achieve the latter but inevitably, disrupt normal operations. The contrasting objectives between public health authorities and airport authorities result in compromising measures for both parties. Broadly similar controlling measures were adopted by various airports during outbreaks in the last decade. Their effectiveness have been analysed in terms of disease control; economic impact to airports were, however, not quantified. This paper concludes that more efficient airport pandemic control plans cause less severe economic impact on airports during pandemic and recommends a streamlined approach that improves overall effect of pandemic control while minimising economic impacts to airport businesses.