Non-parametric analyses of efficiency of airports

This paper estimates the efficiencies and productivity changes of 12 international airports in the Asia-Pacific region based on data from 1998 to 2006. We apply stochastic frontier analysis (SFA) to compute efficiency estimates and use the Malmquist productivity index (MPI) to analyze productivity changes. We use the SFA model with a translog-type production function after testing the statistical hypotheses. According to the results of the SFA hypothesis tests, airports have experienced a technological regression; the deviations from the efficiency frontier are caused more by technical inefficiency than random noise. However, the inefficiency was found to decrease. The MPI reveals a declining trend resulting more from technological change than from efficiency change, with a decrease in inefficiency. Taken together, both the hypothesis tests and the MPI not only provide consistent conclusions, but also suggest that airports should concentrate on technological progress.     

Technical change and productivity growth in airports: A case study

This paper analyses the rate of technical progress at Portuguese airports between 1990 and 2000, using a stochastic cost frontier method. A translog frontier model is used and the maximum likelihood estimation technique is employed to estimate the empirical model. We estimate the efficient scores and disentangle the rate of technical progress into three components: pure technical progress, non-neutral technical progress and scale-augmenting technical progress. The results show that the average score is 88%, denoting a relatively high degree of waste, despite the fact that technical change contributed to a reduction in costs.     

Evaluating the operational performance of airside and landside at Chinese airports with novel inputs

ABSTRACT

This paper evaluates the operational performance of airside and landside at Chinese airports with two novel inputs. Furthermore, the airport landside operation is decomposed into passenger-terminal operations and cargo-warehouse operations. One novel input is the capability of the runway system which is introduced into airside performance evaluation. The other novel input is cargo warehousing which is introduced into landside performance evaluation. To address multiple optimal solutions when estimating Returns to Scale in Data Envelopment Analysis, we adopted the Zhu and Shen method. This empirical study shows that neither the number of runways nor total runway length is a genuine index of runway system capability in the evaluation of airside performance. Only four airports achieved full efficiency in all eight measures while eight airports did not achieve any full efficiency. In addition, one airport did not perform well in the benchmark analysis.     

The influence of the operational environment on efficiency of international airports

Heterogeneity must be considered in the efficiency analysis of decision‐making units; otherwise, the results will be strongly biased. This is also valid for airport management where the operational environment heavily influences efficiency. In this paper, conditional efficiency measures are applied to airports to incorporate heterogeneity in non‐parametric frontier models which are robust for outlying observations. In particular, the influence of the operational environment on airport efficiency is examined in a sample of 141 international airports. The conclusions show that the operational environment indeed matters and that privatisation, regulation, traffic transfer and the dominant carrier have a positive effect on efficiency, whereas aeronautical revenues influence it negatively. Copyright © 2014 John Wiley & Sons, Ltd.     

Evaluation of Potentially Successful Barge Innovations

Abstract

The main objective of this article is to analyse the changes in productivity of the Taiwan Bus Transit System (TBTS) before and after the execution of the ‘Alternatives for Promoting the Development of the Public Transportation Sectors’ (APDPTS), which is designed to provide a better operating environment for the public transport sector in the provision of public transit services. We use a decomposition of the Malmquist productivity index to locate the sources of productivity growth, namely technical change and efficiency change. The former is further decomposed into an output bias, an input bias and a magnitude term to test neutrality. The latter is also decomposed into changes in pure technical efficiency and scale efficiency. In our case, between the pre‐ and post‐APDPTS periods, the efficiency increased only marginally. As a result of a five‐year enhancement programme, the technical regress slowed down slightly, and inward neutral shifts of a transformation frontier were interpreted as being the main contributor to technical regress. In particular, evidence of biased technical change was found, i.e., the effects of output capability increased slightly, but the efficient use of inputs declined during the post‐APDPTS period.     

Airport–Airline interaction: some food for thought

Abstract

We provide an interpretive analysis of vertical relations between airports and carriers, while assessing the way in which deregulation of the airline market and the privatization of airports have created incentives for airport–airline interaction. In particular, if the vertical structure approach has become the standard approach in air transport research, we add to the literature by discussing three issues that we believe need further understanding. The three issues that we think should be the focus of future research on airport–airline interaction are (i) incomplete contracts and asymmetric information structure; (ii) upstream horizontal complementarities; and (iii) airports as two-sided platforms.     

A flexible terminal/mobile lounge system for expanding the capacity of existing airports

One of the great dilemmas facing major airports is the problem of capacity and seasonal surges of activity. This paper suggests a system of small, inexpensive Airport Terminal Modules, which together with a new type of Mobile Lounge, could make available a considerable degree of flexibility. The ATM's are designed to allow maximum variations of aircraft type and passenger load as well as high ground utilization. This concept would allow major airports to be extended with a minimum of inconvenience as demand becomes apparent, thereby allowing financial expenditure to be carefully controlled and more evenly spread.     

The federal republic of Germany: the federal ministry of transport

The continued liberalization of the airline market in the European Community offers the prospect of competition in terms of price, frequency of service and many other attributes. Understanding these factors that influence passenger demand and incorporating them into a demand function poses a substantial theoretical and empirical challenge. A basis for estimating demand functions is the logit model. This paper examines the value of a logit share model in explaining how the share of airlines between airports varies as a function of measured and unmeasured attributes. It shows how demand functions are necessary for understanding a competitive market and evaluates the progress to date in identifying accurate coefficients of the logit function.     

Classifying Ports for Efficiency Benchmarking: A Review and a Frontier-based Clustering Approach

Abstract

Port efficiency and port clustering are two aspects that have received different degrees of attention in the existing literature. While the actual estimation of port efficiency has been extensively studied, the existing literature has paid little attention to developing robust methodologies for port classification. In this paper, we review the literature on classification methods for port efficiency, and present an approach that combines stochastic frontier analysis, clustering and self-organized maps (SOM). Cluster methodologies that build on the estimated cost function parameters could group ports into performance metrics’ categories. This helps when setting improvement targets for ports as a function of their specific cluster. The methodology is applied to a database of Spanish port authorities. The dendrogram features three clusters and five outlier Spanish Port Authorities. SOM are employed to track the temporal evolution of Spanish Port Authorities that are of special interest for some reasons (i.e. outliers). Results show that use of a combination of cost frontier and cluster methods to define robust port typology and SOMs, jointly or in isolation, offers useful information to the decision-makers.     

Slot misuse phenomena in capacity-constrained airports with seasonal demand: the Greek experience

Abstract

Airport slot misuse disturbs the efficient and continuous operation of capacity-constrained airports, leading to congestion and delay problems. Deviations from the coordinated schedule in regional airport systems that feature seasonal demand and delays in certain peak periods are studied in this article. The Greek airport system is considered as a case study. Deviations are quantified by computing the difference between scheduled and actual aircraft arrival times as well as the hourly slot capacity utilization ratio. Two collective indicators for airport benchmarking are proposed. An in-depth analysis of slot allocation deviations and the delays they cause is carried out for a representative sample of airports that are classified according to the proposed indicators. A brief discussion on potential measures to mitigate slot misuse is also presented.     

Congestion spill effects of Heathrow and Frankfurt airports on connection traffic in European and Gulf hub airports

We develop two stage fixed-effects single-spill and double-spill models for congestion connection spills of London Heathrow and Frankfurt airports on 9 hub airports in Europe and the Gulf. Our panel data covers connection traffic from 1997 to 2013 for Heathrow and 1997 to 2011 for Frankfurt. The single-spill results support strongly that the connection spills from Heathrow’s capacity limitations do strengthen competing hub airports of major alliance groups and to a lesser degree one Gulf hub. The double-spill model for Heathrow and Frankfurt shows nearly asymmetric overall spill characteristics between the two airports. Our results underline the influence of airline network strategies on congestion spills as European airline networks are shaped by alliances and umbrella mergers. Thus, the airline network perspective in airport capacity expansion decisions needs to play a greater role, as indicated by our asymmetric results for overall spill effects between Heathrow and Frankfurt airports.     

Contract Design,Financing Arrangements and Public Ownership—An Assessment of the US Airport Governance Model

Abstract

US airports negotiate legally binding contracts with airlines and finance large investment projects with revenue bonds. Applying insights from transaction cost economics, we argue that the observed variation in contractual and financing arrangements at US airports corresponds to the parties' needs for safeguarding and coordination. The case evidence presented reveals that public owners set the framework for private investments and contracting. We suggest that airline contracts and capital market control result in comparative efficient investments and act as a check on the cost inefficiency typically linked to public ownership.     

Joint impact of competition,ownership form and economic regulation on airport performance and pricing

The combined impact of ownership form, economic regulation and competition on airport performance is analyzed using data envelopment analysis to measure cost efficiency in the first stage and regression analysis to measure the impact of the environment in the second stage. The empirical results of an analysis of European and Australian airports over a 10 year timeframe reveal that under relatively non-competitive conditions, public airports operate less cost efficiently than fully private airports. Irrespective of ownership form, regulation is necessary to emulate competitive forces thus pushing airport management towards cost efficiency and reasonable pricing policies. Under potential regional or hub competition, economic regulation inhibits airports of any ownership form from operating and pricing efficiently. Although public and fully private airports operate equally efficiently in a competitive setting, private airports still set higher aeronautical charges. Furthermore, mixed ownership forms with a majority public holding are neither cost efficient nor low price, irrespective of the level of competition.     

Role of the Railways in the Future of Air Transport

Abstract

The role of the railways in the air transport industry is usually limited to provision of access to airports. However, the development of high-speed rail networks and the congestion and environmental problems faced by the air transport industry suggest the railways could have a greater role in working with the airlines to provide an integrated transport service for medium-distance journeys (up to 800 km). Many air journeys involve two flights and a transfer at a hub airport. The alternative being investigated here would replace air journeys by a rail journey and a flight, and a transfer between them at the hub airport. Such integration could offer a positive alternative to aircraft on some routes and lead to railway journeys to airports becoming part of air transport services, and not only to provide access to them. Integration could therefore provide a better use of available air capacity rather than duplicating some high-speed rail routes and services.     

Managerial efficiency of Brazilian airports

The efficiency of 35 Brazilian domestic airports was discussed with a view to identifying avenues to improvement in two dimensions. The first of these is improved management, which shows in the airport’s ability to generate financial returns. The second is the physical dimension, which shows the level of utilization of airport infrastructure. The data envelopment analysis methodology was used to measure distance from the airport efficient frontier and to enable avenues to managerial improvement to be identified.     

Comparative performance analysis of European airports by means of extended data envelopment analysis

Data envelopment analysis (DEA) has become an established approach for analyzing and comparing efficiency results of corporate organizations or economic agents. It has also found wide application in comparative studies on airport efficiency. The standard DEA approach to comparative airport efficiency analysis has two feeble elements, viz. a methodological weakness and a substantive weakness. The methodological weakness originates from the choice of uniform efficiency improvement assessment, whereas the substantive weakness in airport efficiency analysis concerns the insufficient attention for short‐term and long‐term adjustment possibilities in the production inputs determining airport efficiency. The present paper aims to address both flaws by doing the following: (i) designing a data‐instigated distance friction minimization (DFM) model as a generalization of the standard Banker–Charnes–Cooper model with a view to the development of a more appropriate efficiency improvement projection model in the Banker–Charnes–Cooper version of DEA and (ii) including as factor inputs also lumpy or rigid factors that are characterized by short‐term indivisibility or inertia (and hence not suitable for short‐run flexible adjustment in new efficiency stages), as is the case for runways of airports. This so‐called fixed factor case will be included in the DFM submodel of the DEA. This extended DEA—with a DFM and a fixed factor component—will be applied to a comparative performance analysis of several major airports in Europe. Finally, our comparative study on airport efficiency analysis will be extended by incorporating also the added value of the presence of shopping facilities at airports for their relative economic performance. Copyright © 2012 John Wiley & Sons, Ltd.     

Gantry crane operations to transfer containers between trains: A simulation study of a Spanish terminal

Freight transfer operations are critical in combined transport networks. In this paper a simulation model and modelling approach to the transfer of cargo between trains at rail terminals is presented. The model is used to study the Port-Bou terminal, the main intermodal terminal at the Spanish-French frontier. Four different gantry crane operation modes to interchange containers between trains are evaluated. These operation rules are tested in several scenarios to examine the critical factors of the system and the best operation rule for each situation. Latest generation software is used to develop the model that incorporates modular programming and enhanced graphic systems for output representation. It allows a dynamic display of the simulated system and, likewise, the possibility of developing modules that can be reused in other studies. The research shows how simulation can be a useful planning tool in the rail transportation context.     

Dealing with the efficient allocation of scarce resources at congested airports

The existing slot allocation mechanism, based on the International Air Transport Association (IATA) system and its complementary version of the European Union (EU) regulation, produces rather poor capacity allocation outcomes for congested EU airports since it fails to properly match slots requested with slots allocated to airlines. Inefficiencies during the initial allocation are mainly due to the problem complexity in conjunction to limited decision support available to slot coordinators. On the other hand, substantial inefficiencies give rise to severe slot misuse and unreasonably low utilisation of airport resources running already into scarcity. The objective of this paper is to develop an optimisation-based model implementing the existing EU/IATA rules, operational constraints, and coordination procedures with the ultimate objective to better accommodate airlines’ preferences at coordinated airports through the minimisation of the difference between the requested and the allocated slot times to airlines. The results of the model are assessed and compared vis-à-vis the allocation outcome produced according to current slot coordination practice in three regional Greek airports. The proposed model produces very promising results and demonstrates that there is large room for improvement of the efficiency of the current allocation outcome in a range between 14% and 95%. The discussion of the model results is complemented by a sensitivity analysis highlighting the importance of declared capacity and the magnitude of its influence on slot allocation efficiency.     

Effects of corruption on efficiency of the European airports

The effect of corruption on airport productive efficiency is analyzed using an unbalanced panel data of major European airports from 2003 to 2009. We first compute the residual (or net) variable factor productivity using the multilateral index number method and then apply robust cluster random effects model in order to evaluate the importance of corruption. We find strong evidence that corruption has negative impacts on airport operating efficiency; and the effects depend on the ownership form of the airport. The results suggest that airports under mixed public–private ownership with private majority achieve lower levels of efficiency when located in more corrupt countries. They even operate less efficiently than fully and/or majority government owned airports in high corruption environment. We control for economic regulation, competition level and other airports’ characteristics. Our empirical results survive several robustness checks including different control variables, three alternative corruption measures: International Country Risk Guide (ICRG) corruption index, Corruption Perception Index (CPI) and Control of Corruption Index (CCI). The empirical findings have important policy implications for management and ownership structuring of airports operating in countries that suffer from higher levels of corruption.