Working Paper: CEPR ID: DP16435
Authors: Nikolaos Vettas; Svetoslav Danchev; Nikos Paratsiokas
Abstract: 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 purpose of this paper is to assess the effects of the concession in terms of passenger traffic. For that purpose, we applied 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 used 24 regional airports that remained under state control. The econometric estimation provided indications 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 privatisation on passenger traffic indicated that, controlling for heterogeneous trends and effects, passenger volume in the privatised airports was higher by 30% than it would have been under state control. The results indicate 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.
Keywords: airports; privatisation; passenger traffic; difference-in-differences
JEL Codes: H54; L33; L93; O18; R41; C23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Concession of 14 regional Greek airports (L93) | Increase in passenger traffic (L93) |
| Privatization of airports (L93) | Increase in passenger traffic (L93) |
| Investment program (G31) | Increase in passenger traffic (L93) |
| Promotion of new routes (L93) | Increase in passenger traffic (L93) |