Airports’ managerial human capital,ownership, and efficiency

Airport performance differences require a better understanding of the sources of efficiency and competitive advantages. Globalization drives the air transport industry into a more market-orientated business questioning the relationship between managerial decisions and airport performance. Aviation management studies do not consider managerial capabilities and skills since they are intangible exogenous factors that are difficult to assess. In this study, a stochastic frontier analysis is performed accounting for top managers' theoretical knowledge and experience enclosed as exogenous drivers of airports' efficiency. The model analyses 12 Polish airports from 2009 to 2017. The results show a diversity of airports with a different number of passengers as efficient. The top managers' experience, when gained in the same airport, has a positive impact on airports' technical efficiency. Airports having unstable management are more technically inefficient. Independently of the efficiency level, some airports change their management after the national elections, suggesting that managers are chosen by political interest rather than by their specialised knowledge or their prior experience in aviation management. The results suggest that more practical knowledge improve airports’ performance. Airports with a majority of government ownership that are the largest ones increase their efficiency significantly, suggesting that political decisions may be discriminatory in detriment of airports managed by regional and city authorities.     

Inefficiencies and scale economies of European airport operations

In this paper we argue that European airports, on average, are inefficient. Airline inefficiency (low load factors) appears to contribute significantly to airport inefficiency in terms of air passenger movements. We find that the average airport in Europe operates under constant returns to scale in “producing” air transport movements and under increasing returns to scale in producing passenger movements. These operating characteristics are statistically tested in a stochastic frontier model. Using data envelopment analysis, in which the number of runways is used as a fixed factor, technical and scale efficiency coefficients have been assessed. There appears to be no region-specific effect in that an airport in a certain country or region is on average more (in)efficient.     

Analyzing air cargo flows of international routes: an empirical study of Taiwan Taoyuan International Airport

Air cargo demand is an important aspect of the operation and planning of private and public agencies responsible for airports. While most existing studies in this field include only geo-economic characteristics of airports and their hinterlands as explanatory variables, this study develops a gravity model of air cargo flows by trying to incorporate more factors that might influence international air cargo flows of an airport. The model is developed based on the panel data of air cargo services on scheduled routes at Taiwan Taoyuan International Airport during the years 2004-2007. The results indicate that population, air freight rate and three dummy variables, including the regional economic bloc of the “Chinese Circle”(an informal partnership between Hong Kong, Macao, Taiwan and mainland China), the Open Sky Agreements and long established colonial links, are key determinants of international air cargo flows from/to Taiwan. These results suggest a wider array of factors needs to be considered in policy.     

Airport classification based on cargo characteristics

Air cargo has received little attention in airport research. In this paper, 114 airports are grouped according to their cargo business characteristics. Applying a hierarchical cluster analysis, the paper uses absolute (cargo tonnage) and relative measures (share of cargo work load units, of freighter movements and of international cargo) to establish the reliance of different airport types and groupings on air cargo. Eight distinct clusters are identified which show clear differences in the characteristics of the sample with regard to cargo activities. Geographic patterns of these airports are also revealed. For example, North American and European airports are characterised by features unique to these regions. Airports that are highly dependent on air cargo tend to benefit from a central location within networks of cargo airlines, while other airports with high cargo volumes generate these as a result of significant belly-capacity of passenger operations. Understanding the heterogeneity of cargo airports is important for future benchmarking studies in this field.     

Investigating the effects of economies of scope on firms’ pricing behavior: Empirical evidence from the US domestic airline industry

This study investigates to what extent cross-product (belly cargo) output affects (passenger ticket) prices in the US domestic airline industry. The empirical analysis indicates that greater cargo volumes generally result in lower air fares, presumably as a result of the airlines’ realization of economies of scope. This magnitude of this price effect, however, depends on certain firm and route market characteristics. The findings of this study add to extant research on economies of scope, multi-product yield management and airline pricing and provide important insights for policy makers and airline managers alike.     

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.     

Small is beautiful? The impact of economic crisis,low cost carriers,and size on efficiency in Spanish airports (2009–2011)

This paper carries out a comparative technical efficiency analysis of 35 Spanish airports using panel data for 2009–2011 with a data envelopment analysis (DEA) methodology. The results suggest that airport size has a positive impact on the technical and scale efficiency and that the presence of low cost carriers has positively affected the scale efficiency of the airports where they operate. The results also show that during the present economic crisis Spanish airports have experienced a dramatic productivity regress which is due to the reduction of their technological change component.     

Determining the relationship between ownership and technical efficiency by using a dynamic stochastic production frontier approach

This study adopts dynamic stochastic production frontier approach. Because of the impact of quasi-fixed inputs, airports cannot immediately adjust their production processes. Based on the heterogeneity of public and private airports’ operation models, this study estimates their individual production adjustment speed and their short-run and long-run technical efficiencies to compare transnational airport business performance. The results reveal the differences in the production adjustment of airport groups under different ownerships and performance. Private airports have faster production adjustment, whereas public airports have higher short-run and long-run technical efficiencies. As their primary goal, public airports should strive to increase the elasticity of production adjustment to increase the production adjustment speed, thus improving their long-run technical efficiency. On the other hand, private airports should prioritize eliminating short-run inefficiency to increase their actual output level, thereby improving their long-run technical efficiency.     

The determinants of air passenger traffic at Turkish airports

Investigating the determinants of air passenger traffic has become commonplace. In contrast with most previous publications, this paper investigates these determinants in an emerging country, Turkey, at the provincial level between 2004 and 2014. We find that GDP/capita, population, distance to alternative airports, tourism, leading cities, and international migrations all support more air traffic. Furthermore, market concentration is associated with less traffic, and the presence of academics with more traffic. Mapping models' residuals suggest catchment areas, surface transport options, domestic migrations and (geo)politics could also matter. Accordingly, it appears the determinants of Turkey's air passenger traffic do not differ from those of developed economies. The results also suggest new airports should be built based on the aforementioned factors.     

The relationship between airport performance and privatisation policy: A nonparametric metafrontier approach

The assessment of economic and technical efficiency is a useful tool for selecting the most appropriate technology for airport operations. However, traditional models require that the units being assessed operate with the same technology. To overcome this limitation, one can use a non-concave metafrontier approach that is based on Data Envelopment Analysis (DEA) to calculate the techno-economic efficiency and Technological Gap Ratios (TGRs) with non-homogeneous technologies for airports across countries and with different ownerships. The previous studies mainly applied DEA to measure the operational efficiency of airports. Our results indicate that privately owned airports have better technical efficiency than public ones. In addition, our empirical analysis shows that public airports in the Asia-Pacific area have the lowest techno-economic efficiency.     

The potential of horizontal collaboration in airport ground freight services

Since the global economic crisis of 2007–2011, the increasingly dynamic and challenging air cargo market in Europe has forced freight forwarders to improve their performance. In addition to improving their internal transport efficiency, they have also started to look at previously unexplored opportunities for horizontal collaboration in landside airport transport. The aim of this study is to reveal the potential of air cargo transport collaboration on a horizontal level, i.e. between multiple freight forwarders within a single airport. Reviewing existing literature on horizontal collaboration, with a focus on the air cargo industry, we propose a conceptual framework for transport collaboration in the air cargo industry. Based on a comprehensive study on air cargo transport movements within Schiphol, using a simulation model based on company data of 10,747 shipments (6977 tons of cargo) for a period of 30 days, we find several interesting results. Our main finding is that horizontal collaboration can improve the transport performance, by maintaining a high frequency of transport movements and maintaining an acceptable throughput time for air cargo shipments, and at the same time reduce transport costs by up to 40%. For smaller freight forwarders, the frequency of transport deliveries can even increase, while still allowing them to improve the average load factor of transport movements.     

Performance evaluation of China's air routes based on network data envelopment analysis approach

Air routes are among the most important elements of civil aviation transport. Airlines' operations are mainly dependent on the structure and layout of air routes. This paper first divides the production process of air routes into two stages, allocation and transport, based on air route operational characteristics. Then, two network data envelopment analysis (DEA) models are proposed to analyze the efficiency of the system, allocation, passenger transport, and freight transport of 477 air routes. The research result demonstrates that the different constraints on intermediate measure in the network DEA models do affect the air routes’ efficiency significantly; Most air routes have high allocation efficiency and passenger transport efficiency, while they have low freight transport efficiency. Furthermore, the efficiencies of 82 airports are also analyzed after aggregating the efficiencies of the air routes.     

Measuring connectivity in the air freight industry

In this paper, we present an air transport connectivity model for air freight. For the purposes of this paper, connectivity is defined as all possible direct and indirect connections to or from an airport operated by wide-body aircraft, weighted for the quality of the connection in terms of transhipment and in-flight times. Using this model, we analyse the networks of seven European airports. Europe’s largest hub airports carry most air freight thanks to their extensive intercontinental passenger networks, while smaller airports with a strong focus on air freight carry large amounts of cargo on dedicated freighter aircraft. For air freight operations, the catchment area of an airport is much larger than it is for passenger services, as shipments are being trucked to their departure airport throughout all of mainland Europe. Since there are many airports sharing the same catchment area, potential competition for air freight is fierce. We found that well located regions between the four large European airports have access to large air freight networks, whilst regional air freight connectivity in northern and southern parts of Europe is substantially lower.     

Technical efficiency of UK airports

In this paper, the random stochastic frontier model is used to estimate the technical efficiency of UK airports. The airports are ranked according to their productivity for the period 2000–2005 and homogenous and heterogeneous variables in the cost function are disentangled. These changes the ranking of the efficiency of UK airports compared to more conventional measures.     

The impact of national macro-environment exogenous variables on airport efficiency

Our paper tests the extent to which airport efficiency is affected by national macro-environmental factors. The literature on airport performance measurement is extensive but has tended to focus mainly on estimating the effects on efficiency from what are mostly endogenous variables. We undertake a two-stage analysis of 59 international airports observations in the Europe and Asia-Pacific regions. The first stage involves the use of Data Envelopment Analysis (DEA) to measure the efficiency of these airports. This is followed by a second stage, where we use a Truncated Regression model that incorporates the Simar and Wilson bootstrapping technique to test the extent to which a set of macro-environmental factors affect airport efficiency. Results reveal that a state's air transport sector output, institutional quality and robustness, the macro-economic environment, safety and security, and human development, all have a significant influence on the performance of airports. The result of this study fills the gap in the literature related to the non-discretionary variables affecting the performance of airports. It also suggests that policymakers and airport managers consider the identified factors when benchmarking airports.     

The influence of fleet mix,ownership and LCCs on airports’ technical/environmental efficiency

This paper analyses the efficiency of 33 Italian airports for the period 2005–2008. In addition to conventional outputs, differently from previous contributions, two environmental externalities are considered: noise and local air pollution. We perform a two-stage analysis. First, we implement a directional distance function (DDF) model and get airports’ efficiency scores. Then, we study the factors affecting efficiency using a bootstrapping procedure. We find that the fleet mix significantly affects technical/environmental efficiency. Moreover, we provide evidence that public airports have higher efficiency scores. Last, LCCs have no effect on technical/environmental efficiency.     

Determinants of airport cost flexibility in a context of economic recession

The recent economic downturn led to a significant contraction in the global demand for air travel and cargo. In spite of that, airports’ operating costs did not mirror the traffic trends and kept increasing during the same period, showing evident signs of lack of flexibility. With this background, this paper aims at identifying the drivers of airport cost flexibility in a context of economic recession. This is done by estimating a short-run stochastic cost frontier over a balanced pool database of 194 airports worldwide between 2007 and 2009. Using the total change in cost efficiency during the sample period as a proxy for cost flexibility, the impact of variables such as ownership, outsourcing, airline dominance, low-cost traffic, and revenue diversification is tested in a second-stage regression. Contrary to the existing literature, a higher level of outsourcing is shown to reduce cost flexibility. Results also indicate that low-cost traffic, diversification, and corporatization increase the airports’ ability to control costs. The negative impact of airline dominance suggests the need for more stringent regulations on slot allocation at congested airports in order to ensure optimal infrastructure usage.     

Operational efficiencies across Asia Pacific airports

This paper analyses various dimensions of operational efficiencies in major Asia Pacific airports through Data Envelopment Analysis (DEA) models that simultaneously account for external macroeconomics and price factors. Results from this study show that technical, scale and mix efficiencies are high among the major Asia Pacific airports. In addition, significant disparities in cost efficiencies were detected amongst these airports. These disparities can be attributed to the presence of country-specific effect and differences in allocative efficiencies. A virtual airport is then introduced as a superior performer to rank the efficiency performances of airports.     

Evolution trends of the network structure of Spring Airlines in China: A temporal and spatial analysis

Both the sustainable development of China's economy and the deregulation of the China air transport market have acted as a spur for the halting development of low-cost carriers (LCCs) in China. To analyze the development trends of LCCs' network in China, this paper took Spring Airlines, the only LCC in China as an example. First, the winter flight plans of Spring Airlines from 2005 to 2013 were collected. Secondly, the development trends of air transport network of Spring Airlines were explored with methods of mathematical statistics and social network analysis. Additionally, the development trends were analyzed from the levels of navigable cities, air routes and air transport networks. The results show that although Spring Airlines actively launched air routes between tourist cities with non-class I airports, its network has been transformed from a star structure into a complex one with multi-hubs. The development process of the Spring Airlines network can be separated into three stages. In addition, the problems and evolution trends of its network are discussed further.     

Can we explain airport performance? A case study of selected New York airports using a stochastic frontier model

This paper uses stochastic frontier models to assess whether technical efficiency at Newark Liberty International, New York John F. Kennedy International, and New York LaGuardia airports improved from June to August 2008 compared with the summers of 2000 and 2007. An airport is efficient if it can handle operations on-time by minimizing overall demand and maximizing available airport capacity. Granger-causality tests determined the factors that may cause changes in key components and indicators of airport performance. Compared with the other airports, JFK experienced the greatest improvement in technical efficiency. The Granger-causality tests stressed the significance of airport operations and en route factors in supporting efficiency.