The spatial dimension of competition among airports at the worldwide level: a spatial stochastic frontier analysis

This paper analyses the potential impact of airport competition on technical efficiency by applying the spatial stochastic frontier approach (SSFA) rather than the traditional model (SFA). The SSFA allows for isolating the cross-sectional spatial dependence and evaluating the role of intangible factors in influ- encing an airport’s economic performance through the inclusion of the distance matrix and the shared destinations matrix calibrated for different distances. By analysing the statistical differences between the traditional and the spatial model, it is possible to identify the competition effects. This study includes 206 airports at the worldwide level. The results show the existence of the spatial component: we detected a different influence of airports’ efficiency levels according to the geographical distances. This could have not been captured by the traditional SFA. We conclude that when incorporating spatial spillover effects into the airport efficiency analysis, the efficiency dynamics are strongly dependent on the spatial distance among airports.