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An Empirical Investigation on the Efficiency, Capacity and Ownership of Italian Airports

Author

Listed:
  • Paolo Malighetti
  • Gianmaria Martini

    ()

  • Stefano Paleari
  • Renato Redondi

Abstract

In this paper we study the efficiency of Italian airports applying a DEA model to a sample of 34 airports. We consider two outputs: aircraft movements and passengers. We find that large airports are more efficient that domestic and regional ones, i.e. small airports have spare capacity since they are, on average, more distant from the VRS frontier than large airports. Moreover, the latter are operating under decreasing returns to scale while increasing returns to scale arise in the small ones. These findings imply that further investments to develop large airports will lead to higher average costs. The Tobit regression on the estimated DEA scores shows that efficiency is positively related with the so—called hub premium (i.e. an airline dominates an airport) and with privatization, and it is negatively affected by military activities and season effects. Hence we suggest that airport’s privatization, incentives to invest in large airports (which are close to saturation of their capacity) and development plans to improve the activities in domestic and regional airports may form the benchmarks of air transportation policy in Italy at least in the short—run.

Suggested Citation

  • Paolo Malighetti & Gianmaria Martini & Stefano Paleari & Renato Redondi, 2007. "An Empirical Investigation on the Efficiency, Capacity and Ownership of Italian Airports," Working Papers 0703, Department of Economics and Technology Management, University of Bergamo.
    • Handle: RePEc:brh:wpaper:0703
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    File URL: http://hdl.handle.net/10446/424
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    Cited by:

    1. D’Alfonso, Tiziana & Daraio, Cinzia & Nastasi, Alberto, 2015. "Competition and efficiency in the Italian airport system: new insights from a conditional nonparametric frontier analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 20-38.
    2. Tsui, Wai Hong Kan & Gilbey, Andrew & Balli, Hatice Ozer, 2014. "Estimating airport efficiency of New Zealand airports," Journal of Air Transport Management, Elsevier, vol. 35(C), pages 78-86.
    3. Gitto, Simone & Mancuso, Paolo, 2010. "Airport efficiency: a DEA two stage analysis of the Italian commercial airports," MPRA Paper 34366, University Library of Munich, Germany, revised 10 Oct 2010.
    4. Liu, Dan, 2016. "Measuring aeronautical service efficiency and commercial service efficiency of East Asia airport companies: An application of Network Data Envelopment Analysis," Journal of Air Transport Management, Elsevier, vol. 52(C), pages 11-22.
    5. Roberto Colombi & Subal Kumbhakar & Gianmaria Martini & Giorgio Vittadini, 2014. "Closed-skew normality in stochastic frontiers with individual effects and long/short-run efficiency," Journal of Productivity Analysis, Springer, vol. 42(2), pages 123-136, October.
    6. Roberto Colombi & Gianmaria Martini & Giorgio Vittadini, 2011. "A Stochastic Frontier Model with short-run and long-run inefficiency random effects," Working Papers 1101, Department of Economics and Technology Management, University of Bergamo.
    7. Liu, Dan, 2017. "Evaluating the multi-period efficiency of East Asia airport companies," Journal of Air Transport Management, Elsevier, vol. 59(C), pages 71-82.
    8. Scotti, Davide & Malighetti, Paolo & Martini, Gianmaria & Volta, Nicola, 2012. "The impact of airport competition on technical efficiency: A stochastic frontier analysis applied to Italian airport," Journal of Air Transport Management, Elsevier, vol. 22(C), pages 9-15.
    9. repec:eee:jaitra:v:64:y:2017:i:pa:p:68-76 is not listed on IDEAS
    10. Voltes-Dorta, Augusto & Pagliari, Romano, 2012. "The impact of recession on airports' cost efficiency," Transport Policy, Elsevier, vol. 24(C), pages 211-222.
    11. Suau-Sanchez, Pere & Burghouwt, Guillaume & Pallares-Barbera, Montserrat, 2014. "An appraisal of the CORINE land cover database in airport catchment area analysis using a GIS approach," Journal of Air Transport Management, Elsevier, vol. 34(C), pages 12-16.
    12. Fasone, Vincenzo & Maggiore, Pasquale & Scuderi, Raffaele, 2014. "Airport ownership and financial performance: Evidence from Italy," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 163-168.
    13. Tiziana DíAlfonso & Cinzia Daraio & Alberto Nastasi, 2013. "Assesing the Impact of Competition on the Efficiency of Italian Airports," DIAG Technical Reports 2013-01, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    14. Kan Tsui, Wai Hong & Balli, Hatice Ozer & Gilbey, Andrew & Gow, Hamish, 2014. "Operational efficiency of Asia–Pacific airports," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 16-24.
    15. Gitto, Simone & Mancuso, Paolo, 2012. "Bootstrapping the Malmquist indexes for Italian airports," International Journal of Production Economics, Elsevier, vol. 135(1), pages 403-411.
    16. repec:eee:transa:v:106:y:2017:i:c:p:197-214 is not listed on IDEAS
    17. Abbruzzo, Antonino & Fasone, Vincenzo & Scuderi, Raffaele, 2016. "Operational and financial performance of Italian airport companies: A dynamic graphical model," Transport Policy, Elsevier, vol. 52(C), pages 231-237.

    More about this item

    Keywords

    Airport efficiency; DEA analysis; privatization; capacity;

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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