An application of Data Envelopment Analysis (DEA) to measure the efficiency of the Italian airports after the privatisation

During the last years, we have observed a conceptual change in the management and structure of Italian airport sector because of the privatization process. In many cases, it has been accompanied by a process of partial or total privatization of services and infrastructures. The main purpose of this paper is to identify the best performers among the 19 Italian airport over the period 2000-2004 and, consequently, to determine the main variables that could help to improve the efficiency, which are under control of airport managers. We have analyzed the technical efficiency of the Italian airports applying Data Envelopment Analysis (DEA), employing an output orientation because of the difficulty in disinvesting to save costs. Moreover, we have calculated the efficiency of scale in order to identify the nature of the return to scale and to give strategic suggestion. As outputs variables we have chosen only physical variables because we wanted to focus on the core activities of each airport (number of passengers, cargo and traffic for each aircraft); as input variables we have chosen both economic (staff costs and "other costs") and physical (size of the landing strip, expressed in metres) variables. The term "other costs" includes the cost of production which are not connected with cost of capital. All data has been obtained from the annual balance sheets of each airport, annual reports of ENAC and Assaeroporti. The main results have highlighted that ten airports laid on the efficiency frontier at least for one year and, among them, three has been efficient for four years. These results show that the airports are reacting to the process of partial or total privatization.