German Airport Project

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DEVELOPING MEASURES OF AIRPORT PRODUCTIVITY AND
PERFORMANCEAPPLICATION OF DATA ENVELOPE ANALYSIS

• 
  German Airport Project

Presented by H.Engin Duran FHW-Berlin School of
Economics
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Agenda

• 1.DEA TUTORIAL
• - Efficiency Basics
• -Input and Output Oriented
  Analysis
• -The Efficiency /Profitability
  Matrix
• 2. APPLICATION OF DATA ENVELOPE ANALYSIS
• -DEA Results including
  Terminal and Airside efficiency
• -Tobits Regression Analysis
• 3.CONCLUSIONS

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1.DEA TUTORIAL

• Definition of DEA ( Data Envelopment Analysis)
• Data envelopment analysis (DEA) is a linear
  programming based technique for measuring the
  relative performance of organisational units
  where the presence of multiple inputs and outputs
  makes comparisons difficult

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1.DEA TUTORIAL What is efficiency?

• Productive efficiency refers to producing a given
  output by using the minimum possibleamounts of
  inputs, or, producing the maximum possible output
  using a given amount of inputs.
• Difficulty of efficiency measurement in multiple
  input and output case

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1.DEA TUTORIAL Relative Efficiency Approach

• In Multiple case relative efficiency approach

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1.DEA TUTORIAL Relative Efficiency Approach
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1.DEA TUTORIAL Relative Efficiency Approach

• Under these circumstances, efficiency of a target
  unit can be obtained as a solution to the
  following problem
• Maximising the efficiency

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1.DEA TUTORIAL Relative Efficiency Approach

• DEA modal to solved lineerly

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1.DEA TUTORIALOutput Oriented Analysis
Simulation of two outputs y1 and y2 and a
single input e.g v1

• (Y1.w1 Y2.w2 ) / v1 Relative efficiency
• Weights are to be found by solving the modal
  lineerly
• Output oriented modal
• Max Ho Y1.w1 Y2.w2
• V1100 (say)
  
• (Y1.w1 Y2.w2) v1 lt 0

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1.DEA TUTORIALInput Oriented Analysis
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1.DEA TUTORIALInput Oriented Analysis

• X1.V1 X2.V2/ Y1 Relative inefficiency
• Weights are to be found by solving the modal
  lineerly
• Input oriented modal
• Min Ho X1.V1 X2.V2
• Y1100 (say)
  
• X1.V1 X2.V2 Y1 gt 0
• Close to unity, higher efficiency

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1.DEA TUTORIALOutput OrientedAnalysis

• Output versus input oriented DEA modal

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1.DEA TUTORIALThe Efficiency /Profitability
Matrix
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2.APPLICATION OF DATA ENVELOPE ANALYSIS

• DEVELOPING MEASURES OF AIRPORT PRODUCTIVITY AND
  PERFORMANCE
• APPLICATION OF DATA ENVELOPE
• ANALYSIS

David Gillen Ashish Lall
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2.APPLICATION OF DATA ENVELOPE ANALYSIS

• DATA AND METHODOLOGY
• Type of Data
• Number of Airports (21 all from USA)
• Information for each airport was assembled for
  the period 1989-1993.
• 114 observations organized

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2.APPLICATION OF DATA ENVELOPE ANALYSIS

• DATA AND METHODOLOGY
• Two Types of analysis to be held
• DEA and relative efficiency approach
• Terminal Efficiency Analysis
• Movement Efficiency Analysis
• Tobits Regression Analysis

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2.APPLICATION OF DATA ENVELOPE
ANALYSISDEA and relative efficiency approach

• Terminal Efficiency Analysis
• Outputs Number of passengers, Pounds of
  cargo
• Inputs Number of runways number of gates,
  terminal area, number of employees, number of
  baggage collection belts and number of public
  parking spots.
• Movement Efficiency Analysis
• OutputsAir carrier movements, commuter
  movements
• Inputsairport area, number of runways,
  runway area
• and number of employees

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2.APPLICATION OF DATA ENVELOPE ANALYSISDEA
Results including Terminal and Airside efficiency
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2.APPLICATION OF DATA ENVELOPE ANALYSISDEA
Results including Terminal and Airside efficiency
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2.APPLICATION OF DATA ENVELOPE ANALYSISDEA
Results including Terminal and Airside efficiency
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2.APPLICATION OF DATA ENVELOPE ANALYSISDEA
Results including Terminal and Airside efficiency
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2.APPLICATION OF DATA ENVELOPE ANALYSISDEA
Results including Terminal and Airside efficiency
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2.APPLICATION OF DATA ENVELOPE ANALYSISDEA
Results including Terminal and Airside efficiency
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2.APPLICATION OF DATA ENVELOPE ANALYSISDEA
Results including Terminal and Airside efficiency

• Interpretations regarding efficiency
  measurements
• In the majority of cases the index is falling
  implying an increase in efficiency ,basically can
  be explained by a reflect in part the emergence
  from the recession in the late 1980's.
• Anchorage shows an increase in inefficiency for
  terminals but a reduction in inefficiency for
  movements reduction in passengers due to long
  haul jets being able to bypass this technical
  stop
• The hub airports exhibit some loose
  similaritiesAs hubbing rises the terminal
  efficiency improves but movements efficiency
  decreases most likely due to the feed from small
  commuter aircrafts
• Terminals which are doing better reflect new and
  expanding hub operations,traffic and economic
  growth (e.g. San Diego).
• Those doing the same are well established hub
  airports.

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2.APPLICATION OF DATA ENVELOPE ANALYSIS Tobits
Regression Analysis

• MethodologySet of Data
• 4 set of Data is used
• Independent variables dummy variables for the
  time period, dummy variables for hub
  airports,noise strategy variables and management
  operational and investment variables.
• Dependent VariablesLog of efficiency Index of
  movements,close to zero means more efficient .

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2.APPLICATION OF DATA ENVELOPE ANALYSIS Tobits
Regression Analysis
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2.APPLICATION OF DATA ENVELOPE ANALYSIS Tobits
Regression Analysis

• Results and Interpretations regarding Tobits
  Regression for Movements
• The time dummies are not significant so there is
  no apparent trend in the data or anomalies in one
  year or another
• The hub dummies show clearly that primary hubs
  increase the efficient use of the airside.The
  former hubs have a large number of feeder flights
  hence increasing the level of efficiency
• Using a preferential flight path or limiting the
  hours of operation reduces inefficiency while all
  the remaining noise management strategies tend to
  increase inefficiency.

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2.APPLICATION OF DATA ENVELOPE ANALYSIS Tobits
Regression Analysis

• Results and Interpretations regarding Tobits
  Regression for Movements
• Limiting the hours an airport leads reducing
  inefficiency due to given limitations utilizes
  efficiency of airports ,Increasing the number of
  boarding gates can increase airside efficiency
  while increasing the number of runways has no
  impact
• Financing strategy of airport leads to change in
  efficiency. Airports that have residual financing
  have a higher level of efficiency. Under residual
  financing the airlines are at risk for revenue
  shortfalls, this brings pressure to bear on the
  airport to ensure greater efficiency on the
  airside.
• The preferred noise management strategy is to in
  fact limit operating hours and to use
  preferential flight paths would increase
  efficiency

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2.APPLICATION OF DATA ENVELOPE ANALYSIS Tobits
Regression Analysis
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2.APPLICATION OF DATA ENVELOPE ANALYSIS Tobits
Regression Analysis

• Results and Interpretations regarding Tobits
  Regression for terminal
• Terminals at airports that are hubs operate at a
  higher level of efficiency than non-hubs.
• The way in which gates are managed has an impact
  on efficiency. The greater the proportion of
  common and exclusive use gates the greater the
  reduction in inefficiency.In Common use of gates
  airports playing major role and take care for
  maximising efficiency at the mean time In
  exclusive use of gates carriers do take care
  about efficiency
• As the proportion of preferential use gates rises
  we get the opposite result efficiency falls. A
  carrier which has preferential treatment may try
  to use gates as a barrier to entry and not
  necessarily use them efficiently

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2.APPLICATION OF DATA ENVELOPE ANALYSIS Tobits
Regression Analysis

• Results and Interpretations regarding Tobits
  Regression for terminal
• Having greater proportions of international
  passengers is one strategy which has a marked
  impact on improving terminal efficiency.
• Adding gates is also effective but how one
  manages those gates is also important
• Bigger terminals are not the solution to
  improving efficiency but allowing greater access
  to aircraft and passengers with greater numbers
  of gates will.

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Conclusion

• In the majority of cases the index is falling
  implying an increase in efficiency (or reduction
  in inefficiency). This can reflect in
• part the emergence from the recession in the
  late 1980's.
• The best thing airport management is to improve
  efficiency is create pressures of productive and
  dynamic efficiency through corportization or
  privatization 'residual financing' variable.

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Conclusion

• The productivity improvement is a combination of
  external market forces as well as internal firm
  reorganization and changing management incentives
  - intra-firm market forces
• Most important items
• Airside Efficiency
  Having hubs ,
• 
  Expanding Gate Capacity
• 
  Market Discipline
• Movement Efficiency
  Expanding number of gates in forms of common or
  exclusive but not preferantial

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Conclusion

• Is Carrying out such similar project possible
  for German Airports ?
• -Possible but difficulties exist
• Low number of international Airports
• Lack of sufficient useful data

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Thank you !