Does ANSP size and scope matter in the European ANS market? A multi-product stochastic frontier approach. (March 2020) - Buyle, Sven
Abstract: This paper assesses the existence of economies of scale and cost complementarities in the European air navigation services (ANS) industry to provide policymakers and air navigation service providers (ANSPs) insight into the economic viability of possible industry-led consolidation and unbundling opportunities. While previous studies using parametric methods made abstraction of the multi-product nature of the ANS industry, this paper tries to fill that gap by estimating a stochastic multi-product translog cost frontier. The existence of economies of density and scale is evaluated from the estimated cost frontier at the sample means as well as for individual ANSPs in the panel. The results suggest that during the period from 2006 to 2016 the European ANS industry faced economies of density and produced at constant economies of scale in the sample means. However, cost complementarities do not seem to be present. Highlights: This paper assesses economies of scale and cost complementarities for the European Air Navigation Services industry. As opposed to previous research this study uses a multi-product stochastic cost frontier approach. The results suggest economies of density and constant economies of scale in the sample means over the years 2006 to 2016. Cost complementarities do not seem to be present, but further research is required to assess economies of scope.