A Survey of Empirical Research On The Productivity and E Ciency Measurement of Airports

Journal of Transport Economics and Policy, Volume 47, Part 2, May 2013, pp.
157–189
A Survey of Empirical Research on

the Productivity and Efficiency
Measurement of Airports
Vanessa Liebert and Hans-Martin Niemeier
Address for correspondence: Vanessa Liebert, Jacobs University Bremen, School of Humanities and
Social Sciences, Campus Ring 1, 28757 Bremen, Germany (v.liebert@jacobs-university.de). Hans-
Martin Niemeier, University of Applied Sciences Bremen, School of International Business,
Werderstr. 73, 28199 Bremen, Germany (Hans-Martin.Niemeier@hs-bremen.de).
We would like to thank the German Airport Performance (GAP) and German Aviation Bench-
marking (GAB) research projects that are funded by the German Ministry of Education and
Research. Further, we thank Nicole Adler, Peter Forsyth, David Gillen, and Nathalie McChaughey
as well as two referees of this journal for valuable comments. The usual disclaimer applies.
Abstract
Airport benchmarking has become a popular tool used by economists and airport managers alike.
Within academic circles, a number of studies emerged assessing the productivity and efficiency of
airports. This paper surveys the methods, data, and findings of empirical research in order to learn
from previous research, and to gain further understanding of the airport industry. Our survey
reveals that while commercialisation and restructuring contributed to efficiency increases, findings
on ownership and scale effects are inconsistent. Data availability generally proved to be a serious
issue. However, substantial progresses in capturing the increasing heterogeneous character of
airports were made over time.
Date of receipt of final manuscript: April 2012
157
Journal of Transport Economics and Policy Volume 47, Part 2
1.0 Introduction
For more than three decades, benchmarking has served as an important instrument for
managerial and economic purposes in order to assess the performance within and
across companies, or to estimate productivity and efficiency changes over time. Hensher
and Waters (1993) propose the following three techniques often applied in the overall
productivity and efficiency analysis:
1. Non-parametric index number approaches measure the total factor productivity (TFP)
by aggregating inputs and outputs with market prices.
2. Parametric approaches, such as stochastic frontier analysis (SFA), estimate the
efficiency with econometric techniques, and separate the error term into random
noise and managerial inefficiency.
3. The non-parametric data envelopment analysis (DEA) applies linear programming,
and divides the set into relatively efficient and inefficient units without prior knowledge
of the functional relationship between inputs and outputs.
The changing nature of the airport industry over the last decades offers an equally
challenging and interesting objective for the application of benchmarking techniques.
Traditionally, airports were managed and regulated as public utilities, which is still
present in many countries. However, in the late 1980s a worldwide process of privatisa-
tion took place, which was often accompanied by regulatory reforms from cost-based
towards incentive and light-handed regulation. A change in the management style
towards commercial goals led to substantial investments in non-aeronautical activities.
Furthermore, vertical and horizontal boundaries changed over time. While some airports
outsourced their labour-intensive activities, such as ground handling, others have
remained highly integrated either as a separate airport or within an airport system
organised as a civil aviation authority. Moreover, competition between airports began to
arise. Some airports like Manchester or London Stansted face effective competition from
airports in their respective catchment areas. With the deregulation of the airline industry,
the airports in Pittsburgh and Brussels lost their hub carrier and experienced competition
with other hub airports. The liberalisation of bilateral air service agreements offered the
opportunity to attract international traffic to gateway airports and secondary hubs. In
order to meet future demand, congested airports needed to expand and introduce new
technologies to increase runway and terminal capacities. However, at many major
airports the excess demand was inefficiently rationed through queuing and slot allocation
mechanisms. This increased the number of non-weather-related delays. For these
reasons, airports offer a rich field for performance and benchmarking analyses for
performance comparisons across airports, and the assessment of efficiency changes over
time.
The application of airport benchmarking is manifold (Kincaid and Tretheway, 2006).
Airport managers utilise benchmarking to identify best-practice standards and to
develop new concepts for performance improvements. Airlines, shareholders, and
investors use benchmarking as a decision-making instrument. National and regional
governments may assess the effects from political decisions such as privatisation. As
proposed by Shleifer (1985), benchmarking may further serve for regulatory purposes,
widely known as yardstick competition. Whereas yardstick competition evolved to a
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Research on the Productivity and Efficiency Measurement of Airports Liebert and Niemeier
standardised approach in the British water and railway industries, it has to date rarely
been applied to airports.1 The Civil Aviation Authority (CAA) in the UK explains this
reluctance with the heterogeneous character of airports and the challenge to secure
appropriate comparisons (CAA, 2000).
In order to improve benchmarking for practical use, academic research continuously
aims to refine quantitative techniques. Since the late 1990s, a number of academic
research studies emerged, applying quantitative approaches to assess the productivity
and efficiency of airports. Kincaid and Tretheway (2006) as well as Morrison (2009),
however, challenge the past and current practice of airport performance analysis due to
inconsistencies in the data selection and its limited value to managers. They state that a
clear definition of an airport model is crucial to understand the industry. Therefore, the
collection of consistent inputs and outputs is very important. In addition, different tech-
niques and the airports’ heterogeneous character may lead to different results across
studies. This last argument is discussed in a response to Morrison (2009) by Adler et al.
(2009); as especially econometric approaches have been substantially further developed
to account for observed heterogeneity across decision-making units (DMUs). From our
point of view, the debate has not yet resolved all issues and will continue; also because
airport managers still prefer to use simple partial measures while academics utilise
sophisticated overall productivity and efficiency approaches.
In other transport sectors traditionally under public ownership, we find comprehen-
sive surveys of the empirical literature; for example, by Oum et al. (1999) on railways, de
Borger et al. (2002) on public transport, and Gonzalez and Trujillo (2009) on seaports.
While Forsyth (2000) provides an overview of a few airport benchmarking studies and
Graham (2005) focuses on methodological issues, comprehensive research has not yet
been undertaken analysing the empirical studies and discussing the findings. With the
publication of a substantial number of academic benchmarking studies, the aim of this
paper is therefore to provide an overview of the current literature that utilises DEA,
SFA, and TFP to assess the productivity and efficiency of airports. In order to further
our understanding of the airport industry, this paper reviews the variable selection in
previous studies and compares empirical findings. Furthermore, a discussion on the use
of quantitative approaches is provided to examine the progress in airport benchmarking.
A contribution to the literature is a tabular summary covering sixty academic airport
benchmarking studies2 and a synthesis of inputs and outputs considered in this empirical
research.
The survey reveals a number of issues that remain unresolved to date. Whereas
increasing commercialisation and restructuring consistently lead to efficiency increases,
findings on ownership and scale effects prove to be inconclusive. Over time, the majority
of airports exhibit performance increases, which were mostly explained with techno-
logical progress as a result of investment programmes. Consistent capital measures and
1
To the best of our knowledge, the Dublin Airport Authority (DAA) is the only European example that has been
subject to regulation with yardstick competition by the Commission Aviation for Regulation in 2001. However, it
was highly criticised by the airport because inappropriate peer airports have been identified (Reinhold et al.,
2010).
2
We have only attached a light version of the tabular overview to the appendix combining inputs and outputs into
categories. A detailed overview of the studies is available upon request.
159
undesirable by-products were found to be crucial for analyses in order to prevent an

overestimation of the efficiency results, but are often problematic to obtain. Although
the studies indicate substantial progress in utilising frontier approaches by considering
the heterogeneous character of airports, more research is needed to improve airport
benchmarking for regulatory purposes and to alleviate some of the scepticism of airport
managers.
The paper is organised as follows: Section 2 introduces the methodology of perform-
ance measurement and reviews their application in airport benchmarking studies. Section
3 discusses the input and output variables that were applied. Section 4 continues with a
comparison of findings from research studies. Special attention will be drawn on the
results of productivity and efficiency changes over time, ownership, and scale effects.
Concluding remarks are given in Section 5 on the issues that remain unresolved.
2.0 Productivity and Efficiency Measurement Concepts
Over the years, a number of quantitative techniques emerged assessing the productivity
and efficiency of decision-making units (DMUs) such as airports (see Figure 1). The
one-dimensional approach is the simplest form to assess productivity. It simply divides
one output by one input. However, this measure should be treated with caution. As
discussed by Forsyth et al. (1986), partial measures should only be applied if data for
overall measures are not available. Results obtained from partial measures can mislead
Figure 1
Quantitative Methods in Productivity and Efficiency Analysis
Productivity and
Efficiency Analysis
One- Multi-
dimensional dimensional
Average Frontier
Approaches Approaches
Non-Parametric Parametric Parametric Non-Parametric

(Index Numbers) (Deterministic) (Stochastic) (Deterministic)
Total Factor Ordinary Least Stochastic Data

Partial
Productivity Squares Frontier Analysis Envelopment
Performance
(TFP) (OLS) (SFA) Analysis (DEA)
Source: adapted from von Hirschhausen and Cullmann (2005).
160
as they fail to capture substitution effects between different inputs. For this reason,
academic research (Graham and Holvad, 2000; Oum et al., 2003, 2004) uses partial
productivity measures only in addition to overall approaches.
In order to gain an overall measure of the airport’s performance, multi-dimensional
approaches should be applied instead which can be distinguished in frontier and average
approaches. The most popular average approach is linear regression with ordinary least
square (OLS). The availability of price information enables the application of price
index-based number (PIN) approaches to measure the total factor productivity. Average
techniques, however, assume that all DMUs operate efficiently. Frontier approaches, in
contrast, estimate the efficient production or cost function where an airport that deviates
from the frontier appears to be inefficient. The pioneering work on efficiency by Farrell
(1957) was taken up by Charnes et al. (1978), who developed data envelopment analysis
based on linear programming and inspired the econometricians Aigner et al. (1977) to
assess the technical efficiency with stochastic frontier analysis (SFA). In the following we
continue with the concepts of price-based index approaches, DEA, and SFA as the
dominant techniques in the field of airport benchmarking.
2.1 Price-based index number approaches

The application of index-number approaches is most common in measuring price and
quantity changes over time. A popular economic indicator is the Consumer Price Index
(CPI), measuring price changes of goods and services over time. In order to measure total
factor productivity with index numbers, market prices are required as weights in order to
aggregate multiple input and output quantities. However, information on market prices is
often not available. Instead, cost and revenue shares are used. An advantage of index-
number approaches is the provision of meaningful results with only two observations
because the productivity is not assessed relative to other units. The Törnqvist index is
widely used in economic studies; however, the index is restricted to time-series analyses.
Caves et al. (1982a) proposed a multi-lateral translog index known as the CCD index,
which can be used to compare TFP of a set of airports over different years:
ln TFPkj ¼ ðln Yk ln Yj Þ ðln Xk ln Xj Þ

1X 1X
¼ ðRik þ Ri Þðln Yik ln Yi Þ ðRij þ Ri Þðln Yij ln Yi Þ
2 i 2 i
1X i Þðln Xik ln Xi Þ 1
X
i Þðln Xij ln Xi Þ; ð1Þ
ðWik þ W ðWij þ W
2 i 2 i
where Yik and Rik are the output quantity and the revenue share for output i of DMU k;
Ri is the arithmetic mean of the revenue share; and Yi is the geometric mean of output i
over the entire sample. Xik is the input quantity and Wik is the input cost share for input
i of DMU k; W i is the arithmetic mean of cost shares and Xi the geometric mean of
input i over the entire sample.
A limited number of airport benchmarking studies apply index-number approaches.
Hooper and Hensher (1997), Nyshadham and Rao (2000), and Vasigh and Gorjidooz
(2006) utilise the CCD index to measure the airport’s TFP, while Oum and Yu (2004)
and Oum et al. (2006) assessed the variable factor productivity (VFP) using the same
161
index but without capital input. Instead of market prices, all studies included cost and
revenue shares as weighting factors.
As aforesaid, index numbers assume technical efficiency for all observations, which is
unlikely to be true for airports. Instead, environmental constraints, ownership forms, the
regulatory procedure, or the market structure, which are all exogenous to the airport
management, are expected to affect the efficiency. Alternatively, non-parametric frontier
approaches may be applied to assess TFP changes. The most popular model in airport
benchmarking is the DEA-based Malmquist index decomposing TFP changes into pure
technical efficiency, scale efficiency, and the technological changes. Airport studies
utilising Malmquist DEA will be introduced in the following section.
2.2 Data envelopment analysis

The majority of airport benchmarking studies apply data envelopment analysis (DEA).
An advantage of this approach is that multiple inputs and outputs are aggregated
without price information. Furthermore, DEA requires neither the specification of a
production or cost frontier, nor assumptions of the distribution of the error term. The
mathematical framework of DEA has first been proposed by Charnes et al. (1978) to
assume constant returns to scale (CRS) and has been extended by Banker et al. (1984) to
include variable returns to scale (VRS). With linear programming, DEA compares each
DMU to the efficient set of observations, with similar input and output ratios. This non-
parametric approach solves the linear programming formulation for each DMU and the
weights assigned to each linear aggregation are the results of the corresponding linear
programme. The weights are chosen in order to show the specific DMU in as positive a
light as possible, under the restriction that no other DMU, analysed under the same
weights, is more than 100 per cent efficient. Variable returns to scale have mostly been
assumed, as the size of an airport may substantially differ within the sample set (Abbott
and Wu, 2002; Fernandes and Pacheco, 2002; Bazargan and Vasigh, 2003; Barros,
2008a). Gillen and Lall (1997), who divided the airport into terminal and airside
activities, suggest VRS for passengers and CRS for movements. Furthermore, a number
of studies compared the results of CRS and VRS assumptions in order to obtain the
level of scale efficiency (de la Cruz, 1999; Murillo-Melchor, 1999; Abbott and Wu, 2002;
Barros and Dieke, 2007; Lam et al., 2009). Equation (2) presents an input-oriented
model assuming variable returns to scale:
X
min y; s:t: yxo Xl 5 0; Yl 5 yo ; l ¼ 1; l 5 0; ð2Þ
y;l
where y is a scalar that estimates the radial contraction of all inputs, l is a non-negative
vector of weights that are determined by the optimisation process, and xo and yo are
the input and output quantities of DMUo, the airport under investigation. X and Y
represent input and output matrices, respectively. Adding the constraint l ¼ 1 changes
the assumption of CRS to VRS.
Over time, the basic model has been continuously refined. It includes the formulation
of non-radial models which reflect all inefficiencies (including slacks) identified in the
inputs and outputs, the estimation of efficiency changes over time, the improvement of
the discriminatory power of efficiency estimates, the formulation of weight restrictions,
the introduction of network DEA to open up the black box of DEA, the identification
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of outliers, and the introduction of statistical inference to DEA (Cooper et al., 2007).
Figure 2 summarises DEA applications applied in airport efficiency studies.
From the beginning, data collection appeared to be a serious issue and the sample
size was mostly rather small. A low ratio of observations to the number of inputs and
outputs, however, weakens the discriminatory power of DEA. For example, Parker
(1999) assesses the technical efficiency of the BAA as a single unit over a period of
17 years with three inputs and two outputs, and reveals an average efficiency score of
96 per cent. In order to rank efficient airports, Andersen and Petersen (1993) introduce
the super-efficiency model where airports with unique input–output combinations receive
excessively high rankings and are identified as outliers. Several airport studies apply
models that rank efficient airports in order to improve the discrimination of DEA effi-
ciency estimates (Adler and Berechman, 2001; Sarkis and Talluri, 2004; Barros and
Dieke, 2007). In order to avoid too many efficient airports, Bazargan and Vasigh (2003),
Martı́n and Román (2006), and Lam et al. (2009) include a virtual efficient airport which
possesses the lowest input and highest output values of the sample. A sophisticated
approach is principal component analysis (PCA) integrated in DEA. PCA-DEA is
applied to replace the original inputs and/or outputs with a smaller group of principal
components (PCs), which explain the variance structure of a matrix of data through
linear combinations of variables with minimal information loss (Adler and Golany,
2001, 2002). Adler et al. (2012) utilises PCA-DEA to reduce four inputs to two PCs
which explain more than 85 per cent of the variance in the original data. As a result,
only 38 per cent instead of 54 per cent appeared to be relatively efficient.
Panel data models allow the assessment of productivity and efficiency changes over
time. The most popular tool within DEA is the Malmquist index, which was introduced
by Caves et al. (1982b). Distance functions compare two adjacent time periods and TFP
changes are decomposed into pure technical efficiency change, scale efficiency change, and
technological change. Malmquist DEA is applied in a number of studies in order to
disentangle technical and efficiency changes (see Figure 2). An alternative to account for
efficiency changes over time is window analysis, where different sets of pooled data with
overlapping time periods are assessed to observe a trend in efficiency changes. This model
is a trade-off between solving one aggregate model with pooled data and estimating each
time period separately. Window analysis is utilised by Yu (2004) with a two-year window.
A number of studies are concerned with explaining efficiency differences across
airports. Among others, ownership forms, hub or size effects, and the location are
assumed to impact the relative efficiency results substantially. DEA offers various models
to assess the impact of exogenous effects on the efficiency estimates. The majority of
DEA studies utilise a second-stage regression where the first-stage DEA efficiency esti-
mates are regressed against a set of environmental variables in order to evaluate their
significance. The advantage of second-stage approaches is that environmental variables
are not included in the DEA model, hence not affecting the discriminatory power of the
first-stage approaches. A number of studies adopted (censored) Tobit regression where
the DEA estimate is censored at the value of one (Gillen and Lall, 1997; Abbott and
Wu, 2002; Barros and Sampaio, 2004; Chi-Lok and Zhang, 2008). Arguing that DMUs
only appear to be relatively efficient due to biased estimations, Simar and Wilson (2007)
proposed truncated regression which drops the efficient units from the sample. This recent
approach has been adopted by Barros (2008a) and Barros and Dieke (2008). Banker and
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Figure 2
164
Models in Data Envelopment Analysis
Data Envelopment
Analysis
Cross-section, Panel Additional

pooled data applications
Journal of Transport Economics and Policy
Basic DEA Other models Malmquist Window Statistical Ranking methods Improve
(e.g. SBM, FDH, inference (super, cross- discrimination
(CCR, BCC) additive, network DEA)
index analysis efficiency)
(e.g. Bootstrapping) (e.g. PCA–DEA)
Abbott and Wu Adler and Liebert Abbott and Wu Assaf (2010a),

(2010), Adler Yu (2004) Barros and Dieke Adler et al. (2012)
(2002), Barros and (2002), Barros and Barros (2008a),
Sampaio (2004), et al. (2010), Holvad Assaf (2009), Barros Barros and Dieke (2007), Lin and Hong
Bazargan and Vasigh and Graham and Weber (2009), (2008) (2006), Martin and
(2003), de Ia Cruz (2000), Lam et al. Chi-Lok and Zhang Roman (2008),
(1999), Fernandes (2009) (2008), Fung et al. Martin and Roman
and Pacheco (2002), (2008), Gillen and (2006), Sarkis
Gillen and Lall Lall (2001), Murillo– (2000), Sarkis and
(1997), Martin and Melchor (1999), Talluri (2004)
Roman (2001), Yokomi
Pacheco and (2005)
Fernandes (2003),
Pacheco et al.
(2006), Parker
(1999), Pels et al.
(2003), Pels et al.
(2001), Vogel (2006),
Yoshida and
Fujimoto
(2004)
Volume 47, Part 2
Natarajan (2008) conclude that simple ordinary least squares, maximum likelihood
estimation, or Tobit regression dominate other alternatives in second-stage regression.
Combining the arguments of Simar and Wilson (2007) and Banker and Natarajan (2008),
Adler and Liebert (2010) apply robust cluster regression based on ordinary least squares.
Non-parametric Mann–Whitney and Kruskal–Wallis tests assess the significance of effi-
ciency differences among various groups. Bazargan and Vasigh (2003) apply both tests to
assess efficiency differences between public and private airports, and Graham and Holvad
(2000) conduct Mann–Whitney tests on Australian and European airports. Adler et al.
(2012) utilise the four-step programme evaluation procedure by Brockett and Golany (1996)
and Sueyoshi and Aoki (2001), which incorporates a Kruskal–Wallis test in the last stage to
assess efficiency differences between ground-handling providing and non-providing airports.
DEA normally treats the production technology as a black box where no functional
relationship is assumed between input and output quantities. To overcome this short-
coming, Färe (1991) and Färe and Grosskopf (1996, 2000) propose network-DEA,
which allows an analysis of the optimal production structure of DMUs, to determine
both efficient subsystems and overall efficiency. Adler et al. (2012) extended the idea of
Gillen and Lall (1997) to separate both operational sides for the assumption of different
scale effects. The efficiency of aeronautical and commercial activities is estimated separ-
ately in a single model, and both sides are connected via intermediate products.
2.3 Stochastic frontier analysis

An advantage of SFA over deterministic approaches is that it does not explain inefficiency
as purely mismanagement. Additionally, it considers a stochastic random error which
accounts for a not observable relation between the inputs and the output. The para-
metric frontier approach was first independently proposed by Aigner et al. (1977) and
Meeusen and van den Broeck (1977):
lnðyi Þ ¼ x0i b þ vi ui ; ð3Þ
where:
. the scalar ln( yi) is the observed output;
. xi represents a vector of inputs;
. b is a vector of technology parameters to be estimated;
. vi is the stochastic random error; and
. ui is the term for managerial inefficiency.
Over time, the basic model has been continuously refined. It includes the introduction of
panel data models that in addition may capture unobserved and observed heterogeneity.
Furthermore, distance functions rather than traditional Cobb–Douglas or translog
production functions allow multiple outputs in a single production model. Figure 3
illustrates the most important models that are applied to airports.
In the early stages of airport benchmarking, SFA has rarely been utilised due to its
sensitivity to small sample sizes and the requirement to specify a functional relationship
(Assaf, 2010a). Today, data sets are growing and their application has been established.
Initial studies in SFA estimated a production function with physical input data of the
airport infrastructure, such as the number of gates or the terminal size, in order to assess
the efficient use of an airport (Pels et al., 2001, 2003). Nowadays, the collection of
165
Figure 3
166
Models in Stochastic Frontier Analysis
Stochastic Frontier
Analysis
Cross-section, Panel
pooled data
Time- Time-
invariant varying
Homogeneous Homogeneous Heterogeneous Heterogeneous

function function, function function,
unobserved unobserved
heterogeneity heterogeneity
Chow and Fung 2009 Assaf (2009b), Barros (2008c), Oum

Pels et al. (2001) Assaf (2008) Barros (2009),
(M;T;P) Barros (2008b), et al. (2008)
Barros and Marques
Martín et al. (2009), (2008)
Martín and Voltes-
Dorta (2009), Pels
et al. (2003),
Tovar and Martín-
Cejas (2010), Tovar
and Martín-
Cejas (2009)
Volume 47, Part 2
operating and capital cost data is often emphasised in order to assess the cost-efficiency
(Martı́n and Voltes-Dorta, 2007; Martı́n et al., 2009; Assaf, 2010b). Allowing for more
flexibility, translog functions are preferred over Cobb–Douglas functions (Oum et al.,
2008; Barros, 2009; Chow et al., 2009; Martı́n et al., 2009; Tovar and Martı́n-Cejas,
2009). Input distance functions are utilised by Tovar and Martı́n-Cejas (2009, 2010);
however, output distance functions are not considered. This is one important issue for
an industry producing multiple aviation and commercial outputs. Instead, the outputs
are aggregated to operational income (Assaf, 2008) or separated into different output
models (Gillen and Lall, 1997; Pels et al., 2003).
Whereas Chow et al. (2009) examine cross-sectional data with forty-six observations,
the remaining studies utilise panel data models in order to obtain an increasing number
of observations. Panel data models were initially developed by Pitt and Lee (1981) and
Schmidt and Sickles (1984), where the inefficiency is assumed to be time-invariant. To
relax this restriction, Cornwell et al. (1990) and Battese and Coelli (1992) introduce time-
varying inefficiency models where the latter model is dominantly applied in airport
benchmarking (Pels et al., 2003; Chow et al., 2009; Tovar and Martı́n-Cejas, 2009, 2010;
Assaf, 2010b). To capture cross-firm heterogeneity, which is not related to technical
inefficiency, Greene (2005) further refines the model of Schmidt and Sickles (1984) and
Battese and Coelli (1992). Time-invariant firm-specific effects are allocated to a param-
eter explaining unobserved heterogeneity, whereas the inefficiency term allows a variation
over time. Unobserved heterogeneity has been considered in airport studies by Barros
(2008c) and Oum et al. (2008). Based on the formulations of Battese and Coelli (1992),
the latent class model by Orea and Kumbhakar (2004) conducts a clustering of the data
set into different classes where the class membership remains unknown to the analyst.
Barros (2009) applies this formulation on UK airports by defining his classes according
to the market share based on passenger volume.
In contrast to unobservable heterogeneity, observed heterogeneity is reflected in
exogenous effects that contribute to inefficiency. An important issue in parametric
research is whether exogenous factors impact the production technology or the ineffi-
ciency term. Early studies in this area assume a homogeneous production technology for
all airports as proposed by Battese and Coelli (1995), where environmental variables
affect the inefficiency (Pels et al., 2003; Chow et al., 2009; Tovar and Martı́n-Cejas,
2009). Heterogeneous models that account for different production technologies across
airports were, for instance, applied by Oum et al. (2008). They assume ownership to
affect the technical efficiency, whereas the shares of international traffic and cargo are
likely to shift the cost function. Assaf (2008) utilises the meta-frontier approach by
O’Donnell et al. (2007) accounting for technological differences between small and large
airports in the UK. The airport’s efficiency is estimated against its own technology and a
meta-frontier which envelopes the technology of both small and large airports.
2.4 Discussion of techniques

Reviewing the different methodologies introduced in Sections 2.1 to 2.3, it appears that
deciding which technique might be most appropriate remains difficult. DEA and SFA
offer various formulations, and have been substantially further developed since their
introduction in the late 1970s. In general, frontier approaches appear to be most appro-
priate for airport benchmarking because they do not assume that all airports operate
167
efficiently. Further, they do not necessarily require market prices to aggregate multiple
inputs and outputs. If utilising benchmarking as a management instrument in order to
identify best practice standards, DEA provides information on composite benchmarks
which help to reach the target inputs or outputs. A major drawback of DEA and SFA,
however, is the requirement of large data sets in order to obtain fairly robust efficiency
estimates. In addition, DEA is very sensitive to outliers as the efficient frontier is
constructed by the data points. Although SFA benefits from the separation of random
noise from managerial inefficiency, it requires prior information on how to disentangle
the stochastic error and to specify the functional relationship between inputs and
outputs. Both assumptions may heavily affect and bias the results as argued by Stone
(2002). By contrast, in price index-number approaches, two observations already provide
meaningful productivity measures. However, information is required on market prices to
form an input and output index, which is often not available for airports.
To date, DEA has been mostly applied in airport benchmarking. A possible
explanation might be that DEA necessitates fewer assumptions than SFA and the use of
multiple inputs and outputs without price information. In order to ensure the reliability
and verifiability of efficiency estimations, the German regulator for the electricity sector,
Bundesnetzagentur, applies both DEA and SFA (Reinhold et al., 2008). However, based
on empirical studies that compare the efficiency estimates of DEA and SFA, the results
are rather inconsistent (see Ferrier and Lovell, 1990, and Bauer et al., 1998, for the
banking sector).
In summary, the choice of the technique largely depends on various criteria including
the availability of data, the object of research, and prior knowledge of the airport
technology that may be included in the estimations. The following section provides a
review on the choice of inputs and outputs in airport benchmarking studies.
3.0 Variable Selection in Airport Studies
Following Coelli et al. (2003, 83), ‘Irrespective of which methodology [. . .] — PIN, SFA
or DEA — it cannot avoid the first rule for empirical economics: garbage in ¼ garbage
out’. The data included in a formulation should clearly explain the underlying airport
technology. We find a broad consensus that capital, labour, materials, and other external
services are necessary to handle traffic volume and selling non-aeronautical products.
The following section discusses the inputs and outputs included in academic airport
benchmarking studies so far (see Figure 4).
3.1 Outputs
Prior airline deregulation airports were often considered as public utilities focusing on
the provision and operation of the infrastructure that handles passengers, cargo, and
aircraft as common outputs.3 Hence the objective of an airport was to offer a good level
3
Martı́n-Cejas (1999) and Martı́n et al. (2009), for example, further combine passengers and cargo to work load
units (WLU), which is defined by one passenger or 100 kg of cargo. However, given that both are different in
their charging, use of resources, and yield in revenues, they should not be seen as an equal output to the airport.
168
Figure 4
Inputs and Outputs in Airport Benchmarking Studies
Inputs Outputs
Labour Desirable outputs

● Number of employees
• Heads Aeronautical side
• Ordered by qualification ● Physical measure
● Number of full-time equivalents • Number of passengers
● Staff costs – Domestic
– International
Capital • Number of air transport
movements (ATM)
● Physical infrastructure
• Airport area – Commercial
– Commuter, general aviation,
• Car parking area, number of car
military
parking spots
• Work load units (WLU)
• Passenger terminal area, number
of passenger terminals ● Monetary measure
• Aeronautical revenues
• Number of check-in desks, area
departure lounge, number of gates – Landing revenues
– Passenger revenues
• Baggage claim area, number of
– Parking revenues
baggage collection belts
– Handling revenues
• Cargo-handling facility area
• Runway area, runway length, ● Percentage of on-time operations
number of runways
• Apron area, number of terminal Non-aeronautical side
bridges, number of remote stands ● Non-aeronautical revenues
● Monetary measure
• Capital stock (PIM) Undesirable by-products
• Capital value (book value)
• Capital invested Delays
• Interests on net assets ● Delayed air transport movements
• Amortisation ● Time delays
• Rate-of-return on net capital stock
● Capacity measure Noise
• Terminal capacity (number of ● Aircraft noise (surcharge)
passengers per hour)
• Declared runway capacity
(number of movements per hour)
Materials and outsourcing

● Other operating costs
Other
● Average access costs
● Distance to city centre
of service irrespective of commercial and financial purposes. Early studies therefore often
limited their evaluation to an efficient use of the airside infrastructure (Gillen and Lall,
1997; Murillo-Melchor, 1999; Martı́n and Román, 2001; Pels et al., 2001; Abbott and
Wu, 2002; Fernandes and Pacheco, 2002), thereby ignoring non-aviation activities. The
deregulation affected the airport industry by increasing airport competition, changes in
169
ownership forms, and a shift towards incentive and light-handed regulation. Airports
began to operate as commercial enterprises, making financial targets increasingly more
important. A regulated non-congested airport in a competitive environment may seek to
maximise commercial revenues in order to cross-subsidise aeronautical charges, and
thereby attract passengers and airlines (Zhang and Zhang, 2010). Monopolistic and
unregulated private airports may be interested in optimising overall income including
revenues from non-aeronautical sources. Unless a quantity index is designed, non-
aeronautical products are expressed in revenues (Hooper and Hensher, 1997; de la Cruz,
1999; Bazargan and Vasigh, 2003; Yokomi, 2005; Oum et al., 2006; Pacheco et al., 2006;
Barros, 2008b) and became an inherent part of an airport’s income. Therefore, it is
crucial to consider non-aeronautical activities in overall airport analyses unless the input
side can be clearly separated into aeronautical and non-aeronautical activities.
Similar to manufacturing companies, airports generate undesirable by-products.
Noise and pollution affect the environment and delays decrease the service quality.
Consequently, they contribute to a decrease in the airport’s performance. Pathomsiri
et al. (2008) analyse US airports and include delays as a negative (undesirable) by-
product. Their results clearly indicate that ignoring the quality of airport services would
overestimate technical efficiency gains of airports with higher utilisation. To the best of
our knowledge, information on delays such as the average delay per movement is
currently not publicly available for a large number of European airports. However, the
cost of delays to an airline have been estimated by Cook et al. (2004) and may be
considered a negative output at airports with heavy delays. Furthermore, Yu (2004)
integrates aircraft noise as an undesirable by-product and concludes that undesirable by-
products severely affect the technical efficiency of airports.
3.2 Inputs
Input quantity measures of the airport infrastructure were already available in early
stages of airport benchmarking where financial targets remained secondary. The number
of employees is collected as an operating input, and the numbers of gates or runways or
the terminal size are collected to measure capital. Materials and other outsourced
services such as ground handling are usually expressed as other operating expenditures
(Hooper and Hensher, 1997; Sarkis, 2000; Bazargan and Vasigh, 2003; Oum et al., 2003;
Pacheco and Fernandes, 2003; Assaf, 2008; Lam et al., 2009; Martı́n et al., 2009).
The consideration of staff varies among the studies. Arguing that the airport industry
is rather heterogeneous, Pels et al. (2001, 2003), Yoshida (2004), and Fung et al. (2008)
ignore labour in their model to avoid an inappropriate comparison between vertically
integrated airports and airports that outsource labour-intensive operations. The number
of employees is mostly reported in annual reports or other public sources and therefore
used by a number of studies (Murillo-Melchor, 1999; Sarkis, 2000; Abbott and Wu,
2002; Yoshida and Fujimoto, 2004; Yokomi, 2005; Lin and Hong, 2006; Tovar and
Martı́n-Cejas, 2009). This figure, however, does not distinguish between full-time and
part-time employees, and may bias results among airports with different vertical struc-
tures. Other studies collected information on full-time equivalents, but this figure is often
publicly not available (Martı́n and Voltes-Dorta, 2007; Oum et al., 2008; Assaf, 2010a).
Information on staff costs were utilised either in combination with staff quantities to
design an index (Barros, 2008b; Oum et al., 2008; Martı́n et al., 2009; Assaf, 2010b) or
170
to differentiate between unskilled, skilled, and management staff (Hooper and Hensher,
1997; Martı́n and Román, 2001). Cross-country comparisons, however, require adjust-
ments for different staff cost levels.
Airports are a typical example for an industry with lumpy investments such as the
runway system (Golaszewski, 2003). Consequently, capital plays a major role in airport
benchmarking. For example, capital requires consideration in the examination of econ-
omies of scale, in order to assess an efficient use of airport infrastructure, for regulatory
purposes, and to decide investment projects. The measurement of capital input, however,
appears to be a serious issue in airport benchmarking. Due to lack of data, Oum and Yu
(2004) and Oum et al. (2006) ignore capital and assess the variable factor productivity
instead. A number of studies collect physical information about the infrastructure such
as the number of runways, gates, and check-in counters (Gillen and Lall, 1997; Oum
et al., 2003; Pels et al., 2003; Barros, 2008a). This capital measure seems to be appro-
priate in order to assess the technical efficiency and for cross-border studies, thereby
avoiding adjustments of financial data by different national accounting procedures.
However, a simple linear aggregation of these variables is problematic because, for
example, the number of runways does not include information on the configuration,
weather impacts, or environmental restrictions. As an example, the runway systems vary
substantially in their configuration, thereby making a comparison of the number of
runways problematic. To overcome this problem the terminal and declared runway
capacity can be used as a proxy of capital for estimating the technical efficiency (Adler et
al., 2012). The advantage is that a capacity measure considers the entire infrastructure
configuration in one measure and improves comparability.
Studies aiming to examine financial issues measure the monetary value of physical
capital. Various studies included amortisation and interests or the book value of fixed
assets as a measure of capital costs (Martı́n and Voltes-Dorta, 2007; Barros and Weber,
2009); however, different depreciation procedures and expected useful lives across
countries may affect the results. For example, the airports of the British Airports
Authority depreciate their runways over 100 years, whereas the airports operated by the
Aéroports de Paris apply a 10- to 20-year depreciation rule (Graham, 2005). To improve
comparability among the monetary value of physical capital, Hooper and Hensher
(1997) and Abbott and Wu (2002) estimate the gross fixed-capital stock for Australian
airports using the perpetual inventory method (PIM) proposed by Christensen and
Jorgenson (1969). The approach estimates the costs of historical capital investments,
which are not fully depreciated yet, and adjusts the value by inflation. Yet collecting
data on past capital investments and information on expected useful life and deprecia-
tion methods are very time-consuming, especially for cross-border studies.
In summary, supporting Kincaid and Tretheway (2006) and Morrison (2009), the
selection of inputs and outputs needs to be considered carefully. It should be attempted
to include inputs that are connected to all outputs defined in the model. An imbalance
would otherwise distort the results. Ground handling, for example, is a labour-intensive
operation where the output is normally measured in revenues. DEA studies that restrict
the output side to airside activities (that is, passengers, cargo, and movements) will
automatically obtain substantially lower efficiency estimates for airports providing
ground handling, unless staff employed in this activity are removed from the input side.
According to Adler et al. (2012), airports that provide ground handling appear 10 per
171
cent less cost-efficient than their outsourced counterparts if revenues generated from
ground handling are not included but staff are not adjusted accordingly.
So far, we can state that the empirical studies on airport benchmarking apply various
parametric and non-parametric approaches with different underlying assumptions of the
airport production technology. Furthermore, the variables to describe the airport vary
substantially and are often subject to data availability. Consequently, we are concerned
that different approaches and variables may reveal inconclusive results. The following
section compares empirical findings from airport studies.
4.0 Empirical Results of Productivity and Efficiency Studies
The object of research varies among empirical airport benchmarking studies. In order to
evaluate an efficient use of the airport infrastructure, the technical efficiency is assessed
with physical input and output quantities. Productivity and efficiency changes over time
are estimated in order to evaluate technological progress. Very often studies aim to
explain efficiency differences across airports with factors that are at least in the short
term beyond managerial control (for example, geographical and environmental
constraints or political restrictions). Consistent findings are revealed on the impact of
increasing commercialisation and outsourcing both affecting the airport in a positive
direction (Oum et al., 2006; Tovar and Martı́n-Cejas, 2009; Adler et al., 2012). Other
scopes of analysis appear to be inconclusive, as we illustrate in the following. This
section compares the findings on productivity and efficiency changes, and the effects of
ownership and size, all frequently considered in efficiency analyses.
4.1 Productivity and efficiency changes over time

Productivity and efficiency increases may be explained with an efficient use of the airport
infrastructure, innovations, or changes in political decisions such as privatisation and
incentive regulation, all aiming to encourage performance increases. The majority of
studies find positive changes mostly explained by technological improvements due to
airport investment programmes.
Assaf (2010b), utilising SFA, discovers cost-efficiency increases in Australia since
their complete privatisation in 2002, which he explains with the introduction of a light-
handed price monitoring that encourages investments and innovations at airports.
Abbott and Wu (2002) reveal technical progress prior privatisation (1990–2000) due to
advanced computer and air traffic systems. The results from the Malmquist-DEA model
point out that capacity expansion is unneeded in the near future. Inconsistent outcomes
were received for the British airport market. Whereas Yokomi (2005) reveals an
improvement post-BAA privatisation (1975–2001), Barros and Weber (2009) find an
average efficiency decrease between 2000 and 2004; both utilise Malmquist-DEA. How-
ever, given their period under review, the declining trend is not surprising where staff
and other operating costs may have increased disproportionately high to passengers,
cargo, and movements in the aftermath of the 2001 terror attacks in New York. More-
over, non-aeronautical activities are ignored by Barros and Weber (2009), and are
identified as the main driver for performance improvements in Yokomi (2005). Positive
changes are assessed by Chi-Lok and Zhang (2008) and Fung et al. (2008) for Chinese
172
airports conducting similar estimations between 1995 and 2004 with DEA. Fung et al.
(2008) report an annual productivity growth of 3 per cent, which is mainly explained
by technical progress. Gillen and Lall (2001), utilising Malmquist-DEA, find high
productivity growth for terminal-side operations at US airports, which, however, do not
necessarily imply high growth rates for the airside production and vice versa.
On the terminal side, Gillen and Lall (2001) identify hub and gateway hubs as inno-
vative airports by introducing fully-automated baggage-handling systems. Technological
progress is further revealed in the SFA estimation by Tovar and Martı́n-Cejas (2009) for
Spanish airports between 1993 and 1999. They explain improvements as an outcome of
the massive investment programme by the airport operator AENA. Murillo-Melchor
(1999) in turn concludes negative changes in Spain from 1992 to 1994 utilising
Malmquist-DEA. However, positive technical changes coincide with efficiency decrease
in the first-year comparison and vice versa in the year after.
4.2 Empirical effects of ownership

With the intention to reduce government involvement, to minimise costs, and to
maximise productivity, a wave of airport privatisations began in the late 1980s in the
UK. Most European countries followed by partially privatising their airports in the
mid-1990s (Gillen and Niemeier, 2008). Reviewing the theoretical and literature on priva-
tisation, its effects seem to be somewhat controversial, with arguments from the agency
theory, transaction cost theory, and incomplete contracts (Vickers and Yarrow, 1991).
Empirical studies attempting to assess the effects of ownership on the efficiency of
airports are so far inconclusive. Two different options have occurred to consider
ownership as an efficiency driver: the first assessing the airport’s efficiency before and
after privatisation; the second comparing public and private airports. The first study in
this field is an analysis of privatisation effects of BAA airports. Parker (1999) estimates
the technical efficiency prior to and after privatisation (1979–96) with basic DEA. He
finds no evidence that privatisation has improved the airport’s technical efficiency and
concludes that the golden share kept by the government does not induce enough capital
market pressures. Further, he argues that BAA is still subject to economic regulation
and incentives to operate more efficiently can be distorted by government regulation.
Yokomi (2005) reviews the technical and efficiency change of six BAA airports from
1975 to 2001, utilising Malmquist-DEA. In contrast to Parker, he finds that BAA
airports have improved after their privatisation, exhibiting positive changes in technical
efficiency and technology. In particular on the non-aeronautical side, the growth after
privatisation is substantial; this activity is not considered in Parker’s analysis. However,
before and after comparisons are problematic as privatisations are often accompanied
with changes in the regulation or restructuring processes such as outsourcing.
Other studies that assess the effects of ownership by comparing the efficiency of
public and private airports again do not reach a clear conclusion. Oum et al. (2003), Lin
and Hong (2006), and Vasigh and Gorjidooz (2006) measure the effects of ownership on
a worldwide set, and reveal no significant relationship for financial and operational
efficiencies. Oum et al. (2003) argue that the extent of managerial autonomy dominates
the effect of ownership. Furthermore, Vasigh and Haririan (2003) argue that privatised
airports intend to maximise their revenues, whereas public airports aim to optimise
traffic. Barros and Marques (2008) find in their SFA estimation that private airports
173
operate more cost-efficiently than their partially private counterparts. Conducting

index-number VFP and SFA, respectively, Oum et al. (2006) and Oum et al. (2008) are
in favour of privatisation. In contrast to previous studies, they separate airports owned
by one public shareholder from airports with multi-level government involvement. Refer-
ring to Charkham (1996), they argue that different ownership and governance structures
can affect the quality of managerial performance. Oum et al. (2006) reach the conclusion
that public corporations are not statistically different from major private airports. How-
ever, airports that are mainly publicly owned or have multiple government involvement
seem to operate significantly less efficiently than the other ownership forms. Oum et al.
(2008) conclude that airports with major private shareholders are more efficient than
public airports or airports with major public influence. The results by Vogel (2006) on a
European set of airports reveal that privatised airports operate more cost-efficiently, and
receive higher returns on total assets and revenues. Public airports in turn enjoy the
advantage of higher gearing and financial leverage.
According to Vickers and Yarrow (1991), privatisation cannot be seen as a universal
solution, and should not be separated from the economics of competition and regulation
which are all determinants of corporate incentives. In order to search for the most
efficient ownership and regulation form with a given level of local and hub competition,
Adler and Liebert (2010) combine all factors in an Australian–European semi-parametric
two-stage research. The study concludes that under monopolistic conditions, airports of
any ownership form should be subject to economic regulation. However, regulation can
be replaced by effective competition in order to ensure cost-efficiency. Furthermore,
public and major or fully private airports appear to operate equally cost-efficiently.
Hence, no clear answer exists with respect to the ownership form in competitive
situations. This thereby indirectly supports the inconsistent impact of ownership in
studies assessing ownership individually.
4.3 Scale effects

Benchmarking airports of different sizes can raise the question of how to eliminate the
effects of size for a multi-product ‘airport’ firm. According to Graham (2004), after the
airport reaches the size of about 3 to 5 million passengers, economies of scale effects
flatten out, so that for benchmarking of medium- and large-sized airports the size does
not matter. However, various benchmarking studies lead to different conclusions on the
scale effects at airports.4
The British market has been assessed numerous times. Doganis and Thompson
(1973) include UK airports in a regression and find decreasing average costs of up to
3 million work load units (WLUs).5 Tolofari et al. (1990) estimate a long-run translog
cost function of seven UK airports owned by the BAA and find that scale economies
exhaust at a level of 20.3 WLUs. However, this result needs to be treated carefully, as
London Heathrow is the only large airport in their sample. Applying OLS, Main et al.
(2003) find sharply decreasing costs up to 4 million passengers and 5 million WLUs, and
weak decreasing costs up to 64 million passengers and 80 million WLUs. In a worldwide
4
The studies under review in this section assessed both economies of scale and returns to scale.
5
A work load unit is defined by one passenger or 100 kg of cargo.
174
sample they reveal that economies of scale exhaust at a level of 90 million WLUs. Jeong
(2005) finds economies of scales at US airports exhaust at 3 million passengers. Different
to all other studies under review, capital is not considered due to lack of data. However,
non-aeronautical activities were included as opposed to the other studies. Keeler (1970)
also assesses US airports with OLS and concludes that scale is not the main source of
inefficiency. Furthermore, Doganis et al. (1995) conduct regression analysis on European
airports and find decreasing average costs up to 5 million WLUs.
Martı́n and Voltes-Dorta (2007) applied SFA on a worldwide sample, and conclude
that even Atlanta and Chicago as the two largest airports in the world operate under
increasing returns to scale. Pels et al. (2003) research the European market and reveal in
their SFA estimation for an average airport decreasing returns to scale from 12.5 million
passengers for the airside (for example, movements), but increasing returns on the
terminal side (that is, passengers). Similar conclusions are reached by de la Cruz (1999)
utilising DEA on Spanish airports in an aggregated model considering aeronautical and
non-aeronautical activities. He finds constant returns to scale between 3.5 and 12.5
million passengers, and decreasing returns to scale from then on. In contrast, Martı́n
et al. (2009), utilising SFA, find that all Spanish airports operate at increasing returns to
scale. However, different to de la Cruz, they restrict the airport model to airside
activities.
In summary, reviewing the rather inconsistent empirical findings from previous
studies, it becomes clear that different underlying assumptions from the methodology, as
well as different inputs and outputs, may lead to mixed results. Public and private
airports may pursue different targets and the object of research may influence the results
of ownership impacts. Furthermore, ownership should not be separated from the impact
of economic regulation or competition. In addition, commercial activities may contribute
to efficiency improvements and should implicitly be included in overall measures.
5.0 Conclusion and Directions for Future Research
Since the late 1990s, a number of empirical research studies emerged on the productivity
and efficiency analysis of airports with overall quantitative methods such as DEA, SFA,
or PIN. Studies proved mostly to assess economic rather than managerial issues. With
the publication of a meanwhile substantial number of benchmarking studies in the
academic literature, this paper aims to provide an overview of the methodology applied,
the variables selected, and the findings on productivity and efficiency changes, scale, and
ownership effects in order to learn from previous research.
Accounting for efficiency differences across airports, frontier approaches have been
preferred to productivity measures with index numbers. Both efficiency techniques — DEA
and SFA — have substantially improved over time and their usefulness to the airport
industry has steadily increased, especially with respect to the airports’ heterogeneous
character. DEA as a non-parametric technique proved to require fewer assumptions than
SFA and has found widespread application. However, the use of SFA has increased
recently.
Comparing the findings of different studies proves to be difficult. The application of
different methods and data are likely to affect the results on the relative efficiency.
175
Nevertheless, efficiency improvements from increased commercialisation, restructuring,

and technological progress appeared to be fairly consistent. Ownership and scale effects
proved to be inconclusive, showing that further research is required.
In order to conduct managerial benchmarking, we suggest an assessment of airports
with similar input/output combinations in order to ensure comparability. Management
strategies, such as the degree of vertical integration, or airport characteristics like the
traffic structure and size, need to be considered carefully. Furthermore, airports oper-
ating under different scheduling practices may have different declared capacities. Hence a
comparison of slot-coordinated airports with uncoordinated counterparts needs to be
treated with caution. Due to lack of detailed information, all reviewed studies consider
the overall airport system rather than focusing on partial processes which airport
managers often find more informative. In order to improve the modelling and its
application for political and managerial purposes, we suggest that airport managers
should contribute with their industry knowledge. In summary, the area of benchmarking
appears to be a valuable instrument for airport managers, governments, and regulators,
but future research is needed to improve its utilisation.
The collection of appropriate data is a serious issue in airport benchmarking.
Especially early studies ignored non-aeronautical activities in order to assess the airside’s
efficiency, thereby obtaining biased efficiency estimates where the input side was not
adjusted accordingly. Another aspect is the measurement of capital which appears to be
crucial. Although the airport industry is typical for being capital intensive with lumpy
investments, various studies failed to include capital appropriately or simply ignored it
due to a lack of data. Undesirable by-products such as delay or noise proved to be
important in efficiency analysis to prevent an overestimation of efficiency results.
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179
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180
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Appendices
This overview of airport benchmarking studies represents an aggregation of a detailed
compilation which can be downloaded from www.gap-projekt.de
181
Appendix 1
182
Studies Using Non-Parametric Approaches
Methodology Data
Account for observed
Authors Sample Model heterogeneity Inputs Outputs
Abbott, M. and 12 Australian airports Malmquist-DEA Tobit regression Operating and capital inputs Aeronautical
S. Wu (2002) (1990–2000) outputs
...............................................................................................................................
24 worldwide airports DEA Operating and capital inputs Aeronautical
(1998–9) outputs
.......................................................................................................................................................
Adler, N. and J. 26 worldwide airports PCA-DEA with super- Banker and Morey objective data: airport subjective data:
Berechman (2001) (1998) efficiency (1986) charges, no. pax terminals, level of satisfaction
no. rwy, min. connection grouped into five
times in minutes, distance to types

city centre (ND), average
delay
.......................................................................................................................................................
Adler, N. and 48 Australian and Additive DEA Robust cluster OLS Operating and capital inputs Aeronautical and
V. Liebert (2010) European airports regression commercial
(1998–2007) outputs
.......................................................................................................................................................
Adler, N., V. Liebert, 43 European airports Network-PCA-DEA Programme Operating and capital inputs Aeronautical and
and E. Yazhemsky (1998–2007) with dynamic clustering evaluation procedure commercial
(2012) outputs
.......................................................................................................................................................
Assaf, A. (2010a) 27 UK airports (2007) DEA with Operating and capital inputs Aeronautical
bootstrapping outputs
.......................................................................................................................................................
Barros, C. P. (2008a) 33 Argentine DEA Truncated bootstrap Operating and capital inputs Aeronautical
airports (2003–7) regression outputs
.......................................................................................................................................................
Barros, C. P. and 35 major US airports Malmquist-DEA with Operating and capital inputs Aeronautical
A. Assaf (2009) (2002–7) bootstrapping, terminal outputs
and airside separately
.......................................................................................................................................................
Volume 47, Part 2
Barros, C. P. and 31 Italian airports DEA Truncated bootstrap Operating and capital inputs Aeronautical and
P. U. C. Dieke (2008) (2001–3) regression commercial
outputs
.......................................................................................................................................................
Barros, C. P. and 31 Italian airports DEA with cross- Mann–Whitney- Operating and capital inputs Aeronautical and
P. U. C. Dieke (2007) (2001–3) efficiency and super- Hypothesis-Test on commercial
efficiency super-efficiency outputs
scores
.......................................................................................................................................................
Barros, C. P. and 10 Portuguese DEA Tobit regression Operating and capital Aeronautical
A. Sampaio (2004) airports (1990–2000) inputs, input prices outputs
.......................................................................................................................................................
Barros, C. P. and 27 UK airports Malmquist-DEA Operating and capital inputs Aeronautical
W. L. Weber (2009) (2000–4) outputs
.......................................................................................................................................................
Bazargan, M. and 45 US airports (1996– DEA Kruskal–Wallis-test Operating and capital inputs Aeronautical and
B. Vasigh (2003) 2000) and pairwise Mann– commercial
Whitney-test among outputs
three hub sizes
.......................................................................................................................................................
Chi-Lok, A. and 25 Chinese major DEA and Malmquist- OLS and Tobit Capital inputs Aeronautical
A. Zhang (2009) airports (1995–2006) DEA regression outputs
.......................................................................................................................................................
de la Cruz, F. (1999) 16 Spanish airports DEA Operating and capital inputs Aeronautical and
(1993–5) commercial
outputs
.......................................................................................................................................................
Research on the Productivity and Efficiency Measurement of Airports
Fung, M., Y. Hui, 25 Chinese regional DEA and Malmquist- OLS Capital inputs Aeronautical
J. Law, K. Wan, and airports (1995–2004) DEA outputs
L. Ng (2008)
.......................................................................................................................................................
Gillen, D. and A. Lall 22 major US airports Malmquist-DEA, Operating and capital inputs Aeronautical
(2001) (1989–93) terminal and airside outputs
separately
.......................................................................................................................................................
Gillen, D. and A. Lall 21 major US airports DEA, terminal and Tobit regression Operating and capital inputs Aeronautical
(1997) (1989–93) airside separately outputs
.......................................................................................................................................................
Liebert and Niemeier
183
Appendix 1
184
Continued
Methodology Data

Graham, A. and 25 European and 12 DEA, FDH, and partial Mann–Whitney-test, Operating and capital inputs Aeronautical
T. Holvad (2000) Australian airports performance Pearson correlation outputs
(1992–3) coefficient
.......................................................................................................................................................
Lam, S., J. M. W. 11 major Asia-Pacific SBM-DEA Operating and capital Aeronautical
Low, and L. C. Tang airports (2001–5) inputs, input prices outputs
(2009)
.......................................................................................................................................................
Lin, L. and C. Hong 20 major worldwide DEA with super- Hypothesis testing Operating and capital inputs Aeronautical
(2006) airports (2001 or efficiency, and cross- outputs

2002) efficiency and FDH
.......................................................................................................................................................
Martı́n, J. C. and 34 Spanish airports DEA with cross- Operating and capital inputs Aeronautical
C. Román (2008) (1997) efficiency, super- outputs
efficiency, and virtual
rank-efficiency models
.......................................................................................................................................................
Martı́n, J. C. and 34 Spanish airports SMOP and DEA with Operating and capital inputs Aeronautical
C. Román (2006) (1997) cross-efficiency, super- outputs
efficiency, and virtual-
efficiency
.......................................................................................................................................................
Martı́n, J. C. and 37 Spanish airports DEA Operating and capital inputs Aeronautical
C. Román (2001) (1997) outputs
.......................................................................................................................................................
Murillo-Melchor, C. 33 Spanish airports Malmquist-DEA Operating and capital inputs Aeronautical
(1999) (1992–4) outputs
.......................................................................................................................................................
Pacheco, R. R. and E. 35 Brazilian domestic DEA Operating inputs Aeronautical and
Fernandes (2003) airports (1998) commercial
outputs
.......................................................................................................................................................
Volume 47, Part 2
Pacheco, R. R., 58 Brazilian airports DEA Operating inputs Aeronautical and
E. Fernandes, and M. (1998–2001) commercial
Peixoto de Sequeira- outputs
Santos (2006)
.......................................................................................................................................................
Parker, D. (1999) 22 UK airports DEA Banker and Morey Operating and capital inputs Aeronautical
(1979–95; 1988–96) (1986) outputs
.......................................................................................................................................................
Pathomsiri, S., 56 US airports Luenburger productivity Correlation analysis Capital inputs Desirable outputs:
A. Haghani, (2000–3) indicator aeronautical
M. Dresner, and R. J. outputs
Windle (2008) Undesirable by-
products:
no. delayed ATM,
time delays
.......................................................................................................................................................
Pels, E., P. Nijkamp, 34 European airports DEA, terminal and Capital inputs Aeronautical
and P. Rietveld (1995–7) airside separately outputs
(2003)
.......................................................................................................................................................
Pels, E., P. Nijkamp, 34 European airports DEA Capital inputs Aeronautical
and P. Rietveld (1995–7) outputs
(2001)
.......................................................................................................................................................
Sarkis, J. (2000) 44 major US airports DEA with aggressive Operating and capital inputs Aeronautical
(1990–4) cross-efficiency, ranked outputs
efficiency, radii of
classification rankings
.......................................................................................................................................................
Sarkis, J. and 44 major US airports DEA cross-efficiency Operating and capital inputs Aeronautical
S. Talluri (2004) (1990–4) and clustering outputs
.......................................................................................................................................................
Vogel, A. (2006) 31 European airports DEA, partial Operating inputs Aeronautical and
and 4 airport systems performance, financial commercial
(1990–2000) ratio analysis outputs
.......................................................................................................................................................
Yokomi, M. (2005) 6 UK airports (BAA) Malmquist-DEA, Operating inputs Aeronautical and
(1975–2001) aeronautical and commercial
commercial side outputs
separately
185
.......................................................................................................................................................
Appendix 1
186
Continued
Methodology Data

Yoshida, Y. and 67 Japanese airports DEA Tobit regression Operating and capital inputs Aeronautical
H. Fujimoto (2004) (2000) outputs
.......................................................................................................................................................
Yu, M.-M. (2004) 14 domestic Window analysis DEA Banker and Morey Capital inputs Desirable:
Taiwanese airports (1986) aeronautical
(1994–2000) outputs
Undesirable:
a/c noise
Key:
CCD Caves, Christensen, and Diewert PCA Principal component analysis
CRS Constant returns to scale SBM Slack-based measure
DEA Data envelopment analysis SFA Stochastic frontier analysis
EW-TFP Endogenous weight-total factor productivity SMOP Surface measure of overall performance
FDH Free disposal hull TFP Total factor productivity
NIRS Non-increasing returns to scale VFP Variable factor productivity
VRS Variable returns to scale
Volume 47, Part 2
Appendix 2
Studies Using Parametric Approaches
Methodology Data
Assaf, A. (2010b) 13 major Australian SFA (cost function) Operating inputs, Aeronautical
airports (2002–7) input prices outputs
.......................................................................................................................................................
Assaf, A. (2008) 27 UK airports SFA (production-meta Operating and Aeronautical and
(2002–6) frontier) capital inputs commercial outputs
.......................................................................................................................................................
Barros, C. P. (2009) 27 UK airports SFA (cost function, latent Operating inputs, Aeronautical
(2000–6) class model) input prices outputs
.......................................................................................................................................................
Barros, C. P. (2008b) 13 Portuguese SFA (cost function) Operating inputs, Aeronautical and
airports (1990– input prices commercial outputs
2000)
.......................................................................................................................................................
Barros, C. P. (2008c) 27 UK airports SFA (cost function) Operating inputs, Aeronautical
(2000–5) input prices outputs
.......................................................................................................................................................
Barros, C. P. and 117 worldwide SFA (cost function) Operating and Aeronautical
R. C. Marques (2008) airports (2003–4) capital inputs, outputs
input prices
.......................................................................................................................................................
Chow, C. K. W., C. Kong, 46 Chinese airports SFA (production and Capital inputs Aeronautical
and M. K. Y. Fung (2009) (2000) distance function) outputs

.......................................................................................................................................................
Martı́n, J. C., C. Román, 37 Spanish airports SFA (multi-product cost Operating and Aeronautical
and A. Voltes-Dorta (1991–7) function) capital inputs, outputs
(2009) input prices
.......................................................................................................................................................
Martı́n, J. C. and 41 worldwide SFA (multi-product cost Operating and Aeronautical
A. Voltes-Dorta (2007) airports (1991– function) capital inputs, outputs
2005) input prices
.......................................................................................................................................................
Martı́n-Cejas, R. R. 40 worldwide Translog cost function Operating inputs, Aeronautical
(2002) airports (1996–7) with OLS input prices outputs
.......................................................................................................................................................
187
Appendix 2
188
Continued
Methodology Data

Oum, T. H., J. Yan, and 109 airports SFA (cost function) Operating and Aeronautical and
C. Yu (2008) worldwide (2001–4) capital inputs, commercial outputs
input prices
.......................................................................................................................................................
Oum, T. H. and C. Yu 60 major worldwide EW-TFP and partial Operating and Aeronautical and
(2004) airports (1999– productivity capital inputs commercial outputs
2000)
.......................................................................................................................................................
Oum, T. H., C. Yu, and 109 worldwide SFA (cost function) Ownership affects Operating and Aeronautical and
X. Fu (2003) airports (2001–4) efficiency, other enter the capital inputs commercial outputs
technology
.......................................................................................................................................................
Oum T. H., A. Zhang, 50 major worldwide EW-TFP and partial Regression analysis to Operating and Aeronautical and
and Y. Zhang (2004) airports (1999) productivity obtain residual TFP capital inputs commercial outputs
.......................................................................................................................................................
Pels, E., P. Nijkamp, and 34 European SFA (production Exogenous variable Capital inputs Aeronautical
P. Rietveld (2003) airports (1995–7) function), terminal and affects efficiency outputs
airside separately
.......................................................................................................................................................
Pels, E., P. Nijkamp, and 34 European SFA (production Exogenous variable Capital inputs Aeronautical
P. Rietveld (2001) airports (1995–7) function), terminal and affects efficiency outputs
airside separately
.......................................................................................................................................................
Tovar, B. and R. R. 26 Spanish airports SFA (input distance Exogenous variable Operating and Aeronautical and
Martı́n-Cejas (2010) (1993–9) function) affects efficiency capital inputs commercial outputs
.......................................................................................................................................................
Tovar, B. and R. R. 26 Spanish airports SFA (production input Operating and Aeronautical and
Martı́n-Cejas (2009) (1993–9) distance function) capital inputs commercial outputs
.......................................................................................................................................................
Yoshida, Y. (2004) 30 Japanese EW-TFP Capital inputs Aeronautical
airports (2000) outputs
.......................................................................................................................................................
Yoshida, Y. and 67 Japanese EW-TFP OLS Operating and Aeronautical
H. Fujimoto (2004) airports (2000) capital inputs outputs
Volume 47, Part 2
Key: See Appendix 1.

Appendix 3
Studies Using Price-based Index Approaches
Methodology Data
Hooper, P. G. and D. A. 6 Australian airports TFP (CCD) Regression analysis Operating and Aeronautical and
Hensher (1997) (1988–92) capital inputs commercial outputs
.......................................................................................................................................................
Nyshadham, E. A. and 25 European airports TFP (CCD) and Operating and Aeronautical and
V. K. Rao (2000) (1995) partial productivity capital inputs commercial outputs
.......................................................................................................................................................
Oum, T. H., N. Adler, 116 worldwide airports VFP (CCD) Regression analysis Operating inputs Aeronautical and
and C. Yu (2006) (2001–3) commercial outputs
.......................................................................................................................................................
Vasigh, B. and 22 major European and TFP (CCD) Stepwise-regression Operating and Aeronautical and
J. Gorjidooz (2006) US airports (2000–4) capital inputs commercial outputs
Key: See Appendix 1.

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Journal of Transport Economics and Policy, Volume 47, Part 2, May 2013, pp.

A Survey of Empirical Research on

Vanessa Liebert and Hans-Martin Niemeier

Date of receipt of ﬁnal manuscript: April 2012

undesirable by-products were found to be crucial for analyses in order to prevent an

2.0 Productivity and Eﬃciency Measurement Concepts

Non-Parametric Parametric Parametric Non-Parametric

Total Factor Ordinary Least Stochastic Data

Source: adapted from von Hirschhausen and Cullmann (2005).

2.1 Price-based index number approaches

ln TFPkj ¼ ðln Yk ln Yj Þ ðln Xk ln Xj Þ

2.2 Data envelopment analysis

Cross-section, Panel Additional

Abbott and Wu Adler and Liebert Abbott and Wu Assaf (2010a),

2.3 Stochastic frontier analysis

Homogeneous Homogeneous Heterogeneous Heterogeneous

Chow and Fung 2009 Assaf (2009b), Barros (2008c), Oum

2.4 Discussion of techniques

3.0 Variable Selection in Airport Studies

Labour Desirable outputs

Materials and outsourcing

4.0 Empirical Results of Productivity and Eﬃciency Studies

4.1 Productivity and eﬃciency changes over time

4.2 Empirical eﬀects of ownership

operate more cost-eﬃciently than their partially private counterparts. Conducting

4.3 Scale eﬀects

5.0 Conclusion and Directions for Future Research

Nevertheless, eﬃciency improvements from increased commercialisation, restructuring,

times in minutes, distance to types

Account for observed

(2006) airports (2001 or efficiency, and cross- outputs

Account for observed

and M. K. Y. Fung (2009) (2000) distance function) outputs

Account for observed

Key: See Appendix 1.

Key: See Appendix 1.

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