prof. tae h. oum - atrs · outline objective of ... variable factor productivity (vfp) index...
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Key Results of the 2010 ATRS Global Airport Performance Benchmarking Project
Prof. Tae H. Oum The Air Transport Research Society (ATRS)
www.atrsworld.org
The ATRS Global Airport Benchmarking Task Force Asia Pacific: P. Forsyth, Yeong-Heok Lee, Yuichiro Yoshida, Japhet Law
Europe: Nicole Adler, Jaap de Wit, Hans-Martin Niemeier, Eric Pels North America: David Gillen, Tae Oum, Bijan Vasigh, Jia Yan, Chunyan Yu
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Outline
Objective of the Benchmarking Study Airports Included Methodology Key Results on Efficiency and Costs User Charge Comparisons Effects of Business Strategies A Concluding Note
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Objective of the Study To provide a comprehensive, unbiased
comparison of airport performance focusing on
Productivity and Operating/Mgt Efficiency Unit Cost Competitiveness Comparison of Airport Charge Levels
Our study does not treat service quality differentials among airports
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Airports Included in the study
Canada-U.S. 63 airports Europe 43 airports
12 airport groups Asia 27 airports 4 airport groups Australia and NZ 9 airports ---------------------------------------------------------- Total 142 airports and 16 airport groups
***Need your help to include more airports in our study; Can you help us with the data?
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Data Sources: 2001-2008 (2009 data for airport user charges)
Airport’s Financial Statements, Annual Reports and direct data requests;
US FAA, DOT statistics; Association of European Airlines (AEA) Statistics ICAO Digest of Statistics:
annual and monthly traffic data annual financial data - not for all airports
ACI; IATA annual traffic statistics; Capacity information general information surveys (Asia Pacific and
Europe) occasional and not complete IMF and World Bank – various price indices including
GDP deflators for service sectors and PPP US Census Bureau, Statistics Canada – regionally
based Cost of Living Index 5
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Some Characteristics of Sample Airports
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Passengers in Millions
– Europe (2008/06/04)
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© Air Transport Research Society
Passengers in Millions
– Asia Pacific
(2008/06/04)
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Passengers in millions
N. America
(2008/06/04)
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© Air Transport Research Society
Concession Revenue Shares – Europe
Individual Airports Authorities Individual Airport Authorities
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© Air Transport Research Society
Concession Revenue Shares – Asia-Pacific
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Concession Revenue Shares – N. America
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Outline
Objective of the Benchmarking Study Airports Included
Methodology Key Results on Efficiency and Costs Airport User Charge Comparisons Effects of Business Strategies Conclusions
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Methodology: EFFICIENCY MEASUREMENT
Variable Factor Productivity (VFP) Index
Impossible - Total Factor Productivity (TFP) because of capital input cost accounting problem
Unit Operating Cost Competitiveness Index: Combines VFP and Input Price Index
We explored Alternative approaches we have explored: Data Envelopment Analysis (DEA) Econometric Cost Function Approach including
Stochastic Frontier methods Note: Industry acceptance of our report using more
advanced/sophiscated methods is one of our major concern� 14
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Airport Productivity Index
Outputs Inputs
• Aircraft movement • Passengers • (Cargo) • Other revenues
including concessions
• Labour • Other non-capital (soft
cost) inputs • Physical capital
measures: o Runways o Terminals o Gates
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Potential Reasons for the Measured Productivity (gross VFP) Differentials�
Factors Beyond Managerial Control: – Airport size (Scale of aggregate output) – Average aircraft size using the airport – Share of international traffic – Share of air cargo traffic – Extent of capacity shortage - congestion delay – Connecting/transfer ratio
We compute ‘residual (net)’ productivity measures after removing effects of these Factors
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Outline
Objective of the Benchmarking Study Airports Included Methodology Key Results on Efficiency and Costs Airport User Charge Comparisons Effects of Business Strategies Conclusions
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© Air Transport Research Society
Residual (Net) Variable Factor Productivity: Overall Operating/Managerial Efficiency Measure – Europe
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© Air Transport Research Society
Residual (Net) Variable Factor Productivity: Overall Efficiency Measure – Asia Pacific
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© Air Transport Research Society
Residual (Net) Variable Factor Productivity: Overall Efficiency Measure – Asia Pacific
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© Air Transport Research Society
Seoul-Gimpo (SEL) Airport experienced a Remarkable Turnaround�
When new Seoul-Incheon Airport (ICN) opened in 2001, Korean govt transferred all int’l flights from SEL to ICN Drastic reduction of flight, passengers, and revenue
Korea Airports Corporation (KAC) responsible for SEL airport operation, has led a remarkable turnaround success by making use of severely underutilized facilities and airport lands for generating commercial (non-aeronautical revenue), and by under-taking a series of important cost saving measures
Not so successful in other similar cases where Int’l services shifted to new airports: e.g. KIX vs. Osaka-Itami, Pudong-Hong-Qiao in Shanghai, Bangkok, etc.
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Residual (Net) Variable Factor Productivity: North America – Passengers > 15 million
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Residual (Net) Variable Factor Productivity: North America – Passengers < 15 million
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© Air Transport Research Society
Top Efficiency Award Winners (based on Net VFP index=operating/management efficiency)
Europe: Large Airports (> 15 million pax): Olso, Copenhagen Small/Medium Airports (< 15 millions Pax): Geneva,,
Ciampino Asia-Pacific:
Large airports (> 15 million PAX): Hong Kong, Sydney Small airports (< 15 million PAX): Seoul-Gimpo, Perth
North America (Canada/US):
Large Airports (> 15 million pax): Atlanta (also the Global Top Performer), Minneapolis/St Paul
Small/Medium Airports (< 15 millions Pax): Raleigh-Durham, Richmond (VA)
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Cost Competitiveness – Europe = Net VFP and Input Prices
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© Air Transport Research Society
Cost Competitiveness – Asia Pacific
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Cost Competitiveness –North America Passengers > 15 million
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Cost Competitiveness –North America Passenger < 15 million
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© Air Transport Research Society
Top Unit Cost Competitiveness Performers
Europe: Polish Airports, Athens, Tallinn(Estonia), Rome-
Ciampino Asia-Pacific:
Haikou (China), APII (Indonesian group), AAI (Airports Authority of Inida), AOT (Airport Authority of Thailand)
N. America (Canada/US):
Large Airports (> 15 million Pax): Atlanta, Charlotte, Tampa
Small/Med Airports (< 15 million Pax): Raleigh-Durham, Richmond (VA), Nashville,
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Outline
Objective of the Benchmarking Study Airports Included Methodology Key Results on Efficiency and Costs Airport User Charges Comparison Effects of Business Strategies Concluding Note
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Summary – Landing/Takeoff Charges
European Results: Highest charges: Dusseldorf, Birmingham, Ljubljana
(Slovania) Lowest charges: Berlin-Tegel, STN-off-peak, Stockholm Asia-Pacific Results:
Highest charges: Wellington, Kansai, Narita Lowest charges: Kuala Lumpur, Bangkok, Dubai North American Results: Highest charges: Toronto, LaGuardia, Newark, Lowest charges: Charlotte, Raleigh-Durham, Tampa
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Outline
Objective of the Benchmarking Study Airports Included Methodology Key Results on Efficiency and Costs Airport User Charge Comparisons Effects of Business Strategies Conclusions
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Effects of Business Strategies
Diversification of Revenue Source is good: – Airports with larger share of non-aeronautical revenue
achieve higher efficiency (Net VFP)
Outsourcing: Airports contracting out various services to outside
operator achieve higher efficiency Outsourcing terminal operations improve efficiency
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A Final Note
The ATRS Global Airport Performance Benchmarking Report : 3 volumes, over 500 pages of valuable data and analysis
Can be purchased by visiting
www.atrsworld.org Report sale finances our annual
benchmarking research project
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Thank You