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Multi-Product Cost Analysis of US Airports

Patrick McCarthy

A chapter in Airline Efficiency, 2016, vol. 5, pp 243-281 from Emerald Publishing Ltd

Abstract: Abstract This research estimates a multi-product flexible cost function of airport variable costs. Data for the analysis are a panel of 50 airports from 1996 to 2008. Output includes domestic and international departures, non-aeronautical operating revenues, and the number of transport workload units, where a workload unit is a passenger or the equivalent of a 220 pound packet of cargo. The quasi-fixed factor is the equivalent number of 10,000' × 150' runways at an airport. After correcting for first-order serial correlation, the analysis finds that airports operate under constant returns to runway utilization and multi-product decreasing returns to scale, production technology is consistent with product specific returns to capacity utilization and anti-complementarity across outputs, and general airport operations have input substitution possibilities with personnel and contractual repair/maintenance inputs. The study also finds 1.05% technology progress over the sample period, due to strong growth prior to 2001, with similar productivity growth rates for large and medium hubs.

Keywords: Airport costs; transport infrastructure; translog; multi-product output; serial correlation; C33; L93; R41 (search for similar items in EconPapers)
Date: 2016
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