Airport technical efficiency and business model innovations: a case of local and regional airports in Thailand

Abstract

The growth in demand for air transport and the budget constraints put the pressure on airports as a service provider in the air transport system. Hence, airports are required not only to develop infrastructure, service quality, and improve performance but also to adapt themselves by performing better business operations and searching for healthier business management. To accomplish such outcomes, airport business models seem to be a strategic tool to improve overall administrations. However, the knowledge in this field is hardly found in the airport literature. To bridge the research gaps, this dissertation aims to design the airport business model and propose the business model innovations to improve airport technical efficiency. Twenty-eight local and regional airports under operations of the Department of Airports (DOA) are used as a case study. To construct the airport business model and propose the innovations of business models, the situation of local and regional airports in Thailand, factors affecting airport technical efficiency, and airport business model analytical framework are investigated to answer the ultimate research question of the dissertation.

To analyze the situation of the local and regional airport industry, the PESTEL-AHP Model which collecting opinions from the key experts reveal that the Air Navigation Act (No.14) BE 2562 is the component that mostly impacting the overall industry and shaping how DOA airports run their businesses as they are public airports. The situation analysis of the firm-level from the BCC-DEA Model confirms that 28 local and regional airports under the operations of DOA are technically inefficient with the average technical efficiency scores during 2009-2018 equal to 0.188. To examine the sources of airport technical efficiency, the econometric model under the Structure-conduct-performance paradigm is specified. By using the Panel Least Square Method, airport ownership patterns are found the most significant factors affecting technical efficiency while the service-relating policies and total airport revenues also significantly play a part in airport efficiency.

For designing the airport business models, Suratthani International Airport, Lampang Airport, and Ubon Ratchathani International are purposively selected as a unit of analysis. The Business Model Canvas (BMC) from Osterwalder and Pigneur (2010) together with the documentary research from the World’s Best Airport and the World’s Best Regional Airport and the exploratory research approach is integrated to draw the lessons learned and construct the airport business model framework for local and regional airport business model designs. Although the BMC is well-described to the airport business operations, this study adds the new component that is the Sustainability of airports to virtually cover the overall business operations.

After designing the business models for each selected airport, the study finds out that the units of analysis share the common airport business components that are Key Resources, Key Activities, Revenue Streams, Cost Structures and Sustainability of Airport. The reason behind this argument is the impacts of the Air Navigation Act (No.14) BE 2562 shadowing their business administration. However, the individual airport business model is required to customize as they have some diversities in airport operations reflecting from differences in BMC components. The discussion between the best practice airports and the recent airport business models of local and regional airports provides the gap for business model innovations which defined as the strategic options for innovating the airport business models suitable for certain contexts.

To improve the airport technical efficiency of local and regional airports in Thailand, the samples of business model innovations are introduced. The Airport-as-a-tourism Platform Business Model, the Local Partner-and-engagement Business Model, and the Value Proposition-oriented Business Model are proposed as they are regarded as the most feasible, practical, and appropriate to the contexts of local and regional airports under operations of DOA. Policy and managerial implications for relevant government agencies are recommended.