Is it worthwhile to manage airport efficiency through privatization in a developing country? A case study of Pakistani airports

Britain inspired private ownership of airports over state ownership worldwide. However, state ownership of airports has remained predominant in the United States and many other countries. There is no consensus in the literature regarding the superiority of private ownership over public ownership of airports. This study investigates the effect of ownership on airport efficiency and compares the state-owned and privately-owned airports of Pakistan with the airports of the United States, Britain, India and Europe. The study aims to call into question the association of lacking efficiency with state ownership to build a case in favour of airport privatisation. Data Envelopment Analysis (DEA) approach is employed to measure and compare airports' financial, commercial, human resource, maintenance and infrastructure efficiencies. Efficiency scores are subjected to Simar and Wilson regression analysis to test the DEA scores' statistical significance. Contrary to expectations, the results show that state-owned airports in Pakistan are comparable in efficiency with foreign international airports. Moreover, state ownership is found to be more efficient than private ownership. However, further investigations are indispensable to ascertain the impact of ownership on efficiency. This research suggests that the policy makers should not consider privatisation as an elixir to resolve the efficiency issues. •Compares state-owned and privately-owned airports.•Measures efficiency using Data Envelopment Analysis.•State-owned airports in a developing country are more efficient than privately-owned airports.