German Airport Project German Airport Project DEVELOPING MEASURES OF AIRPORT PRODUCTIVITY AND...

German Airport ProjectGerman Airport Project

DEVELOPING MEASURES OF AIRPORT PRODUCTIVITY DEVELOPING MEASURES OF AIRPORT PRODUCTIVITY AND PERFORMANCE:AND PERFORMANCE:

APPLICATION OF DATA ENVELOPE ANALYSISAPPLICATION OF DATA ENVELOPE ANALYSIS

Presented by ; H.Engin DuranPresented by ; H.Engin DuranFHW-Berlin School of EconomicsFHW-Berlin School of Economics

AgendaAgenda 1.DEA TUTORİAL1.DEA TUTORİAL

-- Efficiency Basics Efficiency Basics

-İnput -İnput and and Output Oriented AnalysisOutput Oriented Analysis

-The Efficiency /Profitability Matrix-The Efficiency /Profitability Matrix

2. 2. APPLICATION OF DATA ENVELOPE ANALYSISAPPLICATION OF DATA ENVELOPE ANALYSIS

-DEA Results including Terminal and Airside efficiencyDEA Results including Terminal and Airside efficiency

-Tobit’s Regression Analysis

3.CONCLUSİONS

1.1.DEA TUTORIALDEA TUTORIAL

Definition of DEA Definition of DEA ( Data Envelopment ( Data Envelopment AnalysAnalysiis):s):

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

1.DEA TUTORİAL1.DEA TUTORİAL What is efficiency?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 Difficulty of efficiency measurement in multiple input and output caseoutput case

1.DEA TUTORİAL1.DEA TUTORİAL Relative Efficiency Approach Relative Efficiency Approach

In Multiple case relative efficiency approach :In Multiple case relative efficiency approach :

1.DEA TUTORİAL1.DEA TUTORİAL Relative Efficiency ApproachRelative Efficiency Approach

1.DEA TUTORİAL1.DEA TUTORİAL Relative Efficiency ApproachRelative Efficiency Approach

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

Maximising the efficiencyMaximising the efficiency

1.1.DEA TUTORIALDEA TUTORIAL Relative Efficiency Approach Relative Efficiency Approach

DEA modal to solved lineerlyDEA modal to solved lineerly

1.1.DEA TUTORIALDEA TUTORIALOutput Output Oriented Analysis Oriented Analysis

Simulation of two outputs y1 and y2 and a single input e.g v1Simulation of two outputs y1 and y2 and a single input e.g v1

(Y1.w1 + Y2.w2(Y1.w1 + Y2.w2 ) / v1 = Relative efficiency) / v1 = Relative efficiency

Weights are to be found by solvıng the modal lineerly:Weights are to be found by solvıng the modal lineerly:

OutputOutput oriented modal : oriented modal :

Max Ho: Y1.w1 + Y2.w2Max Ho: Y1.w1 + Y2.w2

V1=100 (say) V1=100 (say)

(Y1.w1 + Y2.w2) – v1 (Y1.w1 + Y2.w2) – v1 << 0 0

1.1.DEA TUTORIALDEA TUTORIALİnput Oriented Analysisİnput Oriented Analysis

1.1.DEA TUTORIALDEA TUTORIALInput Input OrientedOriented AnalysisAnalysis

X1.V1 + X2.V2/ Y1 = Relative inefficiencyX1.V1 + X2.V2/ Y1 = Relative inefficiency

Weights are to be found by solvıng the modal lineerly:Weights are to be found by solvıng the modal lineerly:

InputInput oriented modal : oriented modal :

Min Ho: X1.V1 +X2.V2Min Ho: X1.V1 +X2.V2Y1=100 (say) Y1=100 (say) X1.V1 +X2.V2 – Y1 > 0X1.V1 +X2.V2 – Y1 > 0 == Close to unity, higher efficiencyClose to unity, higher efficiency

1.1.DEA TUTORIALDEA TUTORIALOutput OrientedAnalysisOutput OrientedAnalysis

Output versus input oriented DEA modal;Output versus input oriented DEA modal;

1.DEA 1.DEA TUTORIALTUTORIALThe Efficiency /Profitability MatrixThe Efficiency /Profitability Matrix

2.APPLICATION OF DATA 2.APPLICATION OF DATA ENVELOPE ANALYSISENVELOPE ANALYSIS

DEVELOPING MEASURES OF AIRPORT DEVELOPING MEASURES OF AIRPORT PRODUCTIVITY AND PERFORMANCE:PRODUCTIVITY AND PERFORMANCE:

APPLICATION OF DATA ENVELOPEAPPLICATION OF DATA ENVELOPE

ANALYSISANALYSIS

David Gillen & Ashish Lall


DATA AND METHODOLOGY

Type of DataType of Data Number of Airports ; (21 all from USA)Number of Airports ; (21 all from USA) Information for each airport was assembled for

the period 1989-1993. 114 observations organized


DATA AND METHODOLOGY

Two Types of analysis to be held;

1. DEA and relative efficiency approach Terminal Efficiency Analysis Movement Efficiency Analysis

2. Tobit’s Regression Analysis

2.APPLICATION OF DATA ENVELOPE ANALYSIS2.APPLICATION OF DATA ENVELOPE ANALYSISDEA and relative efficiency approach

Terminal Efficiency Analysis

Outputs: Number of passengers, Pounds of cargo

İnputs: 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

Outputs:Air carrier movements, commuter movements

Inputs:airport area, number of runways, runway area

and number of employees

2.APPLICATION OF DATA ENVELOPE ANALYSIS2.APPLICATION OF DATA ENVELOPE ANALYSISDEA Results including Terminal and Airside efficiencyDEA 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 similarities;As hubbing rises the terminal efficiency improves but movements efficiency decreases most likely due to the feed from small commuter aircrafts

Terminals whıch 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.

2.APPLICATION OF DATA ENVELOPE ANALYSIS2.APPLICATION OF DATA ENVELOPE ANALYSIS

Tobit’s Regression Analysis Methodology;Set of Data;Methodology;Set of Data;

4 set of Data is used;4 set of Data is used;

İndependent variables; İndependent variables; dummy variables for the time period, dummy variables for hub airports,noise strategy variables and management operational and investment variables.

Dependent Variables;Log of efficiency Index of movements,close to zero means more efficient .


Tobit’s Regression Analysis


Tobit’s Regression Analysis Results and Interpretations regarding Tobit’s Regression for Results and Interpretations regarding Tobit’s Regression for

Movements: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.



Results and Interpretations regarding Tobit’s Regression for Results and Interpretations regarding Tobit’s Regression for Movements: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, thıs 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




Tobit’s Regression Analysis Results and Interpretations regarding Tobit’s Regression for terminal:Results and Interpretations regarding Tobit’s 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 İn 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



Results and Interpretations regarding Tobit’s Regression for Results and Interpretations regarding Tobit’s Regression for terminal: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.

ConclusionConclusion

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.

ConclusionConclusion

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 Expanding Gate Capacity

Market DisciplineMarket Discipline

Movement Efficiency Expanding number of Movement Efficiency Expanding number of gates in forms of common or exclusive but not preferantialgates in forms of common or exclusive but not preferantial

Conclusion Conclusion

Is Carrying out such similar project possible Is Carrying out such similar project possible for German Airports ?for German Airports ?

-Possible but difficulties exist;-Possible but difficulties exist;

Low number of international AirportsLow number of international Airports

Lack of sufficient useful dataLack of sufficient useful data

Thank you !Thank you !

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