Airport efficiency in Pakistan - A Data Envelopment Analysis with weight restrictions

Ennen David, Batool Irem

Abstract
This paper investigates 12 major airports in Pakistan for potential cost inefficiencies. We identify inefficiencies by benchmarking the productive performance of airports using Data Envelopment Analysis (DEA) and data for 2012. To improve the ability of DEA to differentiate performance levels, we impose restrictions on the possible weights of inputs and outputs in the DEA procedure. The definition of these weight restrictions is based on additional information on feasible production trade-offs and relative input prices. To the best of our knowledge, this paper provides the first application of predefined weight restrictions in a DEA analysis of airport efficiency. The results suggest that there are cost inefficiencies at several airports, which are mainly caused by overstaffing and overinvestment in capacity. Furthermore, we find that the operational scale of most airports is inefficiently small, so that increases in traffic will result in declining unit costs.

Keywords
Airport; Efficiency; Benchmarking; Data Envelopment Analysis; Pakistan