Efficiency and productivity changes in Greek airports during the crisis years 2010–2014

The aim of this study is to evaluate the operating efficiency and productivity changes of the Greek airports, during the first years of the severe economic crisis in Greece (2010–2014), by using two methods: Data Envelopment Analysis (DEA) and Malmquist Productivity index (MPI). Findings have shown that, despite the dramatic effects of the economic crisis on the socio-economic life of the country, overall airport efficiency and productivity improved, mainly due to exogenous factors such as international tourism growth. The MPI reveals that over the period of the study, airports have experienced an annual average increase in total factor productivity (TFP) of 0.9% (an increase of 3.6% over the examined period). On examining the components of this productivity change, it becomes evident that this is due to the combination of both positive (a slight progress) annual average technology change (0.5%) and technical efficiency change (0.4%). The results also indicate that 65.8% of airports have an increase in average TFP during the period 2010–2014, ranging between 0.4% and 20%. However, as Greek airports operate at poor levels of efficiency, there is still considerable space for improvements in most of the airports.     

Commercialisation and airport performance: The case of Ireland's DAA

Airport performance has been the subject of an increasing volume of empirical research in recent years. This paper bridges a gap in the existing literature through an in-depth case study analysis of the process of commercialisation in the Dublin Airport Authority (DAA), Ireland's state-owned airport company, and the corresponding impact on performance over the 1994–2014 period. We use a model of commercialisation to examine changes in the DAA's internal and external environments that show evidence of a more commercial focus. The DAA's economic performance is then analysed using total factor productivity (TFP) and labour productivity indicators, as well as basic financial indicators. Our analysis highlights the significant internal and external changes experienced by the DAA over the past two decades that have driven a continuous process of commercialisation. While TFP growth was positive or stable in half of the years that we examined, the overall level of TFP declined over our timeframe of analysis. Much of this decline was due to two considerable programmes of investment in long-lived infrastructure assets where a return in the short-term would not be expected.     

Technical efficiency and productivity changes in Spanish airports: A parametric distance functions approach

This paper contributes to the airport benchmarking literature in two ways. To our knowledge, this is the first attempt at using a stochastic distance function to measure airports’ productivity changes while considering multiple outputs. Secondly, we calculate the evolution and decomposition of the Total Factor Productivity (TFP) for Spanish airports. The average rate of productivity showed a slight annual improvement of 0.9%, and the core engine of this was 3% increase in technical progress rather than through efficiency. Results, by airport, identify those needing improvement, to be more attractive in the Spanish airport restructuring program.     

Total factor productivity decomposition,input price inefficiencies,and public transit systems

This paper decomposes the rate of growth of total factor productivity (TFP) in public transit systems among input demand effects, an indirect output effect, an indirect technical change, pure scale effects and pure technical change. An application of the decomposition to selected transit systems is provided. The application shows that the effects of the changes in input price inefficiencies on TFP are sizeable, and that the total subsidy effects on TFP are larger than the total effects from utility maximization behavior. Furthermore, the traditional sources of TFP (i.e., pure scale and technical change) reduce TFP and the Divisia index overestimates TFP in public transit systems.     

Estimating airport efficiency of New Zealand airports

New Zealand's airport industry has experienced substantial growth over recent years, but few studies have analysed the operational efficiency of New Zealand airports. This paper aims to extend the study of Francis and Lyon (2007) by exploring the efficiency and productivity changes of New Zealand's major airports between 2010 and 2012, using slacks-based measure (SBM) model and the Malmquist productivity index (MPI). The findings suggested that the majority of New Zealand airports increased efficiency and productivity during the period under investigation, but should decrease scale of operations in order to operate at their most productive size. Decomposition of the MPI showed that most New Zealand airports experienced gains in efficiency but, in terms of technology, they have regressed. Four significant factors (i.e. airport hub status, airport operating hours, airport ownership, and the Rugby World Cup 2011) were identified by the Simar–Wilson bootstrapping regression analysis as explaining variations in airport efficiency. Importantly, the significant effect of the Rugby World Cup 2011 (a major sport tournament) on New Zealand's air transport demand and airports' efficiency has been demonstrated in this research.     

Productivity and efficiency in urban railways: Parametric and non-parametric estimates

This paper formulates and compares parametric productivity estimates and non-parametric efficiency scores for urban rail firms. It outlines a decomposition of total factor productivity (TFP) change and proposed some hypotheses about how this relates to an analysis of efficiency using data envelopment analysis (DEA). TFP is empirically evaluated using estimates from a translog production function. The estimation also tests some hypotheses about the elements that comprise firm specific ‘technology’. The results show that while estimates of returns to scale differ using the TFP and DEA methods, the ranking of urban rail efficiency is broadly similar.     

Waste management efficiency at UK airports

The aviation industry has a reputation for being a major polluter. Using primary data obtained directly from BAA this paper examines the ways in which BAA (formerly the British Airports Authority) has improved efficiency in the management of airport waste. The paper also considers why, despite these improvements, UK airports still lag behind some European airports in terms of environmental management. The paper concludes that the UK government needs to take a more pro-active role in promoting a more co-ordinated approach to environmental strategy across the industry.     

Japanese-airport benchmarking with the DEA and endogenous-weight TFP methods: testing the criticism of overinvestment in Japanese regional airports

As aviation demand increased constantly along with the rapid economic growth in Japan and surrounding East Asian countries over the last several decades, Japanese government promoted airport construction since 1950s. However, the recent change in the economic background has made rise to a criticism toward the inefficient public investment, especially the transportation infrastructure. In this criticism, it has been argued that some of the small regional airports are indeed suffering the issue of overinvestment. Thus this paper attempts to verify the validity of such criticism by statistically measuring the efficiency of Japanese airports and conducting comparative analysis. For this objective, the paper employs two distinct methods namely data-envelopment analysis and endogenous-weight TFP methods. The results from these methods consistently indicates that the efficiency of regional airports in mainland Japan are lower than others, and that those airports constructed in the 1990s are relatively inefficient.     

An exploratory examination of additional ground access trips generated by airport ‘meeter-greeters’

A significant share of airport passengers are accompanied to and/or from the airport by friends and relatives to wave them off or greet them when they land. At some airports the number of these ‘meeter-greeters’ can be substantial, which can have important ground access planning, economic and environmental implications for the airport operator. Yet this group have received comparatively little attention in either the academic or industry literature. Consequently, to some extent ‘meeter-greeters’ have remained something of a ‘hidden’ element of ground access user. In an attempt to address this, the paper uses secondary data analysis of the UK CAA Passenger Survey Report to explore ‘meeter-greeters’ at five UK airports; Heathrow, Gatwick, Manchester, Stansted and Luton. Focus is given to assessing the scale of ‘meeter-greeter’ journeys and the role of a passenger's trip purpose (business/leisure) and resident status (resident/non-resident) in this process. A key finding from the analysis relates to the disproportionate impact of multi-person trips, where a number of different ‘meeter-greeters’ accompany a passenger to the airport. The implications of these findings are discussed and a number of recommendations for decision makers proposed. Namely, it is suggested that airport monitoring and assessment procedures should incorporate a measure of the additional trip generation by ‘meeter-greeters’ in order to present a more complete picture of the number of people accessing/egressing an airport.     

Airport quality and productivity changes: A Malmquist index decomposition assessment

This paper analyses the productivity of 20 Italian airports management companies during the period 2006–2008 using a DEA Malmquist index that includes a quality component. The proposed methodology is applied for the first time to the airport industry. In doing so, we directly assess the impact of the quality of services delivered by an airport on its productive performance. The study shows that, while Italian airports possess an acceptable level of quality in terms of their infrastructure, their managerial/administrative procedures must be strengthened in order to better deal with both technological modernization and passenger waiting time at the airports.     

A productivity comparison of the world's major airlines

This paper measures and compares productivity and unit cost of the world's 23 major airlines using yearly panel data (1986–1993). An extensive effort was expended to put together a reliable database. These data are then used to accomplish the following: first, unit cost per unit of aggregate output is measured and compared. The effect of input price changes on the unit costs are also examined. Second, the ‘gross’ Total Factor Productivity (TFP) is measured and compared. In order to compare true productive efficiency across airlines and over time, a ‘residual’ TFP index is computed after removing effects of the variables beyond managerial control such as average stage length and composition of outputs. Log-linear TFP level, and TFP growth rate regressions are used to accomplish this task. Our results show that:

1. (a) during the sample period (1986–1993), the major European carriers and the carriers in newly industrialized countries in Asia have achieved significantly higher productivity growth than their North American counterparts;

2. (b) as a result, the productivity gap between North American and other carriers have diminished significantly;

3. (c) however, on average, the North American carriers still enjoy higher productive efficiency than the carriers in Asian NICs and European carriers, but the gap is closing very rapidly; and

4. (d) it is observed that, over time, the productive efficiency of carriers competing in the same markets tends to converge.

Finally, Asian NIC carriers clearly enjoy unit cost advantages over other major carriers. Our results show that European aviation liberalization which began in 1987 appears to have produced substantial productivity gains.     

The role of London airports in providing connectivity for the UK: regional dependence on foreign hubs

In a context of ongoing debate about the future UK aviation policy and its implications for regional economic development, this paper discusses the role of London Heathrow and the South East airports in providing connectivity for the UK, with particular focus on the international markets that originate from regional UK airports. Using an MIDT dataset of worldwide passenger itineraries served by the European airport network during May 2013, we first establish whether London Heathrow can currently be considered the most important hub for the UK, in terms of traffic generation, connectivity, and centrality, while also measuring the dependence of UK regions on foreign airports and airlines to remain connected with the rest of the world. Results show that, despite the competition, London Heathrow benefits from its massive traffic generation to remain the most central gateway for overall UK air transport markets. However, when only regional markets are considered, significant dependence on foreign hubs appears in many destinations, particularly to Asia–Pacific or the BRIC countries where above 80% of passengers use transfer flights. These results fit nicely with the observed trends of seat de-concentration and hub-bypassing in the airline industry. While dependence on foreign hubs can be interpreted as a sign of vulnerability, there is also the argument that bypassing Heathrow allows regional airports to develop new markets and reduce the level of congestion in the London airport system.     

Airport traffic and financial performance: a UK and Ireland case study

The aim of this paper is to examine the development of air services at UK and Irish airports since 1998 and to assess the impact on airport financial performance. A sample of 14 medium/small sized UK airports and three Irish airports is used. The traffic analysis shows that low cost carriers have been largely responsible for strong passenger growth and increased passenger load at a number of regional airports. Some of these carriers use established primary and regional airports whilst others seek out small secondary airports. The airports with a high proportion of low cost traffic tend to have lower unit revenues, particularly as regards airport charges, demonstrating their desire to remain price competitive to capture this type of traffic.     

Airport selection criteria of low-cost carriers: A fuzzy analytical hierarchy process

The selection of airport is an important consideration for low-cost carriers (LCCs) to remain cost competitive. The objective of this study is to identify and rank the airport selection criteria of LCCs. Based on reviewing the existing literature, five main factors comprising 16 sub-factors were developed. The factors were first validated by three industry experts from the aviation industry. Thereafter, a survey questionnaire requiring a comparison of the factors was administered on 28 executives who were involved in the strategy planning and formulation of LCCs based in China or Korea. The collected data were analysed using fuzzy analytical hierarchy process (FAHP). In descending order of their importance, the main factors influencing LCCs' selection of airport are (1) airport charges, (2) airport performance, (3) airport growth opportunities, (4) catchment area and (5) airport infrastructure. The top three sub-factors are airport costs, demand for LCC services and passenger throughput. The research contributes to academic research by providing a holistic assessment of the key considerations influencing LCCs' selection of airport. In addition, it implicates policy formulation of LCCs by providing a framework for assessment of airports that are suitable for LCCs’ operations.     

Sustainable efficiency drivers in Eurasian airports: Fuzzy NDEA approach based on Shannon's entropy

This research explores the physical infrastructure and flight consolidation efficiency drivers of Eurasian airports regarding their infrastructure and movement productivity levels. A novel Fuzzy Double-Frontier Network DEA (FDFNDEA) model is proposed to investigate the relationship between desirable (freight and passenger turnovers) and undesirable (pollutant emission levels due to aircraft movements) outputs against the respective infrastructure usage, fuel consumed, and movements performed at each of the 23 Eurasian airports from 2000 to 2018. This balance between desirable and undesirable outputs emerges spatially and temporally due to the evolution of the airport system's productive resources at each one of the Eurasian countries over the period observed. Shannon's entropy is used as the cornerstone to quantify the input and output vagueness of this evolution in Triangular Fuzzy Numbers (TFN), thus allowing the accurate building of alternative optimistic and pessimistic double-frontier efficiency. Differently from previous research, Shannon's entropy is the key for measuring input and output vagueness levels in light of the maximal entropy principle. This principle states that the distribution that best represents the current state of knowledge is the one with largest entropy. Maximal entropy yields bias-free decision-making in the sense that the input/output distributional profiles for Eurasian airports contain the maximal possible heterogeneity, working as a robust or best/worst-case scenario against eventual unconsidered assumptions. Hence, optimistic and pessimistic Malmquist Productivity Indexes (MPI) for overall and each stage productivity results are subsequently regressed against contextual variables related to airport characteristics and regional socio-demographic and economic indicators of each Eurasian country using bootstrapped Cauchy regressions. The findings revealed the spatial heterogeneity of productivity factors and airport performance across Eurasia. Results also demonstrated the negative impact of income inequality and the positive impact of private participation on technological progression in the Eurasian airport industry.     

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.     

Productivity growth and biased technological change in UK airports

In this paper we estimate the total factor productivity of UK airports using a Malmquist index. Productivity change is factored into an index of efficiency change and an index of technological change. Technological change is further decomposed into indexes that measure the bias in the production of outputs, the bias in the employment of inputs, and the magnitude of the shift in the production frontier. Airports are ranked according to their productivity change for the period 2000–2005. Economic implications are derived.     

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 development of Manchester Airport, 1938–1978: central government subsidy and local authority management

This paper assesses the historical impact of central government policy on the planning and ownership of UK airports with particular reference to development at Ringway, Manchester. We argue that during a crucial period in the creation of airport infrastructure, central government policy proved equivocal. This meant that it was left to the municipal owners to undertake investment if the airport was to grow. The only significant state support was the provision of grant aid when government generally rejected the principle of subsidised airport operations. The local authority displayed considerable initiative, and the result was the nurturing of an international gateway.     

Low cost airport terminal locations and configurations

The growth in the demand for low-cost airlines has coincided with the growth in the airport industry. One attempt by airports to attract such carriers has been to construct dedicated terminals called low-cost terminals. The ability of these to accommodate fast aircraft-operation time in airfields is heavily influenced by its configuration and location in the airport. Here we evaluate the location and configuration of the dedicated terminal by considering the aircraft taxiing distance and passenger walking distance. Result show a single pier to be preferable configuration for a low-cost terminal. Time and cost efficiency seem to be driven largely by the location of the terminal, rather than its configuration.