Small regional airport sustainability: Lessons from benchmarking

Small and regional airports frequently suffer from limited traffic given minimum fixed infrastructure requirements and insufficient revenues to cover their costs. The question is whether such airports could be structured, managed and possibly financially supported in order to survive efficiently. Efficient operations contribute to decreasing the financial dependency of airports on subsidies or the likelihood of foreclosure. This paper applies data envelopment analysis, assuming that the aeronautical output is exogenous, in order to estimate the relative efficiencies of a set of 85 European regional airports over the last decade. We estimate the potential savings and revenue opportunities to be in the order of 50% and 25% respectively because cost increases were in excess of any changes in demand over the timeframe. Using second stage regressions we examine the reasons for poor performance, which include discretionary variables such as the failure to search for commercial opportunities or to produce ground-handling and fueling activities in-house. We also note that belonging to an airport system reduces efficiency in the order of 5%. Finally, the break-even passenger throughput over the last decade more than doubled to 464 thousand, however airports behaving efficiently could have covered their annual operating budget with a mere 166 thousand passengers annually.