Airports’ managerial human capital, ownership, and efficiency

Abstract

Airport performance differences require a better understanding of the sources of efficiency and competitive advantages. Globalization drives the air transport industry into a more market-orientated business questioning the relationship between managerial decisions and airport performance. Aviation management studies do not consider managerial capabilities and skills since they are intangible exogenous factors that are difficult to assess. In this study, a stochastic frontier analysis is performed accounting for top managers' theoretical knowledge and experience enclosed as exogenous drivers of airports' efficiency. The model analyses 12 Polish airports from 2009 to 2017. The results show a diversity of airports with a different number of passengers as efficient. The top managers' experience, when gained in the same airport, has a positive impact on airports' technical efficiency. Airports having unstable management are more technically inefficient. Independently of the efficiency level, some airports change their management after the national elections, suggesting that managers are chosen by political interest rather than by their specialised knowledge or their prior experience in aviation management. The results suggest that more practical knowledge improve airports’ performance. Airports with a majority of government ownership that are the largest ones increase their efficiency significantly, suggesting that political decisions may be discriminatory in detriment of airports managed by regional and city authorities.