1 an Assessment of Productivity and Efficiency in Nigerian Airports Using
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An Assessment of Productivity and Efficiency in Nigerian Airports Using Data Envelopment Analysis Obioma R. Nwaogbea, Innocent C. Ogwudeb, Victor Omokea Carlos P. Barrosc Department of Transport Management Technology, Federal University of Technology Minna, Niger State, Nigeriaa. [email protected], +2348034350201. Department of Transport Management Technology, Federal University of Technology Owerri, Imo State, Nigeria. [email protected]. Instituto Superior de Economia e Gestão, Technical University of Lisbon; Rua Miguel Lupi, 20, 1249- 078 Lisbon, Portugal. [email protected]. Abstract: This paper analyses the efficiency of the Nigerian airport with a DEA-Data Envelopment analysis model. The aviation industry in Nigeria has been deregulated since mid-1990s following the commercialisation of state owned airports and the licensing of private airlines to participate in the aviation industry. The airports have operated largely in a deregulated environment, although largely state owned with some aspects of their operations concessioned to the private sector. Since 2005 efforts have been made to rebuild the infrastructure base of the airports and to improve airport management following best global practice. It has been the aspiration of Nigeria to develop into a viable market that will become the hub of the aviation industry in Africa. This is possible only to the extent that the airports are able to handle effectively the growing demands of the aviation industry in terms of passenger and cargo traffic. It is therefore timely to begin the study of the productivity and efficiency that have been achieved in the airports so far and to benchmark them against both African and world standards in terms of scale effects, technical efficiency and sources of growth. The DEA model is adopted and the airports ranks presented permitting to conclude which are the best airport and the weakest airport in the sample. Policy Implications are derived. Keywords: Nigeria, Airports, DEA model, Efficiency. 1. INTRODUCTION The global expansion in investment in the African countries has lead Nigeria which is the largest in population, gaint of Africa and large economic activiies due to its natural resources to work towards the development of it transport infrastructure more especially aviation industry to accommodate its traffic at the airports from all over the world. The development includes both the international and domestic airport all over the country. Nigeria is aiming to be a hub in terms of economic activity and air transport business for the West African region as well as Africa entirely. Due to this fact, the Nigerian governmnet and their transport professional has recently become very interested in assessing and as well evaluating the overall performance, productivity and efficiency of aviation industry in the country. The role of air transportation in Nigeria is highly significant due to the fact that it does not have any other competitor in terms of speed and safety in the aspect of direct passenger and cargo transportation round the countries entire region, thereby making passenger and freight transportation very difficult. With this, it make the airport/aviation industry to be an important aspect of transport infrastructure that is highly needed in the social, tourism and economic development in the country. Many studies have been conducted in Nigeria on air transportation, airport capacity utilization performance and efficiency in other to make suggestions on how to increase airport and aviation performance. But much work need to be done in the country on the aspect of airport productivity, airport competition, airport quality of service and other operational efficiency to enable the airport operators/management, airlines and government to benchmark their aairport operational activities. Through this process, the government will go along way in developing its 1 airport infrastructure and the human resources in other to achieve their goal of being the hub airport of Africa which is the objective of the present government before the year 2020 Aviation industry is one of the major important sectors in the transportation industry in the world. Its continuous development and technological service improvement makes the sector to be a major contributor to the modern and the global standard of advanced development in the transportation sector. The growth of this sector cannot be compared to any other major transport sector due to its sophisticated technological equipment and continuous innovation in the sector because of its haul of vehicle (Aircraft) that it uses as a carrying system. With the help of this sector much has being achieved throughout the world in terms of economic development, tourism, connectivity, logistics and supply chain activities. The demand of transport services has greater increased the influence of the aviation sector in most countries as well as the global economy. It has enhanced rapid movement of passengers, goods and services to the domestic and international markets of the air transport sector. The industry plays a major role in the country and in the world in the aspect of work and leisure, improve quality of life, living standard of people, generate economy growth, create or generate employment opportunities, increase revenue through tax, all this are generated through supply chain transformation from the airport which act as the landlord to the airline that operate the transport services within the globe (Nwaogbe et al., 2013). With high growth rate of Nigeria population and high traffic growth of domestic and international demand due to high economic development of the country and its position as the giant of Africa, the study will be of hope to the aviation sector. Furthermore various airport infrastructural challenges and sophisticated equipment for safety and security, traffic congestions, delays of flight has cause a heavy deterioration in the airport in term of drawback on passenger throughput, revenue and other airport outputs. This study airport productivity will help to examine the relationship between inputs (runway dimension, terminal capacity, number of employees, total assets, and total cost) and outputs (passenger throughput and aircraft movement) of airport operation in Nigeria. The paper will help the airport managers of the various airports or the federal airport authority of Nigeria to easily determine the probability of the general traffic level (outputs) that exists at all the airports in the country and how to accommodate them at a given level of input of the airports. It will be very useful in accessing, monitoring, managing and as well planning all other operational activities at various airports in the country. Furthermore, the assessment allows or helps the airports directors of operations, managers of operation to benchmark their operational performance or activities and how to set up appropriate standard on their targeted outputs and their improvement in the airport businesses and activities to generate more output or maximize the management and the Federal government objectives of setting the airport. Airports performance is usually analyses in terms of efficiency or productivity. DEA models (Gillen and Lall, 1997; Gillen and Lall, 2001; Adler and Berechman, 2001; Barros and Dieke, 2007; Barros, Managi and Yoshida, 2011) and SFA- stochastic frontier models are usually adopted (Barros and Sampaio, 2004; Barros, 2008a; Barros, 2009; Diana, 2010). However European and USA airports are usually analyzed, while African airports are rarely analyzed (Barros and Marques, 2010; Barros, 2014). Therefore this paper contributes for airport efficiency analysing the Nigerian airports with a DEA model. The motivation for the present research is first to analyse for the first time the Nigerian airports with a DEA model. The model of DEA Solver pro. Version 10.0 will be used. The analysis of airport efficiency can yield significant insights into the competitiveness of airports and their potential for increasing productivity and improving resource use, Biesebroeck (2007). The research on airports has adopted DEA models (Sarkis, 2000; Sarkis & Tallury, 2004) or homogenous production frontier models (Pels et al., 2001, 2003). 2. CONTEXTUAL SETTING 2 This section describes the Nigerian airports and the authorities that are taking care of the operational activities at the airports. Nigeria, a former British colony, attained self government in 1960, maintaining its colonial structure of three regions and one central government. Administrative convenience and political expediency led to further subdivision into twelve-state structure in 1967. However, as a result of the persistent agitations for more states, the number later increased to nineteen states in 1976, twenty-one in 1987, thirty in 1991 and to the current figure of thirty-six states in 1996. Civil aviation began in the country in 1935 when aerodromes were built in Lagos, Kano, and Maiduguri (Bureau of Public Enterprises, 2003). With the oil boom era of the 1970s the need for more airports became apparent. The major criterion for locating the new airports seems to be the desire of the government to open up corners of the country to access and development. Towards the realization of this goal, government appeared to be pursuing a policy of one airport for each state capital. Thus, as more states were created more airports were built, until cost consideration curtailed the construction of any more airports. Currently Nigeria