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An investigation of key issues for improving quality of airport benchmarking : focus on empirical methods Lin, Zhuo

Abstract

Significant changes have occurred over the last three decades in the aviation industry. Deregulation of the airline industry has led to increasingly competitive airline markets domestically and internationally. Consequently, views about airports began to change: from that of a public utility to a more business/commercial entity, which lead to the worldwide moves towards corporatization, commercialization, and privatization of airports. However, most airports enjoy a quasi-monopolistic position and may abuse such a position. Airport performance measurement and benchmarking, therefore, has become increasingly important for airlines, investors, regulators, and airport managers to ensure efficient operation of airports. The main objectives of this study are to empirically compare the three key methodologies for measuring airport efficiency, namely the productivity index method, Data Envelopment Analysis (DEA) method, and stochastic frontier method; and to examine the effects of regional price variations on efficiency measures and rankings. The study is based on the data for 62 North American airports which was kindly provided in confidence by the ATRS Global Airport Performance Benchmarking project. The main findings are: (a) the efficiency scores and airport rankings measured by the three alternative methods are quite similar to each others among the top and bottom ranking airports, whereas considerable differences are observed among the airports in the middle; and (b) As expected, regional price level adjustments help improve the accuracy of efficiency measurement, suggesting that whenever possible regionally differentiated price data should be used instead of national aggregate price data.

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Attribution-NonCommercial-NoDerivatives 4.0 International

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