Determinants of Unit Costs at Airports in Türkiye: Economies of Scale and Revenue Effects

Overview

This study investigates unit cost determinants and economies of scale across 40 airports in Türkiye using panel data from 2014 to 2023. The research examines how passenger volumes, aircraft movements, and airport revenues influence unit cost structures, with particular attention to identifying the presence of economies of scale within the Turkish airport sector.

Methods and approach

The analysis employs panel data methodology with a dataset encompassing passenger numbers, aircraft traffic, and airport revenues spanning a 10-year period. Model specification was determined through application of the Hausman test, which indicated that the random effects model was appropriate for the analysis. This statistical approach allowed for examination of both cross-sectional variation across airports and temporal variation within airports over the study period.

Key Findings

The empirical analysis confirmed the existence of economies of scale at Turkish airports, indicating that unit costs decrease as operational scale increases. Aircraft movements demonstrated a limited impact on unit cost variation across the sample. Notably, the analysis revealed a counterintuitive positive relationship between airport revenue increases and unit costs, suggesting that revenue growth does not proportionally reduce per-unit operational expenses. The study establishes that passenger volume constitutes a primary driver of airport cost structure sensitivity.

Implications

The confirmation of economies of scale has significant consequences for airport infrastructure planning and consolidation strategies in Türkiye. Policymakers may consider this evidence when evaluating airport expansion initiatives or network rationalization, as the cost efficiency gains associated with increased scale suggest potential benefits from strategic capacity development. The finding that aircraft movements exert minimal influence on unit costs indicates that operational configuration decisions around flight frequency or aircraft size carry limited cost implications relative to passenger volume considerations.

The positive association between revenue and unit costs warrants investigation into airport cost management practices and revenue generation strategies. This relationship may reflect cost structures associated with enhanced service provision at higher-revenue airports, investments in capacity expansion at busier facilities, or inefficiencies in revenue allocation. The sensitivity of cost structures to passenger volume underscores the centrality of demand forecasting and capacity planning to airport financial management, suggesting that passenger-focused strategies merit prioritization in operational and strategic decision-making frameworks.

Scope and limitations

This summary is based on the study abstract and available metadata. It does not include a full analysis of the complete paper, supplementary materials, or underlying datasets unless explicitly stated. Findings should be interpreted in the context of the original publication.