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Does ANSP size and scope matter in the European ANS market? A multi-product stochastic frontier approach

Sven Buyle, Wouter Dewulf, Franziska Kupfer, Evy Onghena, Hilde Meersman and Eddy Van de Voorde

Journal of Air Transport Management, 2020, vol. 83, issue C

Abstract: This paper assesses the existence of economies of scale and cost complementarities in the European air navigation services (ANS) industry to provide policymakers and air navigation service providers (ANSPs) insight into the economic viability of possible industry-led consolidation and unbundling opportunities. While previous studies using parametric methods made abstraction of the multi-product nature of the ANS industry, this paper tries to fill that gap by estimating a stochastic multi-product translog cost frontier. The existence of economies of density and scale is evaluated from the estimated cost frontier at the sample means as well as for individual ANSPs in the panel. The results suggest that during the period from 2006 to 2016 the European ANS industry faced economies of density and produced at constant economies of scale in the sample means. However, cost complementarities do not seem to be present.

Keywords: Stochastic frontier analysis; Air navigation service providers; Economies of density; Economies of scale; Cost complementarities (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jairtraman.2019.101754

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