The influence of LCC, Fleet mix and Ownership on airports' environmental efficiency: evidence from Italy

This paper analyses the efficiency of 33 Italian airports for the period 2005-2008. In addition to the conventional outputs (i.e., flights, passengers and cargo), two undesirable outputs have been considered: noise and local air pollution. The Directional Distance Function (DDF) approach shows that the inclusion in the analysis of the undesirable effects of airport operations leads to greater and closer airports' efficiency scores. Furthermore, we perform a second stage regression to investigate the determinants of efficiency. First, we clearly identify the presence of a fleet effect: airports are more environmentally efficient, the lower is the percentage of flights made through narrow-body aircrafts, in comparison to the percentage of flights made by regional jets. Second, we find that the higher is the stake of public local authorities in the airports' ownership structure, the higher is their environmental efficiency. Third, the presence of Low Cost Carriers (LCCs) seems not to be significant from the environmental point of view, in contrast to the common perception that LCCs are more environmentally friendly because they use more modern fleets. Interestingly, most of our results are confirmed also when looking at a more long run scenario.