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Efficiency in Italian Airport Management: The Implications for Regulation by P. Malighetti et al.

Efficiency in Italian Airport Management: The Implications for Regulation by P. Malighetti et al. Comments by Diego Piacentino Workshop Hermes 2007: Quale futuro per il settore del trasporto aereo? Moncalieri (Torino), 29 gennaio 2007. Contents. Introduction Data and technique

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Efficiency in Italian Airport Management: The Implications for Regulation by P. Malighetti et al.

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  1. Efficiency in Italian Airport Management: The Implications for RegulationbyP. Malighetti et al. Comments by Diego Piacentino Workshop Hermes 2007: Quale futuro per il settore del trasporto aereo? Moncalieri (Torino), 29 gennaio 2007

  2. Contents • Introduction • Data and technique • Interpretation of results • Implications for regulation

  3. Introduction • DEA studies are routinedly conducted with respect to the performance of airports (some references are given in the paper) • But this is the first attempt to apply DEA technique to Italian airports • This is a remarkable fact in itself • It is an important contribution in the direction of making analysis more technical, and less dependent on qualitative judgement and casual empiricism

  4. Data and technique • I have little to say about technique (I am not a practictioner of this sort of analysis) • Standard application of input-oriented DEA (little influence of airport management on output levels—however, this is possibly less true for regional airports, and for low-cost connections) • Outputs: aircraft movements and passengers: freight? • Only inputs used in the production of outputs? Airports have an advantage in bringing inputs—and costs—within the regulated till • Quality of output?

  5. Interpretation of results • Three questions (or conjectures) • Aircraft movements vs. passengers movements: may the performance differential be explained by the different impact of discontinuities and rigidities? • Performance change: little or no effect of differences (changes) in the structure of ownership? • Performance change—the airports fare better than the whole economy: a possible consequence of traffic increase and thus better use of available capacity? (Increasing returns to scale)

  6. Implications for regulation • The paper has two main suggestions for regulation: X in the price-cap formula should not exceed 1.58 for aircraft movements and 1.27 for passenger movements • DEA informs on performance differentials with respect to the best current practices—it is concerned with relative performance • But X is meant to drive performance to optimal (feasible) practice—it is concerned with absolute performance • This is not a minor problem, as airports have a long story of public management and monopoly protection—with inefficiency as a likely effect

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