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UBC Theses and Dissertations

The effect of governance structures on airport efficiency performance – the North American case Zhao, Qi


Over the last two decades, there have been widespread moves to corporatize, privatize, and deregulate airports around the world. These changes have created a great diversity of airport ownership and governance structures. Against this backdrop, this paper applies a stochastic cost frontier model to examine how the two dominant governance forms of publically owned airports in North America, namely operation and governance by a government branch and by an airport authority, affect airport efficiency performance. The data for this study is taken over the 2002-2008 period from 54 airports in Canada and the US and provided for this thesis in confidence by the ATRS Global Airport Performance Benchmarking Project. This study sets out to prove that these two types of governance structures can have significant effects on the efficiency performance of airports in North America, with the results showing that (1) the airports operated by an airport authority achieve higher cost efficiency than those operated by a government branch; and (2) the airports operated by a government branch tend to have lower labour share than those operated by an airport authority. Moreover, by separating Canadian and US airport authorities, our study also attempts to determine whether Canadian and US airport authorities differ in their impact on airport (cost) efficiency performance and hence should be considered as different types of airport governance. However, our regression models have not discerned there is any statistically significant difference as to the efficiency performance between airports operated by US and Canadian airport authorities. It seems therefore that US and Canadian airport authorities are similar in nature and should not be considered as different types of airport governance.

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