DP16435 The impact of the concession of 14 regional Greek airports on passenger traffic

Author(s): Svetoslav Danchev, Nikos Paratsiokas, Nikolaos Vettas
Publication Date: August 2021
Keyword(s): Airports, Difference-in-Differences, passenger traffic, Privatisation
JEL(s): C23, H54, L33, L93, O18, R41
Programme Areas: Industrial Organization, Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16435

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.