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The Efficiency of European Airports: Do the Importance in the EU Network and the Intensity of Competition Matter?

Author

Listed:
  • Paolo Malighetti
  • Gianmaria Martini
  • Stefano Paleari
  • Renato Redondi

Abstract

In this paper we study the efficiency of European airports by applying a DEA model to 57 airports. The sample covers 95% of all the airports with a traffic of at least 5 millions passengers (yearly). We find that largest airports (with more than 10 millions passengers) are more efficient, while airports classified by the European Commission as national have spare capacity and should improve their performances. Largest airports have decreasing returns to scale, while national ones will get a reduction in their average costs if they increase their size of operation. Moreover we investigated the determinants of the estimated efficiency scores. The Tobit regression shows that efficiency is positively related with airport’s connectivity index in the European network (i.e. airports with better connections at the network are more efficient) and with the intensity of competition between airports (i.e. airports with nearby competitors on several destinations tend to be more efficient). These results imply that policy makers (in regulating airports’ fares and subsidizing development plans) and managers (in evaluating their assets utilization) should take into account that a well connected destinations map and the presence of indirect competition coming from other airports can improve the performances in the management of European airports.

Suggested Citation

  • Paolo Malighetti & Gianmaria Martini & Stefano Paleari & Renato Redondi, 2008. "The Efficiency of European Airports: Do the Importance in the EU Network and the Intensity of Competition Matter?," Working Papers 0804, Department of Management, Information and Production Engineering, University of Bergamo.
    • Handle: RePEc:brh:wpaper:0804
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    File URL: http://hdl.handle.net/10446/410
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    Citations

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    Cited by:

    1. Pavlyuk, Dmitry, 2012. "Airport Benchmarking and Spatial Competition: a Critical Review," MPRA Paper 43391, University Library of Munich, Germany.
    2. Tolga Ülkü & Vahidin Jeleskovic & Jürgen Müller, 2014. "How scale and institutional setting explain the costs of small airports? -An application of spatial regression analysis," MAGKS Papers on Economics 201435, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item

    Keywords

    Air trasportation; efficiency; connectivity; airports’ competition;
    All these keywords.

    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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