CHAPTER – 2

REVIEW OF LITERATURE

2.0. Introduction

The present chapter reviews the earlier work done in the area by the researchers

and academicians over the past years. Since the area of efficiency of airports is got greater

attention by the researchers in and around world. The research in efficiency of airports is

trending now and most of them are interested to study the efficiency and the previous

studies are lack because now only researchers are interested to study the efficiency of

airports in world wide. The review of literature will helpful to have a clear understanding

of the research problem and to have insight on to the consideration and conclusion drawn

by previous researcher and get the guideline to proceed further. The literature review

provides the guidance to formulate valuable research methodology, helpful to find the gap

of the research and also to identify the models to be used to carry out studies subsequent

to them.

2.1. Literature Review

Ilaria Henke, Mauro Esposito , Valentina della Corte ,Giovanna del Gaudio and

Francesca Pagliara.(2021)1 “Airport Efficiency Analysis in Europe Including User

Satisfaction: A Non-Parametric Analysis with DEA Approach” In recent years, the air

transport sector has played a significant role in the economy of the areas served. The

1
Ilaria Henke, Mauro Esposito , Valentina della Corte ,Giovanna del Gaudio and

Francesca Pagliara.(2021)“Airport Efficiency Analysis in Europe Including User

Satisfaction: A Non-Parametric Analysis with DEA Approach” by Sustainability 2022,

14,vol 283,Published: 28 December 2021.

demand for air travel has doubled every fifteen years and has grown faster with respect to

other industries. This is also due to the introduction of low-cost airlines (LCA). In the

coming decades, more efficient management of airports will become an essential aspect

to address. A clear understanding of the current airport structure based on the analysis of

the operational efficiency will therefore be necessary. All air carriers seek to expand their

operations at airports, which tend to operate efficiently in order to reduce costs. However,

in carrying out their activities and maximizing operational efficiency, airports should

simultaneously manage to increase their passengers’ satisfaction. Passengers throughout

the world are demanding higher levels of service, and regulators are paying closer

attention to airport service offering and service quality. Based on these considerations, the

purpose of this paper is to investigate the efficiency of an airport by conducting a joint

analysis of operational efficiency (using the Data Envelopment Analysis -DEA-model)

for the airport manager (by maximising the exploitation of existing infrastructures), while

also taking into account the perceived quality of airport services by the user. The

originality and significance of this work are found in the quantitative analysis of the

primary criteria that affect the efficiency of major European airports, as well as the

quality perceived by consumers during their air travel. Thus, the effectiveness of 103

European airports in 37 different nations was evaluated for the year 2018, emphasising

the impact of low-cost carriers. This feature, as far as the authors know, has not been

addressed in the literature. Indeed, this study serves as a decision support system (DSS)

tool for operational managers in the aviation industry, identifying the features that

promote airport efficiency. This research relates to the pre-COVID-19 period since

conducting an efficiency analysis influenced by the pandemic would be pointless because

the latter is a distinct phenomenon. As a result, this analysis gives intriguing insights for

both researchers and practitioners to address the issue of efficiency in everyday contexts.
Furthermore, the airline sector is marked by fierce competition, and it may be very

valuable in the near future to investigate this subject in order to improve the management

of enterprises in the industry.

Faura,Ursula Faura –Martinez, (2021)2 “Twenty years of Airport efficiency- A

Bibliometric analysis" Science in Traffic and Transport Original Scientific Paper. This

paper analyses the scientific study on airport efficiency in the WoS (Web of Science)

database for the period 2000–2019. Productivity indicators have been obtained by author,

years, journals, and institutions, and an analysis of visibility, impact, and scientific

collaboration through co-citations was performed. The areas of greatest application are

transport, engineering, and economics. This study reveals the existence of three research

lines, one on airport safety and management, another on technical efficiency using mainly

the DEA method, and the third associated with airport regularization issues. An important

issue which is increasingly taken into account in efficiency studies is related to

environmental aspects. In the ranking of journals publishing on airport efficiency, ordered

by number of articles indexed in WoS, Journal of Air Transport Management is the one

with the highest number of cited articles and publications, whereas Sustainability stands

out as the first non-specific journal on transport. The University of Lisbon and the

University of British Columbia are the ones that deal most with airport efficiency.

Jae Hee Park and Ji Hee Kim (2021)3 “The Impact of Airport Managerial Type and

Airline Market Share on Airport Efficiency” sustainability 2021,13,vol 981. This paper

investigates the impact of airport managerial type and airline market structure on airport

efficiency. It explores whether the market shares of the largest airlines differ depending

2
. Faura,Ursula Faura –Martinez,(2021) “Twenty years of Airport efficiency- A Bibliometric analysis"
DOI: 10.7307/ptt.v33i4.3790
3
Jae Hee Park and Ji Hee Kim “The Impact of Airport Managerial Type and Airline Market Share on
Airport Efficiency”(2021) published at 19 January 2021,13,vol 981.
on the managerial type of the airport. In this study, the efficiency scores for the sample

airport are measured through DEA (Data Envelop Analysis), and the impacts of the

airport managerial type and dominant carrier market share on airport efficiency are

subsequently estimated through CEM (Coarsened Exact Matching). This paper concludes

that group airports are more efficient than the standalone airports, and the market shares

of the largest airlines have a positive impact on enhancing airport efficiency. In addition,

the market shares of the largest airlines are found to be higher for group airports than for

standalone airports. These findings can serve as practical guidelines for governments and

airport authorities by suggesting that efficiency improves when multiple standalone

airports are operated as a group through the M&A of airports or the establishment of

airport operation agencies. While facing unprecedented challenges from the spread of

COVID 19, this paper also suggests that an increase in airline market share through

airport–airline cooperation has a positive impact on airport efficiency.

Oscar Díaz Olariaga ,Luis Pulido Moreno(2019) 4 “Measurement of airport efficiency,

"Colambia's caes". Since the mid-1990s, Colombia's largest airports (including those with

the biggest traffic) have been privatised, handing authority to private operators. The

remaining airports in the network (the smallest ones) are still run by the government.

Based on this, the goal of this research piece is to understand, analyse, and even quantify

airport efficiency in the context of structural transformation, and to compare this to

measures in airports with public governance. The Data Envelopment Analysis approach

was utilised to conduct the study, and this methodology only employs "technical

variables" (that is, only those connected to infrastructure). The main results of the

research reveal higher efficiency indices in the major (or more important) airports, almost

4
Oscar Díaz Olariaga ,Luis Pulido Moreno(2019) “Measurement of airport efficiency, The case of
Colambia” by Vol. 20, no.1, 2019 Transport and Telecommunication, 2019, vol.20,no.1, pp40–51
all of them under private governance, although there is also a group of them (usually very

small airports) with very low efficiency levels.

Fabio Carlucci (2018)5 Andrea Cirà and Paolo Coccorese “Measuring and

Explaining Airport Efficiency and Sustainability: Evidence from Italy” From an

environmental point of view, it is widely recognized in economic literature that an

efficient management of regional airports produces positive effects both for congestion

reduction in the larger airports and for better use of existing infrastructures. Regional

airports are often economically vulnerable due to a lack of traffic volume; also, their

narrow catchment areas frequently result in low cash flow levels. As a result, severe

economic sustainability issues occur. In this context, airport infrastructure providers have

the incentive to hide failures in their strategic decisions, justifying the low share of cost

recovery through market characteristics. Using the DEA (Data Envelopment Analysis)

approach, this research examines the overall technical, pure technical, and scale

efficiency of 34 Italian airports from 2006 to 2016 to see how a variety of factors affect

the efficiency and economic sustainability of regional airports. Our findings show that

airport size, low-cost carrier participation, and cargo volume all have a substantial impact

on the technical and scale efficiency of Italian airports. In other words, privatisation and

deregulation of air transportation can improve regional airport efficiency and

sustainability. This is to imply that, while empirical examination of the consequences of

privatisation and deregulation is recommended for evaluating such political programmes,

the market mechanism is a beneficial instrument in establishing regional airport

sustainability.

Danijela Rabar, Robert Zenzerovic and Josip sajrih Croatian (2017) 6 An empirical

analysis of airport efficiency the Croatian case. The main objective of this paper is to
5
Fabio Carlucci , Andrea Cirà and Paolo Coccorese “Measuring and Explaining Airport Efficiency and
Sustainability: Evidence from Italy”(2018) Published: 4 February 2018.
present an empirical application of the DEA method, by proposing an adequate model for

determining the relative efficiencies of seven Croatian airports, and by analysing the

obtained scores. To overcome certain limitations associated with the relationship between

the number of the observed entities and the number of employed variables, and to provide

dynamic efficiency results that usually reflect reality better than static ones, window

analysis is used as an extension of basic input-oriented DEA models. The findings

indicate that, over the observed period, performance making change and with the

exception of Crotian airports is gradually declining. The results suggest that pure

technical and scale inefficiency for crotian airports, on average, contribute about the same

to the overall inefficiency.

Liu, D (2016)7 “Measuring aeronautical service efficiency and commercial service

efficiency of East Asia airport companies: An application of Network Data Envelopment

Analysis” More recently Liu, analyzing east Asian airports, concluded that airport

efficiency was positively influenced by the number of airlines served and destinations,

while nonaeronautical revenues and quality of service had a significant impact on

financial efficiency. In this paper, to study the efficiency of 103 European airports, the

DEA model based on constant returns on a CCR (Charnes, Cooper and Rhodes) scalewas

developed with an output-oriented approach, to allow us to define the best airports from

the point of view of operational efficiency.

6
. Danijela Rabar, Robert Zenzerovic and Josip sajrih Croatian (2017)” An empirical analysis of airport

efficiency the Croatian case, Operational Research Review, Vol. 471, No. 8, pp. 471–487
7
Liu, D (2016)” Measuring aeronautical service efficiency and commercial service efficiency of East Asia
airport companies: An application of Network Data Envelopment Analysis.”J. Air Transp. Manag.
2016,vol 52, pp11–22
Qi (Mia) Zhao, Yap Yin Choo, and Tae Hoon Oum (2014) 8 “The Effect of Governance

Forms on North American Airport Efficiency: A Comparative Analysis of Airport

Authority vs. Government Branch”.This paper applies a stochastic cost frontier model to

a panel of 54 major airports over 2002-2008 to examine how the two dominant

governance forms of publicly owned airports in the United States and Canada, namely,

operation and governance by a government (city, county, or state) branch, or by an airport

authority, affect airport efficiency performance. Our key findings are (a) airports operated

by an airport authority achieve higher cost efficiency (on average, 14% higher technical

efficiency) than those operated by a government branch; (b) airports operated by a

government branch have lower labor share than those operated by an airport authority;

and (c) there is no statistically significant difference in the efficiency performance

between airports operated by U.S. airport authorities and Canadian airport authorities.

Po-Lon Lai (2013)9 “A Study on the relationship between Airporgts privatization

and airports efficiency” In order to deal with the competitive environment surrounding

the air transport industry, civil aviation authorities have undertaken several approaches to

improve airport efficiency, such as investing in the infrastructure and privatising airport

ownership or governance. Among these methods, airport privatisation policy has been

implemented for around 25 years in the U.K., closely followed by other European

countries. By contrast, decision makers elsewhere, such as in the Asia-Pacific region, are

now interested in privatisation and in doing so evaluate the impact of this process

elsewhere. Therefore, the primary aim of this research is to examine the relationship

between airport privatisation and efficiency, through an Airport Efficiency Evaluation

8
Qi (Mia) Zhao, Yap Yin Choo, and Tae Hoon Oum (2014)“The Effect of Governance Forms on North
American Airport Efficiency: A Comparative Analysis of Airport Authority vs. Government Branch” by
JTRF Vol 53 No. 2, Summer 2014 JTRF Vol 53 No. 2.
9
Po-Lon Lai“A Study on the relationship between Airporgts privatization and airports efficiency”(2013)
System (AEES). The study covers Europe and the Asia-Pacific region, reflecting different

attitudes towards the role of government within airport management.

Adler, N Ülkü, T.Yazhemsky, E.(2013) 10 “Small regional airport sustainability: Lessons

from benchmarking” Air Transp. Manag. 2013, 33, 22–31. The study evaluated the

efficiency of eighty-five small European regional airports with reference to the period

from 2002 to 2009. In their study, they introduced environmental variables in order to

understand their impact on airport management, concluding that, in Europe, airports

operating as part of a group failed to achieve reasonable levels of non-aeronautical

revenue, compared to autonomous airports, necessarily having to resort to regional

incentives.

Gitto, Simone and Mancuso, Paolo (2010)11 “Airport efficiency: a DEA two stage

analysis of the Italian commercial airports” In this paper they use a two stage procedure,

based on bias corrected DEA, to evaluate the impacts of regulatory reforms on technical

efficiency of 28 Italian airports during the period 2000–2006. They employ two different

DEA models: physical and monetary. The first relies on the aeronautical activities, the

second concerns both aeronautical and non aeronautical business and allows us to

evaluate the impact of commercial activities on overall airport efficiency. The main

results are: i) mixed government-private ownerships with a private majority are more

efficient than those with a government majority; ii) the liberalization of ground handling

services has produced an increase of efficiency in airside and landside activities; iii)

granting all services to airport management companies can be a source of inefficiency due

10
Adler, N Ülkü, T.Yazhemsky, E.(2013)”Small regional airport sustainability: Lessons from
benchmarking” Air Transp. Manag.2013, vol 33,pp 22–31.
11
. Gitto, Simone and Mancuso, Paolo(2010) “Airport efficiency: a DEA two stage analysis of the Italian
commercial airports” MPRA Paper No. 34366, posted 31 Oct 2011 23:51 UTC
to the lack of competition in the industry; iv) the introduction of dual-till increases overall

technical efficiency.

Malighetti, G and Martini, G and Paleari, S and Redondi (2009) 12 “The Impacts of

Airport Centrality in the EU Network and Inter- Airport Competition on Airport

Efficiency”. In this paper we study the relationship between airport efficiency and two

factors: an airport’s centrality in the EU network, and the intensity of competition from

alternative airports in the same catchment area. We apply a two-stage econometric model

based on the Simar & Wilson (2007) bootstrap procedure to a balanced sample of 57

European airports. We also design and compute our own measures of airport centrality

and competition. The results show that efficiency is positively related to centrality in the

European network, as measured by a weighted sum of minimal paths passing through the

airport in question. The intensity of competition between airports also has a positive

effect on efficiency. Our analysis suggests that air transportation policies should focus on

increasing competition within important catchment areas (e.g., by investing in

infrastructure facilitating access to alternative airports) and enhancing the connectivity of

the EU network (e.g., by subsidizing new point-to-point connections between airports

with capacity to spare).

Diana, T(2009)13 “Do market-concentrated airports propagate more delays than less

concentrated ones? A case study of selected U.S. airports”. The research is mainly

Focused on ten US airports with reference to the summer periods of the years 2000, 2007,

and 2008, with the aim of establishing whether the propagation of delays could depend on

12
Malighetti, G and Martini, G and Paleari, S and Redondi(2009)“The Impacts of Airport Centrality in the
EU Network and Inter- Airport Competition on Airport Efficiency” 10 January 2009 MPRA Paper No.

17673, posted 06 Oct 2009 09:13 UTC

13
Diana, T(2009) “Do market-concentrated airports propagate more delays than less concentrated ones? A
case study of selected U.S. airports”. J. Air Transp. Manag. 2009,vol 15, pp280–286
whether the airports operate in highly concentrated markets or operate in less

concentrated markets. The conclusion was that there was no significant evidence for

operating in one market or another.

Malighetti, P.Martini, G. Paleari, S. Redondi, R(2007)14 “An Empirical Investigation

on the Efficiency, Capacity and Ownership of Italian Airports.” This study looked at the

efficiency and productivity variations at 34 Italian airports during 2005 and 2006. Low

average efficiencies have been discovered with evidence of better performance across

airports with more than 5 million passengers. Furthermore, hub premiums and the

privatisation process have been identified as good drivers of performance, whereas

military activity and seasonality appear to be impediments. The authors also investigated

business scale inefficiencies, discovering that Milano Malpensa and Roma Fiumicino

airports have diminishing returns to scale, whilst other airports with fewer than 5 million

passengers have increasing returns to scale.

Cullinane, K.; Wang, T.F.Song, D.W.Ji, P(2006) 15 “The technical efficiency of

container ports: Comparing data envelopment analysis and stochastic frontier analysis” In

this study has detail explanation of Parametric methods are limited by the need to

introduce very restrictive hypotheses, which are very often difficult to justify. However,

the distribution model is often not known, or it is not possible to satisfy these difficult

hypotheses which are, however, necessary to make their application valid.

2.2. Summary

14
Malighetti, P.Martini, G. Paleari, S. Redondi, R(2007) “An Empirical Investigation on the Efficiency,
Capacity and Ownership of Italian Airports.” Rev. di Polit. Econ. 2007,vol I, II,pp 157–188.
15
Cullinane, K.; Wang, T.F.Song, D.W.Ji, P(2006) “The technical efficiency of container ports:
Comparing data envelopment analysis and stochastic frontier analysis” Transp. Res. Part A Policy Pract.
2006, vol 40, pp 354–374.
 Based on the earlier studies done in so far for measuring the efficiency airports, it

is understood that all the studies were done in the airports in other countries such as

developed countries, European union countries, group – 7 countries and so on. But the

researcher not be to collect literature from our country i.e. India. So it is understood that

the studies are lack to measure the airport efficiency of India. Considering this gap the

present study made an attempt to measure the operational efficiency of airports in India

more specifically in South Indian airports which includes the states of Tamilnadu, Kerala,

Karnataka and Andhra Pradesh.