Airport privatisation and performance

Vogel, H.A. 2004. Airport privatisation and performance. PhD thesis University of Westminster School of Architecture and the Built Environment

TitleAirport privatisation and performance
TypePhD thesis
AuthorsVogel, H.A.
Abstract

This study assesses the financial performance of a representative sample of 35

European commercial airports for the period 1990 to 1999 inclusive, comparing those subject to partial or full privatisation with those in public ownership. It is hypothesized that privatised airports operate more efficiently than others and that they are an attractive investment as compared to alternative capital projects. Partial factor productivity (PFP), total factor productivity (TFP) indicators and financial ratio analysis (FRA) outcomes are compared, in order to investigate differences which may be

attributable to the degree of privatisation.

The main results of PFP and FRA indicators are tested by an independent and a

paired-samples t-test for differences between airports in public, mixed public-private and fully private ownership. Changes in performance after a change in ownership

structure are reviewed. The analysis of sample data reveals economically meaningful and statistically significant differences between publicly owned and privatised airports. The latter group is not a homogeneous one but shows decisive structural differences between partially and fully privatised companies.

The major differences lie in operating efficiency, asset utilization and capital structure, which vary substantially with the respective ownership status. Whereas privatised airports are more cost efficient, publicly owned airports generate

comparatively higher ratios of unit revenues and work load units to total assets. Their asset turnover is higher but the capital expenditure to total revenue ratio is lower. The increased operating efficiency of partially and fully privatised airports does not, however, translate into higher returns on equity in general. Only partially privatised sample airports may be considered an attractive investment. Regarding capital structure and financing of productive assets, publicly owned airports assume more debt relatively to their respective shareholders' funds, which results in considerably higher gearing and financial leverage, compensating for the comparatively low return rate on assets. Based on the findings of this research, key success factors and value drivers of the airports' business model are identified and consequences for airport management are deduced. Major contributions to the knowledge on the subject result from an application of financial ratio analysis to the sector, including the analysis of capital structures, the usage of performance indicators and financial ratios before and after privatisation and from conducting a DEA analysis strictly based on financial variables.

Year2004
FileVogel.pdf
Publication dates
Completed2004

Related outputs

The Effect of Economic Regulation on Financial Performance: A Case Study of European Airports
Graham, A. and Vogel, H.A. 2014. The Effect of Economic Regulation on Financial Performance: A Case Study of European Airports. 18th Annual World Conference of the Air Transport Research Society. KEDGE Business School, Bordeaux, France 17 Jul 2014

Devising airport groupings for financial benchmarking
Vogel, H.A. and Graham, A. 2013. Devising airport groupings for financial benchmarking. Journal of Air Transport Management. 30, pp. 32-38.

Airport Typologies for Performance Assessment
Graham, A. and Vogel, H.A. 2012. Airport Typologies for Performance Assessment. Air Transport Research Society Annual World Conference. Tainan, Taiwan 27 Jun 2012

Profitability in the airline vs airport business: a long-term perspective
Vogel, H.A. and Graham, A. 2011. Profitability in the airline vs airport business: a long-term perspective. Journal of Airport Management. 5 (3), pp. 255-268.

Can we make money in the aviation industry? Profitability in the airline vs. airport business
Vogel, H.A. and Graham, A. 2010. Can we make money in the aviation industry? Profitability in the airline vs. airport business. 14th Air Transport Research Society World Conference. Porto, Portugal 06 - 09 Jul 2010

Airport valuation: an alternative driver-based approach
Vogel, H.A. and Graham, A. 2010. Airport valuation: an alternative driver-based approach. Journal of Air Transport Studies. 1 (1), pp. 20-47.

Assessing and managing the value of airports
Vogel, H.A. and Graham, A. 2009. Assessing and managing the value of airports. 13th Air Transport Research Society World Conference. Abu Dhabi 27 - 30 Jun 2009

A comparison of alternative airport performance measurement techniques: a European case study
Vogel, H.A. and Graham, A. 2006. A comparison of alternative airport performance measurement techniques: a European case study. Journal of Airport Management. 1 (1), pp. 59-74.

A comparison of alternative airport performance techniques: a Eurpoean case study
Vogel, H.A. and Graham, A. 2005. A comparison of alternative airport performance techniques: a Eurpoean case study. 9th Air Transport Research Society World Conference. Rio de Janeiro, Brazil 03 - 07 Jul 2005

Permalink - https://westminsterresearch.westminster.ac.uk/item/93499/airport-privatisation-and-performance


Share this
Tweet
Email