Journal of Air Transport Management 92 (2021) 102035

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Journal of Air Transport Management

journal homepage: http://www.elsevier.com/locate/jairtraman

Airports’ managerial human capital, ownership, and efficiency

Ane Elixabete Ripoll-Zarraga a, *, Sonia Huderek-Glapska b
a
Department of Accounting, Economics and Finance, University of Plymouth, PL4 8AA, Plymouth, United Kingdom
b
Department of Microeconomics, Poznan University of Economics and Business (PUEB), 61-758, Poznan, Poland

A R T I C L E I N F O A B S T R A C T

Keywords: Airport performance differences require a better understanding of the sources of efficiency and competitive
Stochastic frontier analysis (SFA) advantages. Globalization drives the air transport industry into a more market-orientated business questioning
Environmental variables the relationship between managerial decisions and airport performance. Aviation management studies do not
Managerial human capital
consider managerial capabilities and skills since they are intangible exogenous factors that are difficult to assess.
Technical efficiency
Airports
In this study, a stochastic frontier analysis is performed accounting for top managers’ theoretical knowledge and
experience enclosed as exogenous drivers of airports’ efficiency. The model analyses 12 Polish airports from
2009 to 2017. The results show a diversity of airports with a different number of passengers as efficient. The top
managers’ experience, when gained in the same airport, has a positive impact on airports’ technical efficiency.
Airports having unstable management are more technically inefficient. Independently of the efficiency level,
some airports change their management after the national elections, suggesting that managers are chosen by
political interest rather than by their specialised knowledge or their prior experience in aviation management.
The results suggest that more practical knowledge improve airports’ performance. Airports with a majority of
government ownership that are the largest ones increase their efficiency significantly, suggesting that political
decisions may be discriminatory in detriment of airports managed by regional and city authorities.

1. Introduction 2016; González-Cruz et al., 2018).

Managerial practices heterogeneity enhances changes in firms
operating efficiency. Empirical literature confirms substantial produc­
tivity differences within a firm over time and among firms (Lieberman
et al., 1990; Foster et al., 2008; Hsieh and Klenow, 2009). Managerial
strategic decisions influence the organisation’s performance (Beck and
Wiersema, 2013) since the management function becomes the fourth
productive factor (Marshall and Marshall, 1881). An effective manager
is a source of competitive advantage (Drucker, 2006). Managerial ca­
pabilities and managerial decisions determine the acquisition, devel­
opment, and deployment of the rest of the resources to create value and,
therefore, leading to the organisation’s growth (Hambrick and Brandon
1988; Castanias and Helfat 1991; Camisón, 2004; Helfat and Martin
2015). The investment and utilisation of technology, along with other
expenditures, are practices controlled by the management (Nallari and
Bayraktar, 2010). There are studies of the significance of managerial
human capital to the company’s operation and development in various
industries (Manevska-Tasevska, 2013; Khadka et al., 2014; Drewik et al.,
Another factor driving differences in management practices is the
type of ownership, which potentially influences managerial decisions.
Government-owned firms are weakly incentive overall, although market
competition enhances better management practices along with the level
of education of both managers and no managers (Bloom et al., 2012).
Nevertheless, in the context of airport management is not extensively
analysed. One potential reason is that management skills and practices
are unobservable (Barros and Marques, 2010), although management
practices are a core factor in explaining productivity differences
(Glaister, 2014).
Airports were traditionally considered as public utilities (govern­
ment-owned), with the government as the provider of infrastructure.
Nevertheless, the aviation industry is changing, and so the airports.
Airports are transforming themselves into complex enterprises that
require a wide range of business competencies and skills (Graham,
2013). Managerial skills and expertise are an internal core source of
airport competitiveness (Bednarczyk and Grabińska, 2015). Managers’
characteristics such as age, sex, educational background, and industry

* Corresponding author.
E-mail addresses: ae.ripoll-zarraga@plymouth.ac.uk (A.E. Ripoll-Zarraga), sonia.huderek@ue.poznan.pl, sonia.huderek-glapska@ue.poznan.pl (S. Huderek-
Glapska).

https://doi.org/10.1016/j.jairtraman.2021.102035
Received 1 June 2020; Received in revised form 9 December 2020; Accepted 26 January 2021
Available online 11 February 2021
0969-6997/© 2021 Elsevier Ltd. All rights reserved.
A.E. Ripoll-Zarraga and S. Huderek-Glapska
experience understood as knowledge, skills, and competences for strat­
egy management drive airports’ development (Nowak and
Huderek-Glapska, 2019).
To the best of our knowledge, there are no empirical studies
regarding human capital and airport competitiveness, performance, and
efficiency. Although more diverse ownership forms co-exist, the degree
of the independence of management is questionable. Some airports with
mixed ownership forms may prioritise political interests rather than
airports’ performance and efficiency. Some evidence shows appointing
managers without enough experience in the field rather than an inde­
pendent professional with skills and relevant industry experience.
Market-driven airports require specialist knowledge, experience, com­
petences, and capabilities. The objectives of managers and owners may
differ, which presents the typical agency and principal problem.
Therefore, the impact of managerial capabilities in airports’ perfor­
mance should be evaluated carefully, taking into account their business
environment, including the role of Government or group management.
The study aims to analyse if managerial human capital, namely
airport top managers’ knowledge, and experience, and different degrees
of non-privatise airports’ ownership forms (state, regional, and local
authorities) affect the airports’ technical efficiency. The term knowledge
addresses the academic-theoretical aspect, and the term experience
empirical knowledge. It is expected that the more years that a manager
has managed an airport, the more efficient the airport becomes.
Following Battese and Coelli (1995), we perform a stochastic frontier
analysis for 12 Polish airports and panel data (2009–2017), which al­
lows the enclosing of external factors potentially affecting efficiency.
The environmental variables understood as exogenous drivers of effi­
ciency are related to management and airports’ infrastructure.
The structure of the paper follows. Section two provides a literature
background on human capital and companies’ performance and effi­
ciency. Section three describes the Polish airport network. Section four
describes the theoretical-methodological approach. The data and vari­
ables are presented in Section five. Section six presents the results. The
final section summarizes the final remarks, limitations, and further
research.
2. Literature review: managerial human capital and airports’
efficiency
Managerial human capital refers to the knowledge and experience
(Griffin, 2000; Helfat and Martin 2015). Coleman (2007) defines the
term human capital as education, employment or industry, and other
types of experience. Acquired knowledge is the result of a continuous
learning process and investment in education, which improves through
post-graduate and specialist studies. Nevertheless, theoretical knowl­
edge requires professional practice to gain experience. Some managers
working in the same company acquire firm-specific skills and progress to
higher positions. Managers working in different sectors broaden their
skills and competences. The different approaches generate generic,
related-industry, industry-specific, and firm-specific skills (Castanias
and Helfat, 2001). Adner and Helfat (2003) argue that only generic skills
can be fully transferable to other positions and companies. However,
industry-specific skills are positively correlated with company perfor­
mance (Bailey and Helfat, 2003).
Indeed, the literature evidences the relation between managerial
capabilities and companies’ performance across sectors: industrial
technology-based firms (González-Cruz et al., 2018), agriculture com­
panies (Puig-Junoy and Argiles, 2004; Galanopoulos et al., 2006; Man­
evska-Tasevska, 2013), logistic and supply (Derwik et al., 2016), small
and medium manufacturers (Ismail et al., 2014) and hospitals (Khadka
et al., 2014). The managerial capabilities are a strategic resource to
achieve competitive advantage and explain the heterogeneity among
companies that use a different mix of resources (Camisón, 2005).
Other studies consider a link between the personal characteristics of
a manager and the decision-making process, where information about
2
Journal of Air Transport Management 92 (2021) 102035
internal procedures becomes essential. The accessibility and type of
information are core factors for the relevant decisions in the short-term
and the long-term (strategy). Consequently, the approach to control and
the type of human capital are determinants of technical efficiency
(Puig-Junoy and Argiles, 2004); such as managers’ knowledge (Gal­
anopoulos et al., 2006; Manevska-Tasevska, 2013) and the integration
and effectiveness of internal control procedures through budgeting and
control (Trip et al., 2002; Manevska-Tasevska and Hansson, 2011).
Bezerra and Gomes (2018) provide a review of studies related to
airport performance indicators and practices (airport efficiency and
productivity, benchmarking studies, service quality, safety and security
issues, economic-financial aspects, and environmental issues). Pacag­
nella et al. (2021) review airports’ studies evaluating operational effi­
ciency drivers of large airports from aircraft movement and
infrastructure sharing to baggage tracking. Humphreys and Francis
(2002) discuss the requirement of reflection on the performance mea­
surement of airports in response to changing organizational contexts.
Again, the literature on air transport management evaluates other as­
pects rather than managerial capabilities (e.g., transport management,
services provided, air traffic, airline crews, industrial policies, mainte­
nance, programs, engineering, and flight schedules).
Airports’ efficiency studies are usually based on non-parametric
approaches such as Data Envelopment Analysis (DEA) or Total Factor
productivity (TFP) rather than parametric techniques such as Stochastic
Frontier Analysis (SFA). The choice among them depends usually on
data availability. TFP represents the relation between one output and
one input. When having multi-input output cases, weights must be
specified that are usually based on non-available price information. TFP
decomposition into technical change (technical and scale changes) or
allocative efficiency requires the estimation of production or cost fron­
tiers. DEA has been applied to more than several studies in airport
benchmarking (for example, Gillen and Lall 1997, Parker, 1999; Sarkis,
2000; Pels et al., 2003) compared to TFP (e.g. Oum and Yu, 2004;
Yoshida, 2004). The main reason is that it does not require a functional
form or distributional assumptions such as SFA. DEA, however, does not
allow testing the theoretical assumptions for production and cost fron­
tiers, and the efficiency score may be biased by the noise of uncontrol­
lable factors. The inclusion of external factors implies having to use
two-second stage analysis using techniques such as bootstrapping to
truncated regression (Simar and Wilson 2007) since the efficient units
are correlated with the errors (e.g. Huynh et al., 2020; Chaouk et al.,
2020; Ngo et al., 2020). Previous studies to 2007 used ordinary least
squares (OLS), Tobit regression or truncated regression without boot­
strapping. Overall DEA and TFP do not help to identify sources of in­
efficiency and to provide, consequently, policy-makers and managerial
recommendations (Ripoll-Zarraga and Mar-Molinero, 2020). Less con­
ventional DEA models have been developed to overcome the main DEA
limitations (Dyson et al., 2001). Most of the studies in airports’ effi­
ciency analysis use similar inputs and outputs and, some of them
exogenous factors (non-controlled by the management). Table 1 shows a
representative sample of the inputs and outputs considered in different
studies, including undesirable outputs as well as methodologies.
Barros and Marques (2010) enclosed a variable attempting to cap­
ture airports’ managerial abilities, which is unobserved. Therefore,
equivalent to a firm-fixed effect (Greene, 2003) that imposes heteroge­
neity across the sample and time-invariant characteristics of the variable
(unobserved heterogeneity), which may not be the case. In this regard,
managerial practices enclosed as a fixed effect may explain part of the
inefficiency, but not necessarily. The results showed a negative impact
of management practices in the operating costs, similarly to regulation,
and ownership, addressing the requirement of confirming these results.
Accordingly, there is a need for investigating the relation of managerial
skills and abilities influencing airports’ efficiency as exogenous factors.
Airports require higher quality and efficiency (Fry et al., 2005;
Greenfield, 2014). Although managers are appointed accordingly to
their skills and capabilities, managerial-decisions are implicitly beyond
A.E. Ripoll-Zarraga and S. Huderek-Glapska Journal of Air Transport Management 92 (2021) 102035

Table 1
Airports efficiency studies.
Reference Methodology Inputs Outputs Exogenous Variables

Gillen and Lall DEA Number of employees, boarding gates, Passengers, cargo None
(1997) baggage belts, public parking slots, and
runways, terminal area
Number of employees, and runways, Aircraft movements, commuter None
airport and runway areas movements
Sarkis (2000) DEA Number of employees, boarding gates, Passengers, cargo, aircraft None
and runways, operating costs movements, general aviation
movements, operating revenues
Abbot and Wu DEA and TFP- Number of employees, runway length, Passengers, cargo Aircraft standing area, rate of return, capital labour
(2002) Malmquist Index capital stock ratio, total asset growth rate, type ownership, year
Pels et al. (2003) DEA and SFA- Airport size, number of aircraft parking Passengers, aircraft movements Slot coordinated, time restrictions, airlines’ load
Production function places (at the terminal and remote), and factor, time
runways
Yu (2004) DEA-Window Terminal, apron and runway areas, Passengers, aircraft movements Population (county)
analysis number of connections with other Aircraft noise (undesirable
domestic airports output)
Barros and Dieke DEA Labour costs, capital invested, Passengers, cargo, aeronautical Work load units (WLU)a, rotation of capital, privatised
(2007) operating costs revenues, handling revenues, airport
commercial revenues, number of
planes,
Oum et al. (2008) SFA-Cost function Number of employees, labour costs, Passengers, aircraft movements, Ownership forms
operating costs, terminal size, number non-aeronautical revenues
of runways
Barros and SFA-Cost function Labour costs (unitary), operating costs, Passengers, aircraft movements Ownership forms, hub, rate of return, regulation
Marques (2010) terminal size incentive
Managerial abilities(fixed effect)
Scotti et al. (2012) SFA-Production Terminal area, number of check-in Aircraft movements, work load Ownership forms, competition x% of available seats
function desks, baggage claims, and not units (WLU)
handling employees, runway capacity,
aircraft parking positions.
Lozano et al. Network-DEA Number of boarding gates, apron Aircraft movements (stage one) None
(2013) capacity, runway area (stage one)
Number of check-in desks and baggage Passengers, cargo (stage two)
claims (stage two)
Number of delayed flights,
accumulated delayed flights
(undesirable outputs)
Chaouk et al. DEA and Truncated Number of employees, boarding gates, Passengers, aircraft movements, Air transport sector performance, macroeconomic
(2020) regression and runways, terminal area cargo, and non-aeronautical environment, safety and security stability, quality of
revenues public/private institutions, and the standards of living
dimensions of the population (health, education)
Huynh et al. DEA-SBM and Tobit Terminal and apron areas, runway Passengers, aircraft movements, Decentralised management, competition, number of
(2020) regression length cargo airlines using the airport as their Hub
Ngo et al. (2020) DEA-SBM and Labour costs, operating costs, runway Aircraft movements, cargo, Number of establishments, arrivals, number of
Window and Tobit length aeronautical and non- international and domestic destinations, GDP per
regression aeronautical revenues capita, period 2008/9, period 2011 (earthquake), LCC
operating, privatised airport
Ripoll-Zarraga and SFA-Production Labour costs, operating costs, Passengers, aircraft movements, Number of hotels and campsites, tourists expenditure,
Raya (2020) function and depreciation of airside assets and cargo, and commercial revenues length of stay, arrivals, tourism employees, index
Regression landside assets price
Airports special features (fixed effect)
a
One Work Load Unit (WLU) is equivalent to one passenger or 100 kg of cargo.

the airports’ ownership control (i.e., in comparison to a traditional
definition of input and output). Managers with specific skills related to
an airport (or the aviation industry) are expected to make adequate
decisions. Managerial strategic decisions implicate the firm’s financial,
technical, and operational efficiency. Finally, the effectiveness of the
managerial decision-making process depends upon the autonomy be­
tween ownership and management. The involvement of the ownership
in management often happens in government-owned airports or airports
with mixed forms but with a majority of government. Government au­
thorities appoint the managers. The subsequent changes in the Board
happen after changes in the power of political parties at national and
regional levels. Managers are often chosen for their political preferences
and affinities rather than their relevant knowledge and experience.
Consequently, managers are dismissed independently of the effective­
ness of their management and airports’ performance.
3. The network of polish airports
Poland is the biggest among Central and Eastern European countries
that entered in 2004 the European Union. All countries implemented all
relevant European Union (EU) rules, thus liberalised the air transport
market. This change generated a dynamic traffic growth as a response to
the expansion of the Low-Cost Carriers (LCCs), revealing the stifled
potential of regional airports. In the latest years, the competition be­
tween airports to attract airlines and passengers has intensified.
The network of Polish airports consists of 14 regional airports and
one central airport located in Warsaw. Warsaw Chopin Airport (WAW) is
the hub for the flag carrier LOT Polish Airlines. During the 15 years of air
transport market liberalisation there is a diverse airports’ development
in terms of the number of passengers and cargo handled (Fig. 1.)
Polish airports have diversified ownership in the central government
(state), regional and local authorities (Table 2). The ownership, struc­
tural, and capital transformation of Polish airports began after 1989

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A.E. Ripoll-Zarraga and S. Huderek-Glapska Journal of Air Transport Management 92 (2021) 102035

Fig. 1. Passengers at the Polish airports 2004–2018. (Source: Polish Civil Aviation Authority).

Table 2
Ownership forms of Polish airports 2019 (Source: Airports websites).
Airport Legal form Ownership structure Year of CEO’s appointment

State-owned enterprise Regional City authorities Others

(PPL) authorities

Warsaw Chopin Airport (WAW) State-owned Enterprise 100% – – – 2016

Krakow Airport (KRK) Limited Liability Enterprise 76% 23% – 1% 2016
Gdansk Airport (GDN) Limited Liability Enterprise 29% 33% 34% 4% 2010
Katowice Airport (KTW) Join Stock Company 17% 35% 5% 43% 2006
Warsaw Modlin Airport (WMI) Limited Liability Enterprise 29% 34% – 33% 2016
Wroclaw Airport (WRO) Join Stock Company 20% 31% 49% – 2007
Poznan Airport (POZ) Limited Liability Enterprise 39% 24% 37% – 2006
Rzeszow Airport (RZE) Limited Liability Enterprise 55% 45% – – 2016
Szczecin Airport (SZZ) Limited Liability Enterprise 43% 20% 34% 3% 2011
Bydgoszcz Airport (BZG) Join Stock Company 5% 71% 23% 1% 2010
Lodz Airport (LCJ) Limited Liability Enterprise – – 96% 4% 2012
Lublin Airport (LUZ) Join Stock Company – 34% 60% 6% 2017

with the collapse of the communist system. In the 90s, the airports were
commercialized and transformed into commercial law companies, in
which the state-owned enterprise ‘Polish Airports’ (PPL), and the
regional and local authorities were shareholders. Up-to-date, the state-
owned enterprise (PPL) has the majority of shares at the Warsaw Cho­
pin Airport (WAW), Krakow Airport (KRK), and Rzeszow Airport (RZE).
In these airports, the politicians entitle to recommend specific managers
for a chief executive officer (CEO) position. The control over manage­
ment at other airports depends on the strength of the political power of
regional and local authorities. The political control prioritises political
interests rather than airports’ performance. Airports with infrastructure
provided by the government will prioritise public policy objectives.
Consequently, the managerial decision-making process may be con­
strained. Changes in the political background lead to changes in the
management and, essentially, in the airport strategy. Changes in the
airport’s management may happen even though the airport being
efficient.
4. Methodology
The methodological approaches to measure technical, allocative and
cost efficiency as well as other models of goal attainment such as reve­
nue and profit, are commonly known as frontier approaches, classified
as non-parametric such as Data Envelopment Analysis (DEA) and
parametric methods such as Stochastic Frontier Analysis (SFA). Many
studies have examined airports’ performance using different method­
ologies based on efficiency and productivity analysis. The analysis of
production in multi-output industries is difficult since behavioural as­
sumptions such as cost minimisation or profit maximisation are unlikely
to be applicable (Coelli and Perelman, 2000). Hence, the vast majority of
studies on airports’ benchmarking, and more specifically, in efficiency,
use non-parametric approaches such as Data Envelopment Analysis
(DEA) rather than SFA. Distance functions, on the other hand, become a
relevant tool to analyse the production in these types of industries.
Airports are multi-input output business and, stochastic distance func­
tions provide the appropriate framework to estimate technical effi­
ciencies (Coelli and Perelman, 1999, 2000; Kumbhakar and Lovell,
2000). One main advantage of the distance function is that it does not
require price data or explicit behavioural assumptions since obtaining
cost reliable measures and price data is difficult (Farsi and Filippini,
2009). Additionally, by imposing linear homogeneity restrictions
(Lovell et al. 1994), the distance function can be transformed into an
estimable regression model. Furthermore, the stochastic frontier anal­
ysis allows the incorporation of exogenous variables that are neither
inputs nor outputs, but influence producers’ performance (Kumbhakar
and Lovell, 2000). Examples of SFA in airports efficiency analysis follow
for cost functions (Assaf, 2010b; Barros, 2008b and 2009; Oum et al.,
2008; Martin-Cejas, 2002), and for production functions (Scotti et al.,

4
A.E. Ripoll-Zarraga and S. Huderek-Glapska Journal of Air Transport Management 92 (2021) 102035

2012; Ripoll-Zarraga and Raya, 2020). The restrictions required for homogeneity degree+1 for the outputs
The stochastic frontier analysis (SFA) fits within the parametric, also follow (Coelli and Perelman, 2000),
known as econometric methods. The first stochastic models were
∑
m ∑
m ∑
m
developed by Aigner et al. (1977) and Meeusen and Van den Broeck αl = 1, αll′ = 0, l = 1, 2, …, m; ρjl = 0j = 1, 2, …k (4)
(1977) decomposition the error in two components, the statistical l=1 ′
l =1 l=1

random noise and inefficiency effect.

The canonical formulation that serves as the foundation for other
extensions of their model follows,
y = βx + v − u
Where y is the observed outcome (goal attainment), βx + v is the optimal
or frontier goal (e.g., maximal production output or minimum cost)
pursued by the individual, β* x is the deterministic part of the frontier
and v ∼ N(0, σ 2v ) is the stochastic part representing factors generating
irrelevant noise in the data. Both parts constitute the stochastic frontier.
The stochastic efficient frontier assumes that the production outputs are
subject to random shocks that are not under control of firms. The
amount that the individual observations fails to reach the frontier is u ∼
N(0, σ2u ) understood as (stochastic) inefficiency.
The translog form is a frequently used production function formu­
lation that allows examination of production, cost and efficiency. The
translog function represents a flexible functional form of the production
function allowing partial elasticities of inputs-substitution to vary since
it is a second order flexible functional form that is linear in the param­
eters (Coelli et al., 2005). One of the main advantages is that, unlike the
Cobb-Douglas production function, it does not assume perfect substi­
tution between production factors or perfect competition on the pro­
By using linear homogeneity, the translog distance function,
lnD0 (X, Y) can be transformed into an estimable regression model
(Coelli and Perelman, 2000; Brümmer et al., 2002, 2006; Coelli et al.,
(1) 2005).The homogeneity constraint is imposed following Lovell et al.
(1994) who noted the following property, D0 (X, ωY) = ωD0 (X, Y) for any
ω > 0. Hence choosing arbitrarily one of the outputs, such as the μ − th
( )
output, and setting ω = y1μit , D0 X, yYμit = D0 (X, Y)/yμit
For the translog distance function (4) this provides the m -1 outputs
to be normalised by ω,
where y*lit = yyμlitit is the normalised output distance function by one of the
outputs, which in this regard is yμit , to impose linear homogeneity
property. All the logs involving the μ − th output used for normalising
will be zero since ylit = yμit . Therefore, the summations related to the
outputs are not over m outputs.
The first-order elasticities (αl , βj ) represent the output and input
elasticities contribution to the production of the output yμ used for
normalising purposes. The second-order elasticities (αll′ , βjj′ ) represent
output complementary or substitution effects (bias) of the inputs or the
outputs in the overall production. The first-order input elasticity
(Exj yμ = βj ) is interpreted as an indicator of positive or negative returns of

∑
m− 1
( ) 1∑m− 1 ∑
m− 1
( ) ( ) ∑ k
( ) 1∑ k ∑k
( ) ( ) ∑ k ∑m− 1
( ) ( )
ln(D0i / yμit ) = β0 + αl ln y*lit + αll′ ln y*lit ln y*l′ it + βj ln xjit + βjj′ ln xjit ln xj′ it + ρjl ln xjit ln y*lit (5)
l=1
2 l=1 ′ j=1
2 j=1 ′ j=1 l=1
l =1 j

duction factors (Klacek et al., 2007). Additionally, allows using linear
and non-linear input-output relationship. However, the great number of
parameters to estimate the more difficult to obtain feasibility. The se­
lection of inputs and outputs must be done according to the number of
factors that are really necessary for the behaviour of the output.
A generalised translog distance function with one output and k inputs
for the i-th firm in a period t follows,
the input’s contribution (xj ) to the production of yμ . The first-order
output elasticity (Eyl yμ = αl ) implies a shadow share/contribution of yl
to yμ in the overall production. For the second order elasticities of the
inputs (cross-effects), a negative elasticity implies input substitution
effects between the inputs, and a positive elasticity complementary ef­
fects (Exj xj ′ yμ = βjj′ ). The cross effect of the outputs (Eyl yl ′ yμ = αll′ ) repre­
sent overall the contribution of a change into yl to the productivity or
′

∑
k
( ) 1 ∑
k ∑
k
( ) ( ) shadow valuation of yl relative to its impact on the overall production
ln(D0i ) = β0 + βj ln xj + βjj′ ln xj ln xj′ (2) weighted by share or contribution of the production of yμ .
2
The reciprocal of the distance function D0 , has been proposed as a
j=1 j=1 ′
j

As double log form model (where both dependent and explanatory coefficient of resource use of Debreu (1959) and as a measure of Farell
variables are in natural logs), the estimated coefficients show elasticities (1957) output-oriented technical efficiency: D0 (X, Y) = 1/TE i.e.
0
between the dependent and explanatory variable, relaxing the re­ D0 (X, Y) ≤ 1 and TE0 ≥ 1 where taking the natural log in both sides is
strictions on demand elasticities and elasticities on substitution. Note equivalent to,
that to obtain the frontier surface (i.e., the transformation function) one
would set D0i = 1, which implies the left hand side of equation (2) is ∑ 1∑
m− 1 m− 1
( )
− ln(yμit ) = β0 + αl ln y*lit +
equal to zero. l=1
2 l=1
For m outputs and k inputs (2) follows, ∑
m− 1
( ) ( ) ∑ k
( ) 1∑ k

∑ × αll′ ln y*lit ln y*l′ it + βj ln xjit +

m
1∑ m
′ j=1
2 j=1
ln(D0i ) = β0 + αl ln(ylit ) + l =1
2 l=1 ∑
l=1 k
( ) ( ) ∑k ∑
m− 1
( ) ( )
∑
m ∑
k
( ) 1∑ k ∑ k
( ) ( ) × βjj′ ln xjit ln xj′ it + ρjl ln xjit ln y*lit + (vit − uit ) (6)
× αll′ ln(ylit )ln(yl′ it ) + βj ln xjit + β ′ ln xjit ln xj′ it j
′ j=1 l=1
′ j=1
2 j=1 ′ =1 jj
l =1 j
( )
1 1
∑ Where − ln(yμit ) = ln(yμit )− = ln , therefore the negative sign can
k ∑
m
( )
+ ρjl ln xjit ln(ylit ) yμit
j=1 l=1
be omitted for interpretations purposes,
(3)
Symmetry restrictions are imposed, βjj′ = βj′ j ; αll′ = αl′ l

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A.E. Ripoll-Zarraga and S. Huderek-Glapska Journal of Air Transport Management 92 (2021) 102035

(
1
) ∑
m− 1
( ) 1∑ m− 1 military base, started operating as civilian airports in 2012, Radom
ln = β0 + αl ln y*lit + (RDO) from 2015 and Olsztyn (SZY) from January 2016. Additionally,
yμit 2 l=1
there are missing financial information data for Warsaw Modlin (WMI)
l=1

∑
m− 1 ∑
k
( ) 1∑ k
×
( ) ( )
αll′ ln y*lit ln y*l′ it + βj ln xjit + in 2017, for Szczecin (SZZ) in 2012 and 2017, and for Lodz (LCJ) in
′
l =1 j=1
2 j=1 2016, and the overall period for Zielona (IEG), Radom (RDO) and
∑
k
( ) ( ) k ∑
∑ m− 1
( ) ( ) Olsztyn (SZY). The final sample refers to 12 airports by removing these
× βjj′ ln xjit ln xj′ it + ρjl ln xjit ln y*lit + (vit − uit ) (7) latest three airports (IEG, RDO, and SZY) without financial statements
j
′ j=1 l=1 publicly shared or published.
Although LUZ and WMI are not operating until 2012, financial in­
The technical efficiency for each decision making unit i and period t
formation from 2009 is released (e.g. regarding infrastructure and
is defined as a ratio of the observed output (yit ) to the maximum feasible
operational costs). The traffic variables related to these airports from
output (Ýit ) established by the specific consumption of inputs (Battese
2009 to 2011 (i.e., the number of passengers and movements) are
and Coelli, 1988),
enclosed using 0.001 in the normalisation (ω = y1μit ), in which the value
TEit =
yit exp(βxit + vit − uit )
= = exp(− uit ) (8) of the standardized outputs is equal to zero. It is of interest to observe the
Ýit exp(βxit + vit ) relation between the investment made by the Government and the
The uit represent airport specific fixed effects or time invariant traffic developed by 2017. The three airports with missing financial
technical inefficiency and vit as previously discussed is a normally information for specific years are also enclosed in the study (LCJ for
distributed random error term and is uncorrelated with the explanatory 2016; SZZ, 2012 and 2017; WMI for 2017). Rather than removing them
variables. The value of uit is positive (nonnegative random variable) and from the sample, zero values have been substituted by unitary values.
decreases the efficiency, therefore in the formula − uit is used. Maximum Regarding cargo, airports show a variance in the amount handled per
feasible output is defined for each airport with inefficiency equal to zero year, and some airports do not have cargo at all. Again, unitary values
(vit =0). are used instead.
Following Battese and Coelli (1995) the inefficiency term uit in (7) Fig. 2 shows the geographical location of the airports enclosed in the
and, therefore, the technical efficiency is estimated as follows, final sample. The three airports removed are located in three out of four
empty regions: Zielona Góra Airport (IEG) located in the west, Radom
(RDO) in the south-east and Olsztyn (SZY) in the north.
p
∑
uit = zoit δz + ωit (9)
o=1
5.1. Input and output variables
Where zoit represent the environmental (explanatory) factors associated
with the technical inefficiency effects not controlled by the manage­ The frontier analysis allows determining common characteristics,
ment, at least in the short-term; δz are unknown parameters to be esti­ and practices associated with the efficiency levels, and their influence on
mated; ωit are unobservable random variables independently distributed the performance of the units of assessment. Nevertheless, unlike using
with zero mean and unknown variance σ 2u assuring that uit is non- the traditional inputs (land, labour, and capital), managerial skills and
negative. Following this specification, the inefficiency effects may be capabilities are not directly observable. These relate to different com­
different for each firm, but the variances are assumed to be the same. petencies and skills, which are intangible assets. Except for two of the
The exogenous explanatory variables could include functions of firm and inputs, all the variables are used in the literature (see Table 1). On the
management characteristics as well as the period of observation (Battese outputs side: the number of passengers per year, movements, cargo and
and Coelli, 1995) other operating profits as a proxy of non-aeronautical income. The in­
Due to investments made in some airports in detriment of others, puts are labour costs, the depreciation of the assets, operating costs and
capital investments are accounted for as neutral technical change.
Neutral technical change assumes that potential shifts in the frontier for
different firms do not depend on the levels of inputs consumed. Alter­
natively, Huang and Liu (1994) proposal can be considered with the
inclusion of iterations between the environmental factors and inputs.
Maximum likelihood techniques are used to estimate the frontier and
the inefficiency. Lambda measures the variability of two sources of error
( )
σ2
λ = σu2 . The statistical significance of lambda obtained from the ML
v

estimates indicates the existence of a stochastic frontier function

(Schmidt and Lin, 1984). If λ is statistically different from zero, implies
that the difference between the observed and the frontier production is
dominated by technical inefficiency. In other words, the variation in
actual production comes from differences in industries management
practice rather than random variability. If it is not significant, then any
difference in the production is attributed solely to symmetric random
errors or disturbances, but firms are receiving maximum output
response for combinations of the inputs used. Therefore, when lambda is
significant indicates that the use of the frontier production function is
appropriate. In this case, lambda is significant and high, showing that
one side of the error u, has more power compared to the random noise.

5. Data description

Initially, the sample consisted of 15 airports and data were gathered

for nine years (2009–2017). Lublin (LUZ) and Warsaw Modlin (WMI), a
Fig. 2. Geographical location (Airports analysed).

6
A.E. Ripoll-Zarraga and S. Huderek-Glapska
non-operating costs related to non-aeronautical activities. The labour
costs (excluding air traffic control and cargo services), as well as assets’
depreciation, are a significant part of the overall airports’ costs since
these are fixed costs. The lack of information regarding passengers and
cargo terminal areas implies searching for alternative capacity mea­
sures. Operational costs are expenses incurred as a consequence of the
airports’ main operational activity. Two additional inputs are consid­
ered: the value of the land and the equity shares. Land assets are no
depreciated hence there is no risk of double-counting. Airports are
usually located in remote areas for noise and air traffic constraints. The
value of the land should reflect the airports’ surface premises as a proxy
of capacity: the more valuable the land the more extensive the area.
However one need to take into account the land value differences may
occur as consequence of the geographical location. The airports located
near the city centre may have higher land value than those located
outside the city boundaries. Following the international financial
reporting standards, the land value reflected in the balance sheet is at
cost unless the fair value is lower.1
In the same way, the more shares issued by the regional authority
managing the airport the more financing long-term resources to invest in
infrastructure. Note that there is no information regarding the type of
assets and the nominal value of shares. Hence it is not possible to
differentiate between airside and landside assets (Ashford, 1996; Gillen
and Lall, 1997; Pels et al., 2001; Ripoll-Zarraga, 2018; Ripoll-Zarraga
and Lozano, 2019; Ripoll-Zarraga and Mar-Molinero, 2020).
There is divergence regarding cargo data. Some airports do not have
cargo at all and other different values from year to year. We are aware
that cargo explains differences in efficiency (Ripoll-Zarraga and Lozano,
2019), unfortunately, the models including cargo have not converged.
The final model refers to passengers and movements as outputs and
proxy of aeronautical revenues.
An overall measure of traffic could be discussed to be used as a single
output. Nevertheless, airports are different in terms of size. Conse­
quently, one airport may be less efficient because of the mix of products
in terms of specialisation (i.e. cargo versus passengers) and not because
of resource misused. With this regard, the model provides individual
effects of outputs and inputs in inefficiency rather than using an overall
measure of traffic (i.e., passengers, movements, and cargo) and inputs to
estimate efficiency scores and ranking the airports accordingly, as DEA
does.
The data in monetary values have been deflated by the GDP deflator
and expressed in thousands of euros (base Poland 2010). All the data are
standardised by the geomean. In this way the first-order coefficients are
interpreted as distance elasticities (partial elasticities) evaluated at
sample means.
Time variant model is assumed since the length of the panel is large,
although the number of airports is small, and during the different pe­
riods investments have been performed in some airports. It is expected
to find the time trend capturing productivity change with that capturing
efficiency change.
Table 3 gives summary statistics for the inputs and outputs used in
the model. The data is extracted from airports’ financial statements and
from the statistics published by the Civil Aviation Authority in Poland.
Note that Lublin (LUZ) and Warsaw Modlin (WMI) do not have traffic
data until 2012. Therefore, there are 102 observations regarding pas­
sengers and air traffic movements. The rest of missing is financial data
for Szczecin (SZZ) in 2012 and 2017, Warsaw Modlin (WMI) in 2017 and
Lodz (LCJ) in 2016. As previously discussed, instead of removing them
from the sample, these are replaced by unitary values (see Table 4).
1
IAS 16 International Accounting Standards https://www.iasplus.com/en/
standards/ias/ias16.
7
Journal of Air Transport Management 92 (2021) 102035
5.2. Environmental variables
The environmental variables represent airports’ ownership forms
(Ownership), infrastructure and location: the number of passenger ter­
minals (Terminal PAX), the number of runways, the number of com­
petitors within 150 km understood as the catchment area (Catchment)
(Ripoll-Zarraga et al., 2017; Ripoll-Zarraga and Mar-Molinero, 2020),
and the existence of railway facilities into the airport (Train) introduced
as a dummy. An additional variable is has been tested (Type of Airport),
that captures if the airport diversifies the operational activity (civil­
ian/military) or is fully civilian (case). The idea is to confirm if trading
off activities rather than specialising in one single type of transport may
affect efficiency. The variable ownership captures if the airport is mainly
government-owned (i.e., if higher than 50%). The rest of the ownership
is distributed among regional authorities, city councils, and other local
authorities (see Table 2). The variable takes the unitary value if the
airport is mainly owned by the government and zero otherwise. Two
airports have a majority of government ownership: WAW (100%) and
KRK (76%). RZE distributes its ownership between the government
(55%) and the regional authority (45%). The rest of airports are owned
by the regional authority (BZG, 71%), and city authorities (LUZ, 60%;
LCJ, 96%), or a mix of them (for example, GDN 33% regional and 34%
city authorities; WRO 31% and 49% respectively; POZ 24% and 37%;
SZZ 20% and 34%)
Regarding the environmental variables measuring managerial ca­
pabilities, these are the knowledge related to air transport, i.e., trans­
portation or management, (Qualifications) and the managers’ experience
at a specific airport analysed. The authors made every effort to ensure
that the data are as accurately as possible. Initially, surveys were sent to
airport managers to gain insights regarding knowledge, skills and ca­
pabilities. Nevertheless, the response rate was significantly low. There­
fore, secondary data was sought (e.g., airport websites and articles in
media). Due to the difficulties to obtain solid information about the
airport managers, the CEO background regarding knowledge and
experience is a proxy used as the managerial human capital of the
airport. A CEO implicitly means that he (she) has enough knowledge to
make relevant decisions. The CEO decisions involve all the airport’s
employees’ categories and functions. Therefore, the decisions of man­
agement affect how the airport performs overall. With this regard, this is
the first time that these variables are used in SFA analysing airport ef­
ficiency. Further studies will consider a more nuanced version of
managerial capabilities such as operating procedures at the airports and
decision-making process as well as the effectiveness of internal controls.
The manager’s knowledge may be defined as the level of education
(Ansoff, 1979), while the experience may be defined as the number of
years in a managerial position, training, international career and expe­
rience in previous work places (Camisón, 2004). In this study, it is
assumed that if airport manager has knowledge related to air transport
(field of study), transport or management then the manager has quali­
fications to manage the airport. In this case the variable (Qualifications)
takes value ‘1’ or zero otherwise. Airports managed by CEOs with more
and specialist knowledge are expected to be more efficient. To test the
impact of different scales managerial experience is accounted in two
ways: the number of years that a manager has been working at the
specific airport (Experience), independently if the person worked in
other industries or other airports. Although managerial experience gain
through the years is transferrable (Adner and Helfat, 2003), this variable
is accounting for the impact of management stability. And the specific
year when a new manager is appointed (ChangeinCEO). The stability of
the airport authorities is indicated as essential factor for the imple­
mentation of the adopted development strategy. Therefore airports with
fewer changes in management are expected to be more efficient. The
first years become a learning process. New managers must be familiar
with internal control procedures, departments, internal regulation, ac­
counting systems, etc. before to have enough experience for adequate
decision-making. The second way of measuring the stability of the
A.E. Ripoll-Zarraga and S. Huderek-Glapska Journal of Air Transport Management 92 (2021) 102035

Table 3
Summary Statistics. Input and Output variables (Source: Airports’ Financial Statements, 2009–2017).
Variable Observations Mean Standard Dev. Minimum Maximum

Passengers 102 2,238,245 2,959,325.93 5,697 15,730,330

Air Traffic Movements 102 22,777 33,516.49 42 157,044
Cargo (kgs) 102 6,928,330 16,931,559.87 1 84,389,442
Non-Aeronautical Income (k €) 104 2,264 2,635.14 0.79 15,426
Labour Costs (k €) 104 9,513 18,401.35 256 115,621
Depreciation Assets (k €) 104 5,370 6,832.60 6.75 29,825
Operating Costs (k €) 104 9,882 10,680.12 339 42,027
Non-Operating Costs (k €) 104 1,840 7,556.61 2.32 74,593
Land (k €) 104 82,939 72,069.55 6,102 340,921
Equity Shares (k €) 104 48,624 26,941.79 1.02 111,036

the acquisition of the airport by the State Enterprise ‘Polish Airports’.

Table 4
Finally, a time variable (t) was enclosed in one of the tests to account
Summary Statistics. Environmental variables (Source: Authors, 2009–2017).
for technical change effects, linear and quadratic (e.g., Wilson et al.,
Variable Observations Mean Standard Minimum Maximum 2001) as well as a variable per year (Battese and Broca, 1997), dummies
Dev.
representing a year to capture fixed effects (Scotti et al., 2012) or season
Terminal PAX 108 1.40 0.55 1 3 (Ogundari and Brümmer, 2011). Finally, due to issues of convergence
Number of 108 1.46 0.87 1 4
time has been disregarded.
Runways
Catchment 108 1.32 0.96 0 3
The airport with more stability in management is Rzeszow (RZE)
Train 108 0.34 0.48 0 1 with same manager for 13 years until 2015. Note that the minimum
Ownership 108 0.25 0.44 0 1 value of experience refers to a new manager appointed in a specific
Qualifications 105 0.71 0.45 0 1 airport in a year. Other airports with management stability are Katowice
Experience 102 4.74 3.39 0 13
(KTW) with the same manager for 12 years by 2017, Poznan (POZ) 11
Change in CEO 102 0.12 0.32 0 1
years and Wroclaw (WRO) 10 years. On the other hand Lodz (LCJ)
changes manager three times during the period of analysis, in 2009,
airport’s management is with a dummy accounting the specific moment 2011 and 2017 and Warsaw Chopin (WAW) two times, in 2015 and
when a change happens. This variable has unitary value if the airport has 2016. The airport with four runways is Bydgoszcz (BZG), the main being
changed CEO during a specific year, or zero otherwise. In practice, both of 2,500m length and made from asphalt/concrete, and three grass
variables Experience and ChangeinCEO capture the changes in manage­ runways. Apart from Warsaw Airport, which has two cross-section
ment in a specific airport. Therefore, they cannot be used simulta­ runways, all the Polish airports have one main runway built by con­
neously. Two sets of results have been obtained to confirm the impact of crete, asphalt or a combination of both.
both variables as proxies of managerial capabilities, but measure
differently (i.e., quantitative discrete and categorical as a dummy). A 6. Analysis and results
potential endogeneity between airports’ inefficiencies and the changes
in the management is debatable. Nevertheless, in the case of Polish The results are presented in Table 5. With few exceptions the elas­
airports, the vast majority of appointees respond to political interests. ticities have the expected signs at the geometric mean overall. There­
With this regard, the government aims will prevalence over airports’ fore, the estimated translog fulfils the property of monotonicity (i.e.,
profitability and efficiency. Airports’ inefficiency (efficiency) does not non-decreasing in outputs and decreasing in inputs). The first-order ef­
necessarily imply dismissing (keeping) the CEO. The CEO is likely to be fects are all significant, except for land. The first order coefficients are
appointed if aligned with the policy party representing the majority on the partial elasticities of production for the sample mean. The results
the Board rather than the CEO’s professional experience and managerial show a significant impact of aircraft movements (0.90) as well as non-
skills. In the same way, some CEOs may be unfairly dismissed even aeronautical income (0.49) generating traffic (passengers).
though the airport is improving efficiency. With this regard, these var­ The results initially show that overall airports with more movements
iables attempt to capture if changes in CEOs are or are not related to (0.90), non-aeronautical revenues (0.48), as well as, equity (0.35) have
airports’ efficiency improvements. more passengers. On the other hand, a higher depreciation (− 0.75),
Except for the CEO of the Lodz (LCJ), all the CEOs are men. All CEOs operating (− 0.51), and non-operating costs (− 0.19) do not imply
are university graduates, three of them also hold an MBA diploma and handling more passengers. Aircraft movements are the most relevant
the CEO of the Lodz Airport holds a Ph.D. in economics. Few airport output to increase passengers (0.90; 2.13). Labour costs have a signifi­
managers have specialised studies in aviation, transport, or manage­ cant and positive impact (0.43), highlighting a potential relationship
ment. Only the CEOs of GDN and LCJ were promoted within the same between the number of employees working at the airport and the
airports. The CEO of the Gdansk airport (GDN) worked for the airport number of passengers handled. Nevertheless, in a translog function, the
since the 90s before appointed as the CEO. More than several changes first-order coefficients are not conclusive since they do not provide in­
happened during these years. These include Poland’s accession to the formation about the change in passengers regarding specific inputs
European Union, the consequent liberalisation of the aviation market, as individually or interacting with other inputs and other outputs. For
well as the organization of the European Football Championship EURO example, the depreciation is the input with a more negative impact on
2012. These changes required the appropriate airport infrastructure for the number of passengers (− 0.75). From the airport capacity perspec­
the expected and actual increased traffic and aircraft parking. The CEOs tive, more investments in infrastructure do not necessarily imply higher
of Katowice (KTW), Wroclaw (WRO), and Poznan (POZ) airports have traffic compared to, for example, small airports. With this regard, the
more years of experience in aviation management. Warsaw Chopin positive effect of the use of capacity will depend upon the iteration and
(WAW), Krakow (KRK), and Rzeszow (RZE) changed their CEOs in 2016. mix effects with other variables. Indeed, the iteration between operating
These airports are mostly government-owned, and the changes in their costs and depreciation is relevant, and with a positive sign (1.15). Air­
management happened after a different ruling party gains the elections ports with large infrastructure and not under-used as reflected by
at the end of 2015. A new CEO at Radom (RDO) happened in 2018 after incurring in higher operating costs, will have a higher number of

8
A.E. Ripoll-Zarraga and S. Huderek-Glapska Journal of Air Transport Management 92 (2021) 102035

Table 5
Results Stochastic Frontier Analysis (*Significant at 5%). The same model is used regarding the production function, but including Experience rather than ChangeinCEO.
None of the models tested have converged.
Variable Parameter Coefficient Std. Error z Prob > |z|*

Stochastic Frontier
Constant α₀ − 0.1993 0.0700 − 2.85 0.004
LnATM α₁ 0.9036 0.3273 2.76 0.006
LnNon-Aeronautical Income α₂ 0.4853 0.0495 9.8 0.000
LnWages β₁ 0.4290 0.2082 2.06 0.039
LnDepreciation β₂ − 0.7522 0.2024 − 3.72 0.000
LnOperating Costs β₃ − 0.5066 0.1162 − 4.36 0.000
LnNon-Operating Costs β₄ − 0.1883 0.0275 − 6.84 0.000
LnLand β₅ 0.0151 0.1405 0.11 0.914
LnEquity Shares β₆ 0.3541 0.1160 3.05 0.002
½LnATM2 α₁₁ 2.1264 1.1109 1.91 0.056
½ LnNon-Aeronautical Income2 α₂₂ 0.0776 0.0326 2.38 0.017
½LnWages2 β₁₁ 0.4086 0.1711 2.39 0.017
½LnDepreciation2 β₂₂ − 0.4516 0.2163 − 2.09 0.037
½LnOperating Costs2 β₃₃ − 0.0975 0.1075 − 0.91 0.364
½LnNon-Operating Costs2 β₄₄ 0.0286 0.0171 1.67 0.095
½LnLand2 β₅₅ − 0.0274 0.2137 − 0.13 0.898
½LnEquity Shares 2 β₆₆ − 0.1667 0.0565 − 2.95 0.003
½LnATMLnNon-Aeronautical Income α₁₂ 0.5429 0.3028 1.79 0.073
½LnWagesLnDepreciation β₁₂ − 1.1368 0.5826 − 1.95 0.051
½LnWagesLnOperating β₁₃ − 0.8694 0.3354 − 2.59 0.010
½LnWagesLnNon-Operating β₁₄ − 0.1413 0.0940 − 1.5 0.133
½LnWagesLnLand β₁₅ 1.9555 0.5377 3.64 0.000
½LnWagesLnEquity β₁₆ − 1.4821 0.3752 − 3.95 0.000
½LnDepreciationLnOperating β₂₃ 1.1533 0.3802 3.03 0.002
½LnDepreciationLnNon-Operating β₂₄ 0.4593 0.1088 4.22 0.000
½LnDepreciationLnLand β₂₅ − 0.2827 0.3178 − 0.89 0.374
½LnDepreciationLnEquity β₂₆ − 0.6007 0.3881 − 1.55 0.122
½LnOperatingLnNon-Operating β₃₄ 0.0528 0.0778 0.68 0.498
½LnOperatingLnLand β₃₅ − 0.3103 0.3150 − 0.99 0.324
½LnOperatingLnEquity β₃₆ 0.5017 0.2374 2.11 0.035
½LnNon-OperatingLnLand β₄₅ − 0.3631 0.0909 − 4.00 0.000
½LnNon-OperatingLnEquity β₄₆ 0.0951 0.0605 1.57 0.116
½LnLandLnEquity β₅₆ 0.9573 0.3334 2.87 0.004
LnATMLnWages α₁β₁ 1.8280 0.4295 4.26 0.000
LnATMLnDepreciation α₁β₂ − 0.9589 0.5503 − 1.74 0.081
LnATMLnOperating α₁β₃ 0.4979 0.2411 2.07 0.039
LnATMLnNon-Operating α₁β₄ − 0.3337 0.0698 − 4.78 0.000
LnATMLnLand α₁β₅ 0.1511 0.3335 0.45 0.650
LnATMLnEquity α₁β₆ − 1.2059 0.3096 − 3.89 0.000
LnNon-Aeronautical IncomeLnWages α₂β₁ − 0.0194 0.0778 − 0.25 0.803
LnNon-Aeronautical IncomeLnDepreciation α₂β₂ − 0.1711 0.0946 − 1.81 0.071
LnNon-Aeronautical IncomelLnOperating α₂β₃ − 0.1971 0.0575 − 3.43 0.001
LnNon-Aeronautical IncomeLnNon-Operating α₂β₄ 0.0526 0.0180 2.93 0.003
LnNon-Aeronautical IncomelLnLand α₂β₅ 0.2490 0.0539 4.62 0.000
LnNon-Aeronautical IncomeLnEquity α₂β₆ − 0.0940 0.0429 − 2.19 0.028
Inefficiency Model
Constant δ₀ 6.3552 2.6418 2.41 0.016
Qualifications δ₁ 0.8130 0.3571 2.28 0.023
Change in CEO δ₂ 0.7483 0.3080 2.43 0.015
Number of Runways δ₃ − 0.5159 0.3995 − 1.29 0.197
Catchment Area δ₄ 1.2581 0.4826 2.61 0.009
Train δ₅ 2.3417 1.0852 2.16 0.031
Type of Airport δ₆ − 3.5293 1.8375 − 1.92 0.055
Terminal PAX δ₇ − 5.8419 2.2135 − 2.64 0.008
Ownership δ8 − 5.4689 2.4815 − 2.20 0.028
Variance Parameters
Sigma-U Ōᵤ 0.3970 0.0803 4.94 0.000
Sigma-V Ōᵥ 0.0414 0.0061 6.78 0.000
Lambda λ 9.5931 0.0829 115.75 0.000
Log Likelihood 86.31

passengers per year. On the other hand, airports with overcapacity re­
flected through high depreciation and low activity (i.e., low operating
costs) will have fewer passengers. Doubling the depreciation (i.e., due to
an increase of capacity) does not imply an increase in traffic (− 0.45).
This result suggests that some airports do not have a clear relation be­
tween infrastructure and traffic (i.e., passengers).
Land’s value is not significantly different from zero, suggesting that
not always higher land value is correlated to higher capacity as it was
initially expected. Landside assets seem not that important unless there
is a clear relationship between the value of the land and the efficient use
of airport capacity, in this case, reflected through the cost of employees
(1.95) rather than depreciation (− 1.14).2 This is also confirmed by the
iteration effects between aircraft movements and labour costs (1.82).
The first-order effects are positive for equity (0.35) and negative for
operating costs (− 0.51). Through the direct effect, equity affects directly
2
A significant iteration effect with positive sign indicates that the inputs or
outputs are complementary.

9
A.E. Ripoll-Zarraga and S. Huderek-Glapska
and positively traffic, and through the indirect effect, equity changes the
effect of the operating costs on traffic (0.50). Operating costs are a
reflection of the aeronautical activity of the airports (variable costs). On
the other hand, increasing the equity shares, the production will be
decreased (− 0.17). Airports can increase their traffic until a certain level
where having decreasing returns to scale as confirmed by the scale
elasticities (Table 7). The significant accounting value of equity without
the corresponding investment in capacity may end in underused re­
sources to attract traffic in the long run (− 1.48 iteration with labour
costs; − 1.20 with ATM). The efficient use of companies’ resources
means to invest in capital assets to enhance traffic. Nevertheless, some
entities may use these resources in the short-term financing incurred
expenses for the period.
Regarding the inefficiency model, all the variables have a significant
effect except for the number of runways and, slightly significant, the
type of airport.3 Managers with qualifications related to air trans­
portation, transport, or management do not assure airports’ efficiency
(81%). A potential explanation is that the airport business is highly
regulated with procedures that are standardized and formalized, which
hinder the decision-making process of airport’s managers. This result
may change in other countries or airports with diverse ownership and
management forms. At the same time, airports with changes in man­
agement increase their inefficiency (75%). These results suggest that
stability in managerial positions (within the same firm) allows learning
from the internal procedures and the market to make the most adequate
decisions. It seems that it is preferably keeping the same manager even
though not having qualifications (or specialised studies) in the field than
having a new manager. Previous results in farming studies argue that the
difference in performance is due to variation in management (Kay and
Edwards, 1994). The level of education was found no significant in
previous studies in farming (Wilson et al., 2001) along with age and
family size (Ogundari and Brümmer, 2011). Managers with more
experience and some further education are slightly less inefficient
(Wilson et al., 2001). Knowledge acquired by practice with the academic
and theoretical background may improve airports’ performance. Further
research is required.
Having more than 50% of government ownership decreases airports’
inefficiency significantly (− 5.4) as well as the type of airport (− 3.5).
Most of the highly efficient airports are government-owned, suggesting
that political governmental decisions are in favour of these airports and
detriment of airports owned by regional and city authorities (WAW 98%
technically efficient with 100% government-owned; KRK with 89% and
76% respectively or RZE 98% and 55%). When airports have a majority
of government ownership, the political parties with more power in
government will tend to change the airports’ management, and inde­
pendently of the efficiency level (i.e., WAW 98.28% efficient in 2015;
KRK 93.03%; and RZE 99.34% changed their CEO after the national
elections). Consequently, the potential manager’s qualifications may not
be essential to be appointed as the airport’s manager, but the CEO’s
affinities to the political party in power without assuring airports’ effi­
ciency (0.81). Overall at airports with significant government owner­
ship, the political background will drive changes in CEO and not
necessarily to enhance lower efficiency. Airports with no state owner­
ship and diverse property between regional and city authorities and
others show different levels of efficiency (for example, LCJ without
government ownership, achieves 98% of efficiency; GDN 29% gover­
ment-33% regional authority and 91% of efficiency; WRO 20%–31%
regional authority with 91% of efficiency; KTW 17%–35% and 98% of
efficiency). Most airports are fully civilian and achieve high-efficiency
scores. Although previous international benchmark studies may show
the larges airports, such as WAW, technically inefficient (e.g., Chaouk
et al., 2020), these may not control for the impact of ownership and
3
Three airports are joint civilian-military used (BZG, KRK, and WAW),
whereas the rest are fully civilian.
10
Journal of Air Transport Management 92 (2021) 102035
governance forms as well as the peculiarities of the national regulatory
framework (Ripoll-Zarraga 2018).
The number of runways does not affect inefficiency. Indeed, small
airports such as Lublin (430,000 passengers in 2017), Bydgoszcz
(331,000), and Lodz (192,000) have more than one runway. Neverthe­
less, only the main runway is made by asphalt and the secondary ones
with grass, potentially not used on a current basis, but for emergencies.
Warsaw Chopin (15,752,000 passengers in 2017) is the only airport with
two asphalt runways. Following (Pels et al., 2001), the number of run­
ways has been enclosed in the model as semi-fixed input. Nevertheless,
none of the models converge.
The results show a significant impact of having competitors making
airports more inefficient (1.26). Nevertheless, except for Warsaw Chopin
(WAW) and Warsaw Modlin (WMI), there is no clear relation between
the number of airports in the same catchment area and airports’ in­
efficiency. Airports with more competitors no necessarily are more
inefficient, it depends on their specialisation rather than the number of
passengers. For example, Warsaw Chopin (WAW) is the largest airport in
passengers and is highly efficient and so is Lodz (LCJ) with only 192,000
passengers. Both airports have a large airport in their catchment area at
49 and 152 km respectively (Warsaw Modlin with 2,392,000 passen­
gers). On the other hand, Warsaw Modlin (WMI) having Warsaw Chopin
and two small airports nearby (Lodz and Olsztyn with 105,000 passen­
gers) is highly inefficient (38%). One reason could be that the airport
starts operating in 2012. Poznan is highly efficient (70%) with three
airports in its catchment area (Wroclaw 2,855,000; Bydgoszcz 331,000;
and Zielona Góra 18,000). Overall all the airports have other airports
located between 106 and 152 km. In this sense, airports with only one
large airport nearby are overall highly efficient (for example, Warsaw
Chopin or Lodz achieving an overall 98%). Whereas the presence of
medium and small airports, even though having a large airport within
the same catchment area, increases inefficiency (for example, Warsaw
Modlin 38% or Poznan 70%), partly, because they compete for the same
type of passenger.
Having more passenger terminals decreases inefficiency (− 5.8).
Most of the highly efficient airports have more than one terminal (for
example, in 2017, GDN had two terminals, KTW three, and WAW two).
This result is not conclusive since it may involve endogeneity, and re­
quires further research. In the same way, it is not clear the fact of having
train infrastructure to access the airport and efficiency (− 3.5). Airports
with no railway are also highly efficient (e.g., WRO 91%, RZE 98%, LCJ
98%, KTW 98%).
The technical efficiency level for each airport and year are presented
in Table 5. Unfortunately, the model generated missing estimates for
Poznan (POZ) from 2009 to 2012, potentially influencing the low effi­
ciency for 2013 (see Table 6).
The model shown in Table 5 is used to estimate the individual
technical efficiency scores (Table 6). Overall there are diverse efficiency
scores across the years, being LUZ and POZ medium efficient. WMI is the
airport with the lowest efficiency in Poland across the years since 2014,
potentially due to having WAW in the same catchment area and perhaps
due to specialization in handling only one air carrier (Ryanair).
Regarding the efficiency scores linked to changes in management, most
of airports which experienced changes, decrease their respective tech­
nical efficiency. For example, in 2016 KRK drops its efficiency from 93%
to 69%. The previous year, after the national elections, a new CEO with
no experience in aviation is appointed. In 2009 BZG had 95% of effi­
ciency. A new CEO is employed with limited aviation knowledge, but
holding qualifications. In 2010 the efficiency drops to 57% being
persistent until the end of 2012 when it increases again (93%), poten­
tially due to insights gain of the internal procedures of the airports and
the market. On the other hand, some of the highly efficient airports do
not reduce their efficiency after changes in management. These airports
may have more resources to hire a more experienced manager in avia­
tion. For example, RZE and WAW change the management after the
elections in 2015. The efficiency drops slightly after the change
A.E. Ripoll-Zarraga and S. Huderek-Glapska Journal of Air Transport Management 92 (2021) 102035

Table 6
Airports’ technical efficiency.
Airports 2009–2017 2009 2010 2011 2012 2013 2014 2015 2016 2017

BZG 78.34% 94.77% 56.70% 61.50% 57.87% 92.62% 92.70% 96.07% 66.40% 86.41%
GDN 90.93% 68.62% 69.31% 94.83% 97.89% 97.86% 96.03% 97.91% 98.43% 97.53%
KRK 89.41% 95.18% 94.55% 96.85% 90.08% 69.77% 97.29% 93.03% 69.06% 98.91%
KTW 98.00% 98.78% 98.44% 97.16% 95.94% 98.74% 96.88% 98.27% 99.03% 98.71%
LCJ 97.99% 98.56% 98.63% 98.06% 98.24% 97.52% 96.55% 97.57% 97.93% 98.85%
LUZ 57.44% 22.02% 88.91% 93.52% 53.14% 40.04% 47.03%
POZ 70.51% (missing) (missing) (missing) (missing) 56.35% 67.47% 93.92% 71.26% 60.23%
RZE 98.54% 98.11% 98.92% 96.67% 98.93% 98.66% 98.99% 99.34% 98.22%
SZZ 64.26% 95.00% 94.88% 72.32% 95.64% 34.83% 28.49% 27.84% 38.45%
WAW 98.08% 97.99% 98.81% 98.75% 98.30% 98.12% 97.90% 98.28% 98.02%
WMI 38.67% 40.83% 87.82% 25.25% 15.32% 17.71%
WRO 91.23% 84.09% 74.96% 96.60% 92.22% 95.24% 98.45% 94.75% 89.89%

Table 7
Scale Elasticity (Returns to scale) and biases of inputs Ey1 + Ey2 + Ey3 = 1
y1 y1
Variables Elasticities (first-order) Cross-term Effects (second-order)

Ex2 xj ′ y1 Ex3 xj ′ y1 Ex4 xj ′ y1 Ex5 xj ′ y1 Ex6 xj ′ y1

Passengers 0.3888
y1
Aircraft Movements y2 − 0.9036*
Non-Aeronautical Income y3 − 0.4853*
Wages x1 − 0.4290* − 1.1368 − 0.8694* − 0.1413 1.9555* − 1.4821*
Depreciation x2 0.7522* 1.1533* 0.4593* − 0.2827 − 0.6007
Operating Costs x3 0.5066* 0.0528 − 0.3103 0.5017*
Non-Operating Costs x4 0.1883* − 0.3631* 0.0951
Land x5 − 0.0151 0.9573*
Equity Shares x6 − 0.3541*
SEjt 0.6489

(− 1.12% and − 0.26% respectively), nevertheless, both continue being
highly efficient. KRK is also influenced by the political background and
dropped its efficiency significantly (− 23.97%). Other airports without
the pressure of the political background are able to hire the right pro­
fessional to manage the airport, improve their respective technical ef­
ficiency. For example, GDN in 2009 appoints a new CEO, and the
efficiency increases overall from 69% to 97%. LCJ with changes in 2008,
2010 and 2016 is highly efficient in all the years (98%).
These results suggest that the political power will prevalence to hire
a CEO who may not be familiar and experienced in the sector, but
coming from other specialization ending with a negative impact on
traffic (efficiency).
Fig. 3 shows that the most efficient airports show stability across the
years (KTW, RZE, and WAW). Airports with more instability are BZG
(from 2010 to 2012, and 2016) and SZZ (from 2013 to 2014). LUZ, POZ,
and WMI also show certain variability although LUZ and WMI airports
start their activity in 2012, and WMI experienced a technical problem
with the runway in the first half of 2013. With the exception of SZZ, most
airports are highly efficient in 2013. SZZ is one of the airports with the
lowest years of experience of its management for 2013 (two years) the
same as LCJ, one year for LUZ, and three years of managerial experience
for BZG and GDN). These results confirm that the management’s expe­
rience within the same airport affects its efficiency. Although managers
may have the previous airport managerial experience, airports are
business, with specific corporate governance, procedures, and internal
controls that may differ from one to other. Even the new manager having

Fig. 3. Airports’ technical efficiency.

11
A.E. Ripoll-Zarraga and S. Huderek-Glapska
significant experience in the field and relevant qualifications, every
airport is different from each other and will require a learning process of
accounting systems, approach to controlling, and internal procedures in
the sense of implantation of audit internal control.
As previously highlighted in a translog function, the first-order co­
efficients are not conclusive. With this regard, the output elasticity
concerning the inputs is estimated (scale elasticity). Table 7 presents the
summary of the returns to scale and the cross effects of inputs. Input
complementary effects are significant between employees’ salaries and
the value of the land (1.9555*), depreciation, and operating costs
(1.1533*) as well as with non-operating costs (0.4593*), between land
and equity (0.9573*), and between operating costs and equity
(0.5017*). Complementary effects mean that the joint effects of these
variables contribute to the development of traffic (passengers). The first
two indicate that higher airport capacity will increase traffic if used in
the operational activity (i.e., not having infrastructure under-use). Evi­
dence of input substitution effects are between salaries and equity shares
(− 1.4821*), salaries and operating (− 0.8694*), and land and non-
operating costs (− 0.3631*). Airports are operating at decreasing
returns to scale (SEjt <1) or close to constant returns to scale, indicating
that a 1% joint increase of the inputs does not increase the production
proportionally but in 0.65%. With this regard, some inputs may become
potentially a burden.
7. Conclusions
This study performs a stochastic frontier analysis for 12 Polish air­
ports for nine years and panel data. Traditional inputs and outputs are
enclosed in the production function and environmental variables
capturing airports managers’ experience are enclosed in the inefficiency
term. The results conclude that aircraft movement, and with less rele­
vance non-aeronautical income and equity, enhance a higher number of
passengers. The depreciation is the input with a more negative impact
on the number of passengers. The value of the land is a proxy of airports’
capacity with no impact in traffic unless there is a joint effect on em­
ployees’ costs and equity. A higher value of equity will allow airports to
invest in the long-term, in capital assets, with the requirement of having
more number of employees to maintain the premises. These results
confirm the relevance of the use of airport capacity to develop traffic
(number of passengers). Higher airport capacity will increase traffic if
used in the operational activity, but not if the infrastructure is under-use.
Airports experimenting with changes in management decrease their
technical efficiency in the following period of change. Appointed man­
agers may hold qualifications, but without experience in aviation. With
this regard, the political background has a relevant impact in some
airports that hire new managers after the political elections making
airports dropping their efficiency. Airports government-owned (or with
a majority of the government ownership) helps to decrease inefficiency.
Although the government may have influence pressuring to change
management, in the period analysed airports government-owned have
not reduced their efficiency. On the other hand, knowledge acquired by
practice combined with the academic and theoretical background may
improve airports’ performance. Further research is required.
The number of observations becomes a limitation, not only regarding
the inputs and outputs but with more relevance, the managerial skills,
knowledge, and experience in aviation. Depreciation is a proxy of the
use of infrastructure (airports’ capacity potentially under-use). Never­
theless, since airports have decentralised management, different ac­
counting policies may apply according to how the revenues are
generated (accruals convention). Therefore, for the same type of assets,
some airports may reflect more depreciation compared to others having
a higher negative impact on traffic, in efficiency. Managerial and
experience data were obtained through secondary sources. It is neces­
sary to analyse further the implication of the political party in power
with airport managers’ shortlisting and appointing processes. Addi­
tionally, to confirm if changes in management correspond to
12
Journal of Air Transport Management 92 (2021) 102035
appointments based on wide experience and knowledge rather than
political interests appointees, and the effect on airports’ technical
efficiency.
Future research will include other factors affecting the airports’
performance and the decision-making process, along with the knowl­
edge, capabilities, and experience of the managers. For example, to
analyse the impact of the composition of the Board, internal control
procedures and accounting systems, as well as the management deci­
sional factors such as the strategic plans for airports’ development,
negotiation with airlines and new routes, implementation, and control.
Additionally, a benchmark with European airports and different
ownership forms should provide further insights into the managerial
experience and the impact on airports’ technical efficiency. More spe­
cifically, further studies could enclose Central and Eastern European
Countries (Czech Republic, Slovakia, Estonia, Hungary, Latvia,
Lithuania, and also Poland) where airports are converging into market-
orientated businesses and may share similar practices.
Acknowledgements
This publication is based upon work from COST Action ATARD
TU1408, supported by COST (European Cooperation in Science and
Technology).
This study was partially supported by the National Science Centre
Poland (2015/17/D/HS4/00363).
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