Efficiency Stochastic Frontiers: a Panel Data Analysis for Spanish Airports (1992–1994)

8.5 Conclusions The most efficient airports are the ones of Madrid, Barcelona, Palma de Mallorca, Malaga, Gran Canaria, Tenerife South, Alicante, Ibiza, Fuerteventura, Menorca and Bilbao. These airports have the highest traffic of passengers (between 3 million and 19 million). Airports of medium efficiency are the ones of Tenerife North, Valencia, Seville, Santiago, Almeria, Las Palmas, Asturias, Vigo, Reus, Jerez de la Frontera, Girona and La Coruña. These airports have medium volumes of traffic (between 400 thousand and 3 million). The airports of Granada, Pamplona, Melilla, San Sebastian, Santander, Zaragoza, Valladolid, Murcia and Hierro have a low efficiency, with volumes of traffic of up to 400 thousand passengers. The airports of Madrid and Barcelona present constant returns to scale because they have extinguished their scale economies as they have achieved their optimum size. However, the airports of Malaga and Alicante present decreasing returns. A possible reason for this is the strong stationarity in traffics, which requires that airports are big in order to answer to the peaks in demand, while traffics are low the rest of the year. The remaining airports present increasing returns, as expected. These airports will extinguish their returns to scale economies as they increase the traffic (we have estimated an average increase around 5% during the last 10 years), thus achieving the optimum size.