Measuring aeronautical service efficiency and commercial service efficiency of East Asia airport companies: An application of Network Data Envelopment Analysis

Abstract

Improving operation efficiency has become an important development strategy for many airport companies. However, there is little research on these companies' operating process decomposition or discussing the causes of inefficiency in sub-processes. This study evaluates the overall efficiency and the operational efficiencies of aeronautical service sub-process and commercial service sub-process for 10 East Asia airport companies from 2009 to 2013 using Network Data Envelopment Analysis (NDEA) and identifies the key influencing factors of respective sub-processes efficiency by employing the Panel Data model. The first-stage NDEA results indicate that only Airport Authority Hong Kong in 2012 and 2013 performed efficiently in both sub-processes and achieved overall efficiency. The overall efficiencies of all other companies are not high. During the entire study period, in aeronautical service sub-process, Beijing Capital International Airport Co., Ltd. and Shanghai International Airport Co., Ltd. performed efficiently, while in commercial service sub-process, only Hong Kong airport performed efficiently. The second-stage regression analysis implies the number of airlines served and the number of destinations have significant and positive influences on the efficiency of aeronautical service. Non-aeronautical revenues and service quality have significant and positive influences on commercial service efficiency.