This is an outdated version published on 2023-06-30. Read the most recent version.

Airports’ public infrastructure and sources of inefficiency

Authors

  • Ane Elixabete Ripoll-Zarraga Department of Business, Universitat Autònoma de Barcelona, Cerdanyola del Valles, Spain

Keywords:

Stochastic frontier analysis (SFA), Environmental variables, Fixed effects, Catchment areas, AENA, Airports

Abstract

Purpose –The Spanish airport system contains several regional airports within an amenity distance and alternative travel modes. Profitable airports cross-subsidise small airports, which are not required for regional development or connectivity. Airports are government-owned and centralised-managed by Spanish Airports and Air Navigation (AENA, for its Spanish acronym). This study aims to analyse the probability of an under-used public infrastructure and the AENA’s managerial ability as per the financial sustainability of the network in the long term. Design/methodology/approach – The national regulatory framework determines the airports’ environment. Six airports revealed unobserved heterogeneity, avoiding model misspecification. The framework is defined through proxies of the singularities of the Spanish framework: public investments and geographical specifications. The stochastic frontier analysis model follows two time-varying specifications, accounting for airports’ environmental factors, to ensure the robustness of the results to differ from the inefficiency caused by AENA and external factors. Findings – Airports’ infrastructure capacity and traffic are not correlated; regional airports become a financial burden for the system unless they specialise or differentiate. Proxies defining the airports’ context are relevant. Because airports do not compete for airlines and passengers, there are too many regional airports with little traffic, resulting in disused public infrastructure that falls far short of improving connectivity and regional development. Originality/value – This study contributes to paying attention to the characteristics of the regulatory framework, such as management strongly centralised in AENA, airport charges decided by the owner, lack of competition and lack of an independent regulatory entity. Another original contribution considers reliable capital measures (airports’ infrastructure).

DOI: https://doi.org/10.1108/JEFAS-12-2021-0269

Downloads

Download data is not yet available.

References

Amsler, C., Prokhorov, A. and Schmidt, P. (2016), “Endogeneity in stochastic frontier models”, Journal of Econometrics, Vol. 190 No. 2, pp. 280-288, doi: 10.1016/j.jeconom.2015.06.013.

Ashford, N., Stanton, H. and Moore, C. (1996), Airport Operations, McGraw-Hill Education, New York.

Ayvar-Campos, F.J., Navarro Chávez, J.C.L. and Giménez, V. (2019), “Generation and distribution of income in Mexico, 1990-2015”, Journal of Economics Finance and Administrative Science, Vol. 25 No. 49, pp. 163-180, doi: 10.1108/JEFAS-04-2018-0040.

Barros, C.P. (2008a), “Technical change and productivity growth in airports: a case study”, Transportation Research Part A: Policy and Practice, Vol. 42 No. 5, pp. 818-832, doi: 10.1016/j.tra.2008.01.029.

Barros, C.P. (2008b), “Technical efficiency of UK airports”, Journal of Air Transport Management, Vol. 14 No. 4, pp. 175-178, doi: 10.1016/j.jairtraman.2008.04.002.

Barros, C.P., Wanke, P., Nwaogbe, O.R. and Azad, M.A.K. (2017), “Efficiency in Nigerian airports”, Case Studies on Transport Policy, Vol. 5 No. 4, pp. 573-579, doi: 10.1016/j.cstp.2017.10.003.

Battese, G.E. and Coelli, T.J. (1988), “Prediction of firm-level technical efficiencies with a generalized Frontier production function and panel data”, Journal of Econometrics, Vol. 38 No. 3, pp. 387-399, doi: 10.1016/0304-4076(88)90053-x.

Battese, G.E. and Coelli, T.J. (1992), “Frontier production functions, technical efficiency and panel data: with application to Paddy Farmers in India”, Journal of Productivity Analysis, Vol. 3 Nos 1-2, pp. 153-169, doi: 10.1007/bf00158774.

Battese, G.E. and Coelli, T.J. (1995), “A model for technical inefficiency effects in a stochastic Frontier production function for panel data”, Empirical Economics, Vol. 20 No. 2, pp. 325-332, doi: 10.1007/bf01205442.

Bezerra, G.C. and Gomes, C.F. (2016), “Performance measurement in airport settings: a systematic literature review”, Benchmarking: An International Journal, Vol. 23 No. 4, pp. 1027-1050, doi: 10.1108/bij-10-2015-0099.

Bilotkach, V. and Bush, H. (2020), “Airport competition from airports’ perspective: evidence from a survey of European airports”, Competition and Regulation in Network Industries (CRNI), Vol. 21 No. 3, pp. 275-296, doi: 10.1177/178359172093787.

Boletín Oficial del Estado (2018), “BOE-A-2018-3940”, available at: https://www.boe.es/diario_boe/txt.php?id=BOE-A-2018-3940

Cambra de Comerç de Barcelona (2010), “El modelo de gestión aeroportuaria en España: marco institucional y jurídico y líneas maestras para una propuesta de cambio”, 4th of November 2010.

Chen, Y.-H. and Lai, P.-L. (2019), “Determining the relationship between ownership and technical efficiency by using a dynamic stochastic production Frontier approach”, Journal of Air Transport Management, Vol. 75, pp. 61-67, doi: 10.1016/j.jairtraman.2018.12.001.

Chesher, A. (1984), “Testing for neglected heterogeneity”, Econometrica, Vol. 52 No. 4, p. 865, doi: 10.2307/1911188.

Coelli, T. and Perelman, S. (1999), “A comparison of parametric and non-parametric distance functions: with application to European railways”, European Journal of Operational Research, Vol. 117 No. 2, pp. 326-339, doi: 10.1016/s0377-2217(98)00271-9.

Comisión Nacional de los Mercados y la Competencia [CNMC] (2014), “El Sector Aeroportuario en España: Situación Actual y Recomendaciones de Liberización”, Documento de Regulación Aeroportuaria (DORA 2017-2021), available at: https://www.seguridadaerea.gob.es/lang_castellano/aeropuertos_2/dora/default.aspx (accessed January 2017).

Coto-Millán, P., Carrera-Gámez, G., Castanedo-Galán, J., Inglada, V., Núñez-Sánchez, R., Pesquera, M.A. and Sainz, R. (2007), “Efficiency stochastic frontiers: a panel data analysis for Spanish Airports (1992-1994)”, Essays on Transport Economics, pp. 121-126, doi: 10.1007/978-3-7908-1765-2_9.

Coto-Millán, P., Casares-Hontañón, P., Inglada, V., Agüeros, M., Pesquera, M.A. and Badiola, A. (2014), “Small is beautiful? The impact of economic crisis, low-cost carriers, and size on efficiency in Spanish airports (2009–2011)”, Journal of Air Transport Management, Vol. 40, pp. 34-41, doi: 10.1016/j.jairtraman.2014.05.006.

Coto-Millán, P., Inglada, V., Fernández, X.L., Inglada-Pérez, L. and Pesquera, M.A. (2016), “The effect procargo on technical and scale efficiency at airports: the case of Spanish airports (2009-2011)”, Utilities Policy, Vol. 39, pp. 29-35.

Council of Ministers (2011), “Civil Aviation Authority Resolution 20th of February 2017”, Boletín Oficial del Estado (BOE), Vol. 49.

Emrouznejad, A. and Yang, G.-L. (2018), “A survey and analysis of the first 40 years of scholarly literature in DEA: 1978-2016”, Socio-Economic Planning Sciences, Vol. 61, pp. 4-8, doi: 10.1016/j.seps.2017.01.008.

European Commission (2011), “Flightpath 2050”, Europe’s’ Vision for Aviation, available at: https://ec.europa.eu/transport/sites/default/files/modes/air/doc/flightpath2050.pdf

European Commission (2016), “State aid: commission orders Spain to recover incompatible State aid for high speed train test centre from railway operator ADIF”, Brussels. Press release, July, available at: https://ec.europa.eu/commission/presscorner/detail/en/IP_16_2621

European Commission (2019), “Evaluation of the directive 2009/12/EC of the European parliament and of the Council of 11 March 2009 on airport charges”, Brussels, July, 2019, available at: https://ec.europa.eu/transport/sites/transport/files/legislation/swd20190289.pdf

European Council (2019), “Excessive deficit: Spain exits procedures as deficit reduced below 3%”, available at: https://www.consilium.europa.eu/en/press/press-releases/2019/06/14/excessive-deficit-spain-exits-procedure-as-deficit-reduced-below-3/

European Court of Auditors (2014), “EU-funded airport infrastructures: poor value for money”, Special Report, 21, available at: http://www.politico.eu/article/eu-wasted-money-on-new-airports-say-auditors/

Financial Reporting Council (2014), “True and fair concept”, London, June, available at: https://www.frc.org.uk/accountants/accounting-and-reporting-policy/true-and-fair-concept

Gallegos-Monteagudo, A. (1992), “Performance estratégica y económica de empresas estatales: el caso de las aerolíneas Latioamericanas”, Journal of Economics, Finance and Administrative Science, Vol. 1 No. 1, pp. 93-99, doi: 10.46631/jefas.1992.n1.04.

Gillen, D. and Lall, A. (1997), “Developing measures of airport productivity and performance: an application of data envelopment analysis”, Transportation Research Part E: Logistics and Transportation Review, Vol. 33 No. 4, pp. 261-273.

Greene, W. (2003), Econometric Analysis, Prentice Hall, Englewood Cliffs.

Hattori, T. (2002), “Relative performance of U.S. And Japanese electricity distribution: an application of stochastic frontier analysis”, Journal of Productivity Analysis, Vol. 18, pp. 269-284, doi: 10.1023/A:1020695709797.

Humphreys, I. (1999), “Privatisation and commercialisation changes in UK airport ownerships patterns”, Journal of Transport Geography, Vol. 7, pp. 121-134.

International Air Transport Association [IATA] (2013), “Airport competition”, IATA Economic Briefing, No. 11, November, p. 17.

International Air Transport Association [IATA] (2018), “Airport infrastructure investment –user consultation”, available at: https://www.iata.org/contentassets/d1d4d535bf1c4ba695f43e9beff8294f/airport-infrastructure-investment---user-consultation.pdf

Kumbhakar, S.C. (1990), “Production frontiers, panel data and time-varying technical inefficiency”, Journal of Econometrics, Vol. 46, pp. 201-2012.

Kumbhakar, S.C. and Lovell, C.A. (2000), Stochastic Frontier Analysis, Cambridge University Press, Cambridge.

Kumbhakar, S.C., Parmeter, C.F. and Tsionas, E.G. (2013), “A zero inefficiency stochastic Frontier model”, Journal of Econometrics, Vol. 172 No. 1, pp. 66-76, doi: 10.1016/j.jeconom.2012.08.021.

Lozano, S. and Gutiérrez, E. (2009), “Efficiency analysis and target setting of Spanish airports”, Networks and Spatial Economics, Vol. 11, pp. 139-157, doi: 10.1007/s11067-008-9096-1.

Marques, R.C. and Barros, C.P. (2010), “Performance of European airports: regulation, ownership and managerial efficiency”, Applied Economics Letters, Vol. 18 No. 1, pp. 29-37, doi: 10.1080/13504850903409763.

Martin, J.C. and Roman, C. (2001), “An application of DEA to measure the efficiency of Spanish airports prior to privatization”, Journal of Air Transport Management, Vol. 7 No. 3, pp. 149-157, doi: 10.1016/S0969-6997(00)00044-2.

Martin, J.C. and Roman, C. (2006), “A benchmarking analysis of Spanish commercial airports. A comparison between SMOP and DEA ranking methods”, Networks and Spatial Economics, Vol. 6 No. 2, pp. 111-134, doi: 10.1007/s11067-006-7696-1.

Martin, J.C., Roman, C. and Voltes-Dorta, A. (2009), “A stochastic Frontier analysis to estimate the relative efficiency of the Spanish airports”, Journal of Productivity Analysis, Vol. 31 No. 3, pp. 163-176, doi: 10.1016/j.tre.2010.09.007.

Martin, J.C., Roman, C. and Voltes-Dorta, A. (2011), “Scale economies and marginal costs in Spanish airports”, Transportation Research Part E, Vol. 47, pp. 238-248.

Murillo-Melchor, C. (1999), “An Analysis of technical efficiency and productivity changes in Spanish Airports using the Malmquist Index”, International Journal of Transport Economics, Vol. 26 No. 2, pp. 271-292.

Oum, T.H., Yan, J. and Yu, Ch. (2008), “Ownership forms matter for airport efficiency: a stochastic Frontier investigation of worldwide airports”, Journal of Urban Economics, Vol. 62 No. 2, pp. 422-425, doi: 10.1016/j.jue.2008.03.001.

Parker, D. (1999), “The performance of BAA before and after privatisation”, Journal of Transport Economics and Policy, Vol. 33, pp. 133-145.

Pels, E., Nijkamp, P. and Rietveld, P. (2001), “Relative efficiency of European airports”, Transport Policy, Vol. 8 No. 3, pp. 183-192, doi: 10.1016/S0967-070X(01)00012-9.

Pels, E., Nijkamp, P. and Rietveld, P. (2003), “Inefficiencies and scale economies of European airport operations”, Transportation Research Part E: Logistics and Transportation Review, Vol. 39 No. 5, pp. 341-361, doi: 10.1016/S1366-5545(03)00016-4.

Ripoll-Zarraga, A.E. (2018), “The Spanish airport system: a critical assessment of the impact of AENA's managerial decisions on airports' technical efficiencies”, Doctoral Thesis, Universitat Autònoma de Barcelona, available at: https://www.tdx.cat/handle/10803/665608

Ripoll-Zarraga, A.E. and Huderek-Glapska, S. (2021), “Airports' managerial human capital, ownership, and efficiency”, Journal of Air Transport Management, Vol. 92, 102035, doi: 10.1016/j.jairtraman.2021.102035.

Ripoll-Zarraga, A.E. and Lozano, S. (2019), “A centralised DEA approach to resource reallocation in Spanish airports”, Annals of Operations Research, Vol. 288 No. 2, pp. 701-732, doi: 10.1007/s10479-019-03271-6.

Ripoll-Zarraga, A.E. and Mar-Molinero, C. (2020), “Exploring the reasons for efficiency in Spanish airports”, Transport Policy, Vol. 99, pp. 186-202, doi: 10.1016/j.tranpol.2020.08.021.

Ripoll-Zarraga, A.E. and Raya, J.M. (2020), “Tourism indicators and airports' technical efficiency”, Annals of Tourism Research, Vol. 80, 102819, doi: 10.1007/j.annals.2019.102819.

Ripoll-Zarraga, A.E., Portillo, F. and Mar-Molinero, C. (2023), “The impact of the economic crisis on the efficiency of Spanish airports: a DEA Visualisation analysis”, Research in Transportation Business and Management, Vol. 46, 100689, doi: 10.1016/j.rtbm.2021.100689.

Salazar de la Cruz, F. (1999), “Technical, allocative and economic efficiency in transport”, International Journal of Transport Economics, Vol. 26 No. 2, pp. 255-270.

Salcedo, N.U. (2021), “Editorial: review and roadmap from the last 10 years (2010–2020)”, Journal of Economics, Finance and Administrative Science, Vol. 26 No. 51, pp. 2-6, doi: 10.1108/JEFAS-06-2021-271.

Scotti, D., Malighetti, P., Martini, G. and Volta, N. (2012), “The impact of airport competition on technical efficiency: a stochastic Frontier analysis applied to Italian airports”, Journal of Air Transport Management, Vol. 22, pp. 9-15, doi: 10.1016/j.jairtraman.2012.01.003.

Tapiador, F.J., Mateos, A. and Marti-Henneberg, J. (2008), “The geographical efficiency of Spain's regional airports: a quantitative analysis”, Journal of Air Transport Management, Vol. 14 No. 4, pp. 205-212.

Tovar, B. and Martin-Cejas, R.R. (2009), “Are outsourcing and non-aeronautical revenues important drivers in the efficiency of Spanish airports?”, Journal of Air Transport Management, Vol. 15 No. 5, pp. 217-220.

Tovar, B. and Martin-Cejas, R.R. (2010), “Technical efficiency and productivity changes in Spanish airports: a parametric distance functions approach”, Transportation Research Part E, Vol. 46 No. 5, pp. 249-260.

Wang, H. and Schmidt, P. (2001), “One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels”, Journal of Productivity Analysis, Vol. 18 No. 2, pp. 129-144.

World Finance (2016), “Spain's infrastructure woes are more serious than they appear”, March 2016, available at: http://www.worldfinance.com/infrastructure-investment/government-policy/spains-infrastructure-woes-are-more-serious-than-they-appear

Yu, M.-M. (2010), “Assessment of airport performance using the SBM-NDEA model”, Omega, Vol. 38 No. 6, pp. 440-452, doi: 10.1016/j.omega.2009.11.003.

Zhang, T. and Garvey, E. (2008), “A comparative analysis of multi-output Frontier models”, Journal of Zhejiang University Science A, Vol. 9, pp. 1426-1436, doi: 10.1631/jzus.A0820121.

Downloads

Published

2023-06-30

Versions

How to Cite

Ripoll-Zarraga, A. E. (2023). Airports’ public infrastructure and sources of inefficiency. Journal of Economics, Finance and Administrative Science, 28(55), 1–2. Retrieved from https://revistas.esan.edu.pe/index.php/jefas/article/view/661