Measuring the efficiency of airports in China with the DEA and endogenous-weight TFP methods

Despite the recent impressive growth of China’s civil aviation industry, the study of the efficiency of airports in China has been largely neglected. We studied the operational efficiency of 41 China airports, including international hubs, regional hubs, and regional airports by using the Data Envelopment Analysis (DEA) and the Endogenous- Weight Total Factor Productivity (EWTFP) methods. Our empirical results show that there is a statistically significant variation in operational efficiency among airports in China, and that most airports in China, and especially those that are relatively efficient, exhibit strongly increasing returns to scale. Accordingly, focusing investment on efficient airports alone may lead to a significant widening up of the efficiency gap between airports in China. The Civil Aviation Administration of China (CAAC) may therefore need to devise a policy not only to improve the operational efficiency of major airports, but also to maintain a balanced development of regional airports across the country.