Productivity Changes in Canadian Airports and Technological Change Analysis

Abstract

This article reports on a study of the productivity changes in Canadian airports from 2004 to 2010. The authors analyze productivity scores, with a focus on the nature of technological change. They explore the potential of the Data Envelopment Analysis (DEA) method as in instrument that combines operational and financial data as a way to assess technical efficiency. The authors begin with a lengthy literature review in this area, then describe their methodology, which is based on the Luenberger Productivity Indicator. Their dataset includes 22 airports, for the 7 year period. Data was collected on four outputs (cargo, passengers, aircraft, area) and three inputs (total costs, capital assets, and runway area). Only ten airports demonstrated gains in productivity in the time period under consideration. The authors conclude with a discussion of the impact of technological change and its impact on productivity, highlighting the paradox that technological change is positive for some airports and negative for others. They hypothesize that value-added services (such as free Internet wi-fi access) provided by airports may be seen by passengers as benefits of flying through a particular airport and thus may indirectly influence productivity of that airport.