US Airport Costs and Production Technology A Translog Cost Function Analysis

From a panel of fifty airports over a 13-year period, this research estimates a translog model of airport short-run operating costs. Output is departures and the effective number of 10,000 by 150 feet runways is a quasi-fixed factor of production. The analysis finds that airports operate under increasing returns to runway utilisation, input demand for general airport operations is price elastic, and inputs are Morishima substitutes in production. A residuals analysis suggests that air cargo, aeronautical and non-aeronautical services, and serving international travellers are important airport cost discriminators. © 2013 LSE and the University of Bath