Abstract
AbstractThis paper assesses the financial performance of 35 European airports for the decade 1990 to 2000, comparing those subject to partial or full privatisation with those still in public ownership. In contrast to earlier research, the outcomes of partial factor productivity (PFP), financial ratio (FRA) and data envelopment analysis (DEA) are evaluated, in order to investigate differences attributable to the degree of privatisation. Changes in performance after a change in ownership structure are reviewed. The analysis of sample data reveals economically meaningful and statistically significant differences between publicly owned and privatised airports. The major differences lie in operating efficiency, capital productivity and capital structure. Although partially and fully privatised airports operate more efficiently, this does not translate into significantly higher returns on shareholders’ funds. Due to their at least indirectly government-backed credit standing, publicly owned airport companies can assume more debt relative to their respective equity. This results in considerably higher gearing and financial leverage, which compensates for the comparatively low return rate on assets.
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