The Impact of the Concession of 14 Regional Greek Airports on Passenger Traffic

Greece implemented an extensive privatization program in the past decade, which included the concession of 14 regional airports for a period of 40 years. The main goal of this paper is to assess the effects of the concession in terms of passenger traffic. For that purpose, we apply a “difference-in-differences” econometric analysis of passenger traffic before and after the concession, using traffic data from the reports of the Hellenic Civil Aviation Authority. As a control group, we use 24 regional airports that remained under state control. The econometric estimation indicates that the change in the management model of these airports has contributed significantly to the increase of passenger traffic. In particular, the coefficient of the variable used to interpret the effect of privatization on passenger traffic indicates that, controlling for heterogeneous trends and effects, passenger volume in the privatized airports was higher by 30% than what it would have been under state control. The results demonstrate that strengthening the private sector involvement in the development and operation of public infrastructure may have positive economic impact, particularly when it involves the entry of an experienced international strategic investor in asset development in a country undergoing a prolonged and deep economic crisis.