Size versus efficiency: a case study of US commercial airports

The paper presents a productivity analysis using data envelopment analysis (DEA) of 45 US commercial airports selected from the top 15 large, medium, and small hub airports. Financial and operational data, such as aircraft movements, number of airport gates, the annual number of enplaned passengers and runway capacity, is used. Initially, a DEA is deployed to analyze the efficiency and performance measures of airports within each group by comparing and cross-referencing them with each other. We then extend our analysis to identify those airports that are not efficient and are thus dominated by other airports that are more efficient.     

A general framework for price regulation of airports

Price cap regulation (PCR) was first implemented for privatized utilities in the UK in the 1980s. It has since been adopted by numerous countries as a regulatory regime in several sectors. This paper focuses on the development of different forms of price regulation of airports of which PCR is one variant. In countries where airport privatization is still in the early stages, the spectrum of airports and varied nature of regulatory regimes can be confusing and the lack of a general framework can itself become an obstacle to privatization. This paper proposes a general framework comprising decisions to be made for seven variables which is able to accommodate the diversity of airports and varied approaches that may be required as well as transitions between approaches. These approaches include light-handed regulation, price or revenue yield caps, rate of return regulation, earnings sharing, as well as choice of till.     

A comparative analysis of economic performance of US commercial airports

There have been various agreements between the US commercial airports and the airlines each of which has defined how the risk, responsibilities, and reward of running an airport should be shared among them. The airport–airline financial relationships at the nation’s commercial airports are based on four basic approaches: the residual cost, the compensatory, the hybrid, privatization approaches. In this paper, the authors provide a comprehensive review of airport–airlines financial agreements, and develop an analytical model to measure the financial performance of the US commercial airports. In general, compensatory airports have had a higher marginal contribution to profitability than residual airports.     

Car parking management at airports: A special case?

The number of employees who daily commute to an airport represents, on average, one quarter to one half of the daily number of passengers. At UK airports it is rare for employees to pay for their car parking, with most employers absorbing the charges imposed by the airport authority. This paper details the main issues with offering free parking to employees drawing comparisons between a selection of case studies where parking management measures for employees have been introduced, and the airport sector. The paper then reports on a survey and a series of focus groups that were conducted with employees at a large UK airport in order to gauge their attitudes and likely behavioural responses to potential parking management strategies. Key findings are presented to show how airports may be able to learn from the experiences of others in the successful introduction of parking management strategies, but that there are also key barriers that are specific to airports that would need to be overcome.     

Real estate,factory outlets and bricks: A note on non-aeronautical activities at commercial airports

This note considers the degree of complementarity of non-aviation activities to airside activities at airports in relation to airport governance and regulation. A simple economic model of airport operations is employed to draw the distinction between complementary and non-complementary non-aviation activities by airports and the effect of these activities on aeronautical prices and competition.     

Performance assessment of UK airports: Evidence from a Bayesian dynamic frontier model

This paper analyzes the cost efficiency of UK airports over the period 1998-2008, using a Bayesian dynamic frontier model. This model provides a more structural explanation for the variation in airports inefficiency than has been presented by previous models, and also allows for cost inefficiency effects. On average, the dynamic frontier results, estimated via the Markov Chain Monte-Carlo simulation, indicate that UK airports improved their efficiency over time. Factors found to be important determinants of cost efficiency include airport size, price regulation, price cap variations and airport competition. Policy implications of the results are derived.     

The conversion of military bases to commercial airports: existing conversions and future possibilities

The Base Realignment and Closure Act of 1988 closed over one hundred military facilities across the United States. This paper examines the five types of conversion at the 37 bases that had the potential to become civilian airports. There are two keys to a successful airport conversion: using locational advantage to attract certain kinds of air service, and political cooperation at the local, state, and national levels. Bergstrom Air Force Base in Austin, TX, and Chanute Air Force Base in Rantoul, IL, are case studies of successful conversions.     

Maximizing the value for money of PPP arrangements through flexibility: An application to airports

The economic crisis in most developed countries is fostering the search for new models for infrastructure planning and management. There is great uncertainty surrounding these investments and, therefore, it is necessary to capture the latent value from infrastructure projects. The principle is that the project should have the necessary flexibility to adapt to future changes, i.e., at the design stage it is necessary to incorporate flexible options that would allow the infrastructure and/or the service to be adapted to changes.This paper focuses on contextualizing this concept as well as characterizing real options and identifying different areas of application to showcase the broad range of the different fields that make use of this tool. Moreover, the case study which regards a large infrastructure – an airport – will allow quantifying the economic value of some options supported in real options theory.     

Cost efficiency of African airports using a finite mixture model

This paper evaluates the operational activities of African airports using a finite mixture model that allows us to control for unobserved heterogeneity. In doing so, a stochastic frontier latent class model, which allows for the existence of different technologies, is adopted to estimate cost frontiers. This procedure not only enables us to identify different groups of African airports analysed from Angola and Mozambique, but also permits the analysis of their cost efficiency. The main result is that three groups are identified in the sample, each equipped with completely different “technologies”, suggesting that distinct business strategies need to be adapted to the characteristics of the airports. Some managerial implications are developed.     

A welfare analysis of subsidies for airports

The welfare of residents and profitability of business in many medium-sized MSAs would be improved if their airports had a higher level of service, for example reflected by more frequent flights serving more destinations. The level of service at such airports may rise with the number of enplanements, making total enplanements and the level of service subject to a positive feedback effect. Using a new annual data set put together by combining five sources for the years 2002 through 2012, we find evidence for such a positive feedback effect. We argue that subsidies at smaller airports may be welfare-enhancing in the presence of such an effect.     

Sustainable airport development with performance evaluation forecasts: A case study of 12 Asian airports

This study evaluates airport performance from 2014 to 2021 with actual and forecasted data to help plan airport sustainability and establish sustainable airport development strategies. Eight Chinese airports (PEK, PVG, CAN, SZX, SHA, XMN, HAK, and HKG) and four representative Asian airports (HND, ICN, SIN, and DEL) are studied. Airport performance is evaluated from the process level (i.e. operational processes providing aeronautical service and financial processes providing commercial service) to the airport level using the Network DEA with actual and forecasted data from the grey model. Results indicate that HKG has been and will be efficient for the entire study period. There is an observed trend of an overall efficiency decrease during the forecast period of 2018–2021. This study classifies operationally efficient airports (PEK, HND, and XMN) and financially efficient airports (HAK, ICN, and DEL). Mainland Chinese airports show significantly higher operational efficiency than financial efficiency, and lower rankings in overall efficiency. It is expected that mainland Chinese airports will soon develop beyond the transportation center, possibly towards the aerotropolis, balancing economic, social, and environmental aspects for sustainable development. This study helps airport management to evaluate sustainable development strategies by assessing current and near future conditions affecting sustainability.     

Performance measurement: a review of airports

This paper considers the past, present and future of airport performance measurement. The authors examine the changing nature of the performance measurement of airports. Airport performance measures are important for day to day business and operational management, regulatory bodies, Government and other stakeholders such as passengers and airlines. Measurement systems have been forced to develop in response to changing organisational contexts. With pressures for change coming from changing ownership patterns, an increased commercial focus, regulation, rapid passenger growth, increased concern for the natural environment and technical innovation, the experiences shared and lessons to be learnt highlighted in this paper will be of interest to both academics and practitioners.     

Indicators and evaluation model for analyzing environmental protection performance of airports

This study develops an evaluation model for analyzing environmental protection performance of airports. First, indicators for evaluating environmental protection at airports are derived by reviewing related literature and existing environmental management plans using the Fuzzy Delphi method. Then, the weights and value functions of these indicators are obtained through expert questionnaire surveys. Applying the value functions to the environmental data from different airports yields the value of each indicator. Finally, multiplying the values with their corresponding weights sheds light on the performance of individual and overall indicators. Findings of this study offer references for airport management in evaluating airport performance in energy conservation, carbon reduction, and implementation of environmental protection measures, as well as in developing performance improvement schemes according to the state of the airport.     

Do market-concentrated airports propagate more delays than less concentrated ones? A case study of selected U.S. airports

Airport congestion and widespread passenger discontent with airlines' poor on-time performance have recently led the Federal government to reduce peak-time operations at large airports such as Chicago O'Hare and New York John F. Kennedy. This paper proposes a methodology to compute delay propagation based on the discrete Fourier transform (DFT) at a sample of ten U.S. airports in summer 2000, 2007 and 2008. The sampled airports are different in terms of size, location and index of concentration.In this research, a flight is considered to be late if it arrives more than fifteen minutes past its schedule. Delay propagation is defined as the hourly ratio of two amplitudes: the one of late arrivals at a sampled airport to that of late arrivals at the final destinations served from that same sampled airport. The purpose of this study is to determine whether delay propagation differs at market-concentrated airports from less concentrated ones. Based on nonparametric tests and proximity analysis, there is no clear evidence that market-concentrated airports are different from less concentrated ones in terms of propagated delays.     

Mode choice behavior modeling of ground access to airports: A case study in Istanbul,Turkey

The increase in air transportation mode share, thereby the passenger traffic at airports has made the ground access to the airports more important in recent years. The aim of this study is to analyze the ground access mode choice to airports by using Multinomial Logit (MNL). In particular, our focus is on how transit areas of influence affect the mode choice for travelling to airports. Atatürk International Airport (IST) in Istanbul, Turkey was selected for the analyses and the investigated modes to access IST were automobile, drop-off, public transit, and taxi. The results showed that significant factors and variables included the trip distance to access IST, type of destination, trip cost to IST, automobile ownership status, employment status, travelling group size, location of the trip origin with respect to public transit influence, and time difference between the flight time and departure time to IST. It is also concluded that if the trip origin to IST was inside the influence areas of public transit, then public transit would be more likely to be chosen over other modes for accessing IST.     

Runway safety at airports: A systematic approach for implementing ultra-safe options

Enhancing airport runway safety is a difficult problem because runway accidents are rare events. Nonetheless, investments are being directed at improving safety for US airport ground traffic control systems. This paper shows that under these circumstances it is difficult to assess and measure the added safety offered by new replacement systems. We develop a framework for introducing and sequencing system improvements to provide greater assurances in enhancing safety. This framework shows how a new method can first be introduced as a secondary system, to test and verify its efficacy prior to its adoption as a primary system.     

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.     

Estimating the sensitivity of small airport catchments to competition from larger airports: A case study in Indiana

An accurate estimation of airport catchment area enables airlines and airport operators to make informed decisions and to target potential markets precisely. This study uses the state of Indiana as a case study to estimate traffic leakage from the local airport, Indianapolis International Airport (IND), to two large hub airports in Illinois, the neighboring state of Indiana, namely Chicago O'Hare International Airport (ORD) and Chicago Midway International Airport (MDW). By using a decision making model that considers flying cost and access cost, this study simulates from local passengers' perspective which origin airport delivers the most cost effective flight itinerary. Using the top 20 routes of IND in 2018 as model inputs, the catchment area of two Chicago based airports in Indiana with variable coverage is plotted for different traveling scenarios. The analysis shows that an airport catchment area is sensitive to location, service level and traffic volume of competing airports nearby, as well as purpose of travel (business or leisure), number of travelers in a group (single, couple, family or multiple), length of trip, destination (domestic or international), preference of airlines (network carrier or budget carrier), and frequent flyer program status (premier member or general member). These findings could be valuable to all three aforementioned airports as well as airlines serving these airports when allocating operational and marketing resources. More importantly, this study creates a generic model that could be used by virtually any airport to estimate scenario-based catchment area using readily available itinerary and spatial data without resorting to expensive passenger surveys.     

Efficiency drivers of international airports: A worldwide benchmarking study

The main purpose of these work was to identify operational efficiency drivers of international airports. In order to achieve this, a two-step quantitative-qualitative research approach was conducted. In the first step, a two-stage DEA model was used, and it was possible to identify, within a sample of the 60 biggest airports from the six Airport Council International (ACI) regions, the most efficient airports of the world: Beijing International Airport, Heathrow International Airport, Dubai International Airport, and Hartsfield-Jackson Atlanta International Airport. In the second step of the research, four airports were selected in order to search for the efficiency drivers. In this context, Heathrow International Airport was considered to be a benchmark and presented most of the identified efficiency drivers (27 of 31). Standing out were Just-in-Time (JIT) and Total Quality Management (TQM) principles and also Passenger boarding optimization, besides the presence of almost all of the most relevant efficiency drivers, according to airport managers.     

Effects of non-aeronautical activities at airports on the public transport access system: A case study of Zurich Airport

Many planning authorities and airports study measures to increase public transport use for airport ground access and egress. At the same time, an increase in real estate development at and around airports is occurring, both due to airports seeking new revenue possibilities and other developers attempting to profit from high value locations. This paper considers non-aeronautical activities at large airports, largely commercial centres and transit hubs, as land uses that have the potential to improve the situation for operating public transport services. In order to assess potential benefits and disadvantages, four research questions are considered: (1) Can the additional travel volume reach levels at which it has a significant impact? (2) To what extent do non-aeronautical activities influence the public transport access system? (3) Is the resulting demand distribution better or worse regarding peaking behaviour? (4) Is there a potential for the resulting overall demand to bring about capacity shortages?A case study is conducted at the airport of Zurich, Switzerland, which finds that non-aeronautical activities in the direct airport vicinity have led to a situation where the operation of public transport services is much more viable due to overall higher passenger numbers and a more even distribution throughout the day. It is concluded that locating non-aeronautical activities at airports can, in addition to providing commercial benefits to developers, lead to a situation where improved public transport services become feasible.