Developing measures of airport productivity and performance: an application of data envelopment analysis

Abstract

Abstract Many studies have investigated the financial results and economic productivity of airlines but few have investigated the productivity or performance of airports, and how changes in the industry may have affected them. Most airports measure performance strictly in accounting terms by looking at only total costs and revenues and the resulting surpluses or deficits. Few utilize any type of productivity measure or performance indicator. This paper applies Data Envelopment Analysis to assess the performance of airports. It is used to construct performance indices on the basis of the multiple outputs which airports produce and the multiple inputs which they utilize. In particular we develop productivity measures for terminals and airside operations. The performance measures are then used in a second stage Tobit regression in which environmental, structural and managerial variables are included. The regression results provide a ‘net’ performance index and also identify which variables the managers have some control over and what the relative importance of each variable is in affecting performance. The data set contains a panel of 21 U.S. airports over a five-year period.