Productive and Operational Efficiency of US Airports with Joint Consideration of both Desirable and Undesirable Outputs

In the past few decades, as the aviation industry has become more competitive, airports have had to adapt their operations to become more productive. A number of studies have been conducted comparing productivity and operational efficiency of airports around the world. This study differs from previous work in that both desirable and undesirable outputs are considered. The result of the analysis is an efficiency measure that provides a comprehensive and practical basis for airport comparisons. A directional output distance function, rather than the traditional Data Envelopment Analysis (DEA), was applied to assess operational efficiency at 56 US airports from 2000 - 2003. Airports were modeled as production units with three common physical inputs; i.e., land area, number of runways, and area of runways, and three desirable outputs; i.e., passengers, number of non-delayed flights, and cargo throughput. Two undesirable outputs were also considered; i.e., number of delayed flights and time delays. For comparison purposes, a DEA model without consideration of undesirable outputs was also estimated. As expected, when undesirable outputs were not considered, the resulting efficient airports also tended to be the most congested. These efficient but congested airports were generally either extremely busy, under slot controls, or facing regulatory constraints regarding expansion. On the other hand, if delayed flights and time delays are taken into assessment, a larger number of airports are identified as efficient because they are credited for reducing the two undesirable outputs. The results indicate that there may be a balance between quantity and quality of outputs in the achievement of efficient outcomes; i.e., airports can trade-off utilization levels for reduced flight and time delays.