Inefficiencies and scale economies of European airport operations

In this paper we argue that European airports, on average, are inefficient. Airline inefficiency (low load factors) appears to contribute significantly to airport inefficiency in terms of air passenger movements. We find that the average airport in Europe operates under constant returns to scale in "producing" air transport movements and under increasing returns to scale in producing passenger movements. These operating characteristics are statistically tested in a stochastic frontier model. Using data envelopment analysis, in which the number of runways is used as a fixed factor, technical and scale efficiency coefficients have been assessed. There appears to be no region-specific effect in that an airport in a certain country or region is on average more (in)efficient. (C) 2003 Elsevier Ltd. All rights reserved.