Privatization,corporatization, ownership forms and their effects on the performance of the world's major airports

This paper focuses on measuring and comparing productive efficiency and profitability among airports owned and operated by government departments, 100% government-owned corporations, independent airport authorities, mixed enterprises with government majority ownership and mixed enterprises with private majority ownership. The analysis is based on a cross-sectional, time-series dataset (2001–2003) for the major Asia-Pacific, European and North American airports. There is strong evidence that airports with government majority ownership and those owned by multi-level of government are significantly less efficient than airports with a private majority ownership; there is no statistically significant evidence to suggest that airports owned and operated by US government branches, independent airport authorities in North America, or airports elsewhere operated by 100% government corporations have lower operating efficiency than airports with a private majority ownership; airports with a private majority ownership achieve significantly higher operating profit margins than other airports; whereas airports with government majority ownership or multi-level government ownership have the lowest operating profit margin; and generally, airports with a private majority ownership derive a much higher proportion of their total revenue from non-aviation services than any other category of airports while offering significantly lower aeronautical charges than airports in other ownership categories excluding US airports. The results suggest that private–public–partnership with minority private sector participation and multi-level governments’ ownership should be avoided, supporting the majority private sector ownership and operation of airports.     

Airport ownership and financial performance: Evidence from Italy

In the past few decades many countries have increased the presence of various forms of private sector involvement in airport ownership and management. This paper focuses on the financial performance of Italian airport companies. We present empirical evidence separately for two groups where public or private management majority prevails. The main findings indicate that companies with a private majority outperform the others in terms of financial indicators that are related to operating income.     

Evaluating corporate social responsibility of airlines using entropy weight and grey relation analysis

This paper applies entropy weight and grey relation analysis to evaluate corporate social responsibility (CSR) performance of eight Chinese major airlines. This paper intends to achieve two main aims. First, this study uses entropy to find the relative weights of performance measures of CSR. In so doing, we find that on-time performance, accident rate, flight frequency, growth of employees revenue, and employees revenue are relatively most important measures. Second, based on the results of entropy analysis, this study ranks the airlines in terms of CSR performance by grey relation analysis. This result shows that most of the larger state-controlled airlines perform better in performance of CSR. Furthermore, the private airline has made relatively large improvement in its CSR performance. In addition, the listed airlines are better than non-listed airlines in CSR performance.     

A decision framework for successful private participation in the airport sector

As private participation in public airports becomes a global trend, there are a number of concerns and debates over the conflicting interests of the private and public sectors. For instance, the private sector's interest in maximizing profits often opposes the public sector's interest in protecting the public interest and social welfare. In this paper, we reframe the conflict in terms of principal-agent theory, and inform policymakers to understand public-private management problems in a broader context. Firstly, we demonstrate how various ownership and governance structures shape the private participation based on (1) ownership-type, (2) mode of ownership shift, and (3) ex-post government control. Secondly, we then highlight that this process should be context-based, and examine the recent case of Incheon International Airport (IIA) in South Korea to illustrate the importance of contextual factors. Lastly, we provide comprehensive recommendations to policymakers involved in bringing private partners into the airport sector, which include setting a clear agenda, exercising a reasonable level of control, understanding the sharing of risk and responsibility under different structures, and assessing technical, economic and political factors that may affect the policy outcome.     

Technical efficiency of mainstream airlines and low-cost carriers: New evidence using bootstrap data envelopment analysis truncated regression

Between 2001 and 2005, the US airline industry faced financial turmoil while the European airline industry entered a period of substantive deregulation. Consequently, this opened up opportunities for low-cost carriers to become more competitive in the market. To assess airline performance and identify the sources of efficiency in the immediate aftermath of these events, we employ a bootstrap data envelopment analysis truncated regression approach. The results suggest that at the time the mainstream airlines needed to significantly reorganize and rescale their operations to remain competitive. In the second-stage analysis, the results indicate that private ownership, status as a low-cost carrier, and improvements in weight load contributed to better organizational efficiency.     

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.     

Total factor productivity analysis of the UK airport industry: A Hicks-Moorsteen index method

This study examines the total factor productivity (TFP) change of the UK airport industry from 2001 to 2009 using a Hicks-Moorsteen index method. The results show that the industry experienced an average annual growth in TFP of 0.32 per cent with efficiency change being the main contributor to the TFP growth. We find that private UK airports enjoy slightly higher TFP growth than those in public or mixed ownership. Regulation and airport size are found to have statistically significant effects on the airport productivity level.     

Eco-positioning of airlines: Perception versus actual performance

To date there has been little research in air transport into the eco-positioning of airlines, that is, their environmental image relative to other airlines and how actual environmental performance relates to this eco-positioning. This paper identifies the environmental perceptions that passengers hold of twelve airlines and relates these perceptions to airlines' actual environmental performance, using load factors, aircraft age and the atmosfair Airline index as proxies for environmental performance. Based on a survey of over 600 passengers at Liverpool John Lennon Airport, the research analyses air travellers' perception of airlines from an environmental perspective. The results show that while there are significant differences in people's environmental perception of airlines, the eco-positioning of the airlines is not correlated to their actual environmental performance. The results support previous research findings in other industries that in many cases actual performance is less important than communicating environmental messages to the public in creating a superior eco-positioning.     

Price,capacity and concession period decisions of Pareto-efficient BOT contracts with demand uncertainty

In this paper, we study the impact of demand uncertainty on the build-operate-transfer (BOT) contract design by optimizing a bi-objective problem via three critical decisions: toll, capacity and concession period. We derive the optimums and identify the public and private sector’s economic incentives. We find that the optimal length of concession period and the service quality of the infrastructure depend on the two parties’ operational costs and negotiation powers. Under mild conditions, we prove that the government will build a larger capacity but charge less than the private sector. Furthermore, the efficiency of BOT contract is improved with demand uncertainty.     

Examining the impacts of the Great Recession on the commuting dynamics and jobs-housing balance of public and private sector workers

Research examining commuting-related phenomena remains a key area of geographical research. And although substantial research has attempted to explore the relationships between transportation and land use, little is known about how the impacts of major economic changes such as the Great Recession would affect related commuting dynamics. In addition, commuting studies examining the plight of workers in private versus the public sectors are also virtually non-existent, though the two-groups' commuting dynamics would potentially be affected very differently by the Great Recession. This study contributes to a better understanding of commuting and jobs-housing balance during the Great Recession. We employ metrics from the excess commuting and jobs-housing balance literature in an effort to examine the commuting dynamics of private and public sector workers, with a focus on the time period around the Great Recession. Our analysis is conducted for the Atlanta, GA Metropolitan area. Findings of the study are that private workers experienced better jobs-housing balance over the study period, but they commute longer and more inefficiently when compared with public workers. While the Great Recession worsened both groups' commuting situation, the effect was more significant for public workers in terms of increasing their travel burdens. Since the public sector response to the Great Recession was delayed, policy implications suggest monitoring employment trends during and after economic shocks and recognizing the transportation disadvantages public sector workers may face in future crises. Keywords: excess commuting, jobs-housing balance, the Great Recession, private and public employment, spatial optimization.     

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.     

How vehicle ownership affect time utilization on study,leisure, social activities,and academic performance of university students? A case study of engineering freshmen in a rural university in Thailand

This study aims to investigate how the ownership of a private vehicle influences time utilization of university students, and whether it impacts their academic performance. This research analyzes travel/activity patterns of 130 engineering freshman students at a rural university in Thailand. An analysis of travel/activity data shows that vehicle ownership seems to play an important role in university student’s time utilization on various activities. It was found that those students who own a vehicle tend to spend less time for academic purposes, and more on leisure and social activities than non-owner students. Nevertheless, a further study using regression analysis on academic performance shows that the ownership of a vehicle does not seem to have a significant impact on the grade point average of students, once the cognitive ability and gender are accounted for. The findings imply that campus policies/measures that restrict the ownership or usage of a private vehicle in rural universities would improve the campus learning environment by influencing university students to put more attention on school-related activities, but such policies do not seem to impact on the academic performance of the college students.     

Measuring the productivity changes of Chinese airlines: The impact of the entries of non-state-owned carriers

The competitive environment of the Chinese airline industry has experienced rapid change since non-state-owned airlines entered the market in 2004. We focus on measuring the productivity changes in the Chinese airlines, especially state-owned ones after this change. The results show that non-state-owned airlines are performing better than state-owned airlines. The productivity changes of state-owned airlines are mainly driven by technical changes before or after the entries of non-state-owned airlines. They have little efficiency improvement. However, the productivity changes of private airlines are mainly due to efficiency improvement. The changes associated with international joint venture cargo carrier are due to its significant improvement in both the efficiency and technical changes.     

The political economy of post-transition transportation policy in Hungary

This paper reviews transportation system trends in Hungary since the transition in 1989. It documents the continuation of rapid increases in private motor vehicle ownership and use despite a major economic downturn. Sharp increases in new highway investments are contrasted with a growing backlog of unmet maintenance and rehabilitation needs in the road, rail and public transit sectors. It then reviews recent political struggles over these policies, and the effectiveness of these policies in promoting employment, regional development, and a sustainable environment. It suggests that the dynamics of the post-industrial economy may have reduced the importance of highway sector investments relative to investments into human capital.     

Government support to airlines in the aftermath of the COVID-19 pandemic

This paper assesses government support measures to the air transport sector following the outbreak of the coronavirus disease (COVID-19) pandemic from two points of view. First, it explores the factors that shape governments’ willingness to support airlines. This is followed by a discussion on the various types of support that may be provided and how country-specific parameters influence the choice of measures. Second, it analyses the implications of government support in three dimensions relevant to air transport policy: competition and liberalisation, airline ownership and control, and environmental sustainability. The analysis suggests that most governments give a high priority to maintaining air transport connectivity in order to protect economic activity and jobs, in aviation itself and in related sectors such as tourism. The trade-off between ensuring connectivity and maintaining competition after the COVID-19 pandemic is a challenge with several political and economic dimensions. The re-orientation of public policy in the aftermath of the pandemic may limit the relative importance of the policy priorities that shaped the evolution of the air transport sector before the crisis, especially those related to climate change and the environment. The role of government and public authorities at all levels – especially the type and duration of measures affecting transport operations – will be crucial for the future development of the aviation industry.     

Linkages between customer service, customer satisfaction and performance in the airline industry: Investigation of non-linearities and moderating effects

The paper investigates the linkages between customer service, customer satisfaction, and firm performance in the US airline industry. In particular, the moderating effects of market concentration and firm dominance on the service-satisfaction-performance relationship are examined. Our major finding is that market concentration dampens the relationship between customer satisfaction and airline profitability. Although the same moderating relationship was not found for market power, these results, combined, indicate that airlines can increase profits in concentrated markets without providing for the same, concomitant increases in customer satisfaction as airlines operating in more competitive markets. From a public policy perspective, our results point to the importance of regulators monitoring airline actions, such as mergers and alliances, that serve to increase the concentration of markets, but may result in lower levels of customer satisfaction.     

Managing public transport in developing countries: Stakeholder perspectives in Dar es Salaam and Faisalabad

Most developing country governments face the dilemma of how to promote affordable public transport for the urban poor. In developing countries, the trend of turning to the private sector for the provision of public transport services has resulted in a large number of individual operators whose main aim is (not surprisingly) to maximise profits. The drive for profitability can be achieved by increasing efficiency and cutting bloated costs, but may also lead to unfavourable behaviour that can adversely affect passenger safety and comfort and could also damage the urban environment. The challenge is to find a way to regulate and control this multiplicity of small businesses in such a way as to retain the cost minimisation pressures of the profit-seeking private sector without sacrificing safety, health or quality of service.This paper presents a comparison of stakeholder attitudes to the regulation and control public transport in Dar es Salaam (Tanzania) and Faisalabad (Pakistan). The views of stakeholders were established as part of a wider DFID-sponsored study of ‘Partnerships to improve access and quality of urban public transport for the urban poor’ and were collected using content analysis, literature reviews, historical analysis, case studies, focus group discussions, forums and workshops. The stakeholders involved included users, particularly passengers from low-income households, providers and operators of services (drivers and conductors), and regulatory agencies. The example of the Faisalabad Urban Transport Society (FUTS), effectively a public–private partnership, is described to provide a useful model of regulation and control of private sector operators as well as for reconciling the interests of multiple stakeholders.     

Africa’s single aviation market: The progress so far

To promote the development of air transport at the continental level, several policies were introduced, leading to the Yamoussoukro Decision (YD) in late 1999, which had the liberalisation of the intra-African aviation spaces as its main objective. Even though notable progress has been achieved towards more market-oriented aviation policies, at the pan-African level some markets are still restrictive and inconsistent with the YD, particularly with respect to the granting of 5th freedom rights. This paper aims to examine recent developments in the aviation sector in Africa, with a focus on the implementation of the YD. The obstacles to liberalisation are discussed and several measures for facilitating Africa’s move towards multilateral open skies are investigated. These include, among others, a greater collaboration and co-operation among African airlines, as well as between African airlines and foreign ones; redefinition of the role and responsibilities of different institutions which are instrumental in implementing the YD and some further issues such as ownership guidelines.     

Internationalization strategies of EU and Asia–Pacific low fare airlines

We employ Dunning’s eclectic paradigm (OLI) to shed light onto low fare airlines’ internationalization strategies. In addition to 31 European low fare airlines, we also analyze the internationalization strategies of 41 low cost carriers in the Asia–Pacific region. The results indicate that homogenous groups of such airlines emerge with regard to their internationalization strategies and that capital and ownership structure as well as relative timing is especially closely related to low fare airline’s entry modal choice. We discuss inferences for the use of the OLI paradigm in further studies of airline internationalization.     

Efficiency of US airlines: A strategic operating model

This paper applies the unoriented DEA network methodology to measure US airlines' performance relative to that of peer airlines and identifies the sources of its inefficiency. The analysis of the results suggests that major US airlines are more efficient than national US airlines in spending operating expenses and gaining operating revenue, but there is no significant difference in their service supply and demand efficiencies.