Estimating the Impact of Airport Privatization on Airline Demand: A Regression-Based Event Study

Center for Transportation Economics - Working Paper, 2016

27 Pages Posted: 24 Sep 2015 Last revised: 18 Mar 2016

See all articles by Paula Rolim

Paula Rolim

Aeronautics Institute of Technology

Humberto Bettini

University of São Paulo (USP) - School of Engineering (EESC)

Alessandro V. M. Oliveira

Aeronautics Institute of Technology

Date Written: March 17, 2016

Abstract

This paper develops an empirical model of passenger demand for routes of airports subject to either imminent or recent privatization. We investigate whether the privatization process produces a sequential impact over traffic. By employing a regression-based event methodology and controlling for fixed effects, price endogeneity and sample selection, we perform an econometric analysis of pre-privatization and post-privatization dynamic patterns of demand to infer the demand consequences of the major change in airport governance. We examine recent Brazilian airport privatization experience as a case. The main results suggest that privatization produced an overall increase in airline demand and that the airport notably recognized with the greatest demand potential and with the largest market penetration of a fast-growing low cost newcomer had the highest estimated ceteris paribus effect of privatization on demand.

Keywords: airports, privatization, demand, econometrics, endogeneity

JEL Classification: L93, C5

Suggested Citation

Rolim, Paula and Bettini, Humberto and Oliveira, Alessandro Vinícius Marques de, Estimating the Impact of Airport Privatization on Airline Demand: A Regression-Based Event Study (March 17, 2016). Center for Transportation Economics - Working Paper, 2016, Available at SSRN: https://ssrn.com/abstract=2650343 or http://dx.doi.org/10.2139/ssrn.2650343

Paula Rolim (Contact Author)

Aeronautics Institute of Technology ( email )

Praça Marechal Eduardo Gomes, 50
São José dos Campos, 12.228-900
Brazil

Humberto Bettini

University of São Paulo (USP) - School of Engineering (EESC) ( email )

Brazil

HOME PAGE: http://www.prod.eesc.usp.br/

Alessandro Vinícius Marques de Oliveira

Aeronautics Institute of Technology ( email )

Praça Marechal Eduardo Gomes, 50
São José dos Campos, 12.228-900
Brazil

HOME PAGE: http://www.ita.br

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