MEASURING TOTAL FACTOR PRODUCTIVITY OF AIRPORTS - AN INDEX NUMBER APPROACH

There is an increasing trend towards corporatisation and privatisation of airports in an effort to improve performance. However, the normal financial reporting requirements associated with these forms of organi sation are not sufficient indicators of the performance of airports si nce profitability can be more a function of the exercise of market pow er than a sign of productive efficiency. Also, there are concerns that efforts to regulate the prices charged by airports can result in unde r-investment and declining service standards. This makes it important to monitor the cost-efficiency, cost-effectiveness and service-effecti venes of airports. There is a growing literature on these topics, but so far there has been little attempt to apply the concepts of total fa ctor productivity to the airport sector. We use a non-parametric index number method to illustrate how such a global measure can be used to investigate the role of disaggregated performance measures that often are very useful to managers and to those monitoring airport operations . (C) 1997 Elsevier Science Ltd. All rights reserved.