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

Nicole Adler; Vanessa Liebert

doi:10.1016/j.tra.2014.03.008

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

Nicole Adler^*, Vanessa Liebert

^*Corresponding author for this work

Business Administration

Research output: Contribution to journal › Article › peer-review

92 Scopus citations

Abstract

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

Original language	American English
Pages (from-to)	92-109
Number of pages	18
Journal	Transportation Research, Part A: Policy and Practice
Volume	64
DOIs	https://doi.org/10.1016/j.tra.2014.03.008
State	Published - Jun 2014

Bibliographical note

Funding Information:
We would like to thank the German Airport Performance research project funded by the German Ministry of Education and Research for providing the data. Further, we thank Prof. David Gillen, Prof. Hans-Martin Niemeier, and the participants of the World Bank roundtable on Transport Productivity in February 2010, the German Aviation Research Society Conference in November 2010 and the Aviation seminar at the University of British Columbia in February 2011 for fruitful discussions. Nicole Adler thanks the Recanati Fund for partial funding of this research.

Keywords

Airport efficiency
Competition
Data envelopment analysis
Ownership form
Pricing
Regulation

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10.1016/j.tra.2014.03.008

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

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

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author = "Nicole Adler and Vanessa Liebert",

note = "Funding Information: We would like to thank the German Airport Performance research project funded by the German Ministry of Education and Research for providing the data. Further, we thank Prof. David Gillen, Prof. Hans-Martin Niemeier, and the participants of the World Bank roundtable on Transport Productivity in February 2010, the German Aviation Research Society Conference in November 2010 and the Aviation seminar at the University of British Columbia in February 2011 for fruitful discussions. Nicole Adler thanks the Recanati Fund for partial funding of this research. ",

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

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ER -

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

Abstract

Bibliographical note

Keywords

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