ABSTRACT
All businesses or organizations, whether in the public or private sector, need to measure and monitor their performance. The use of performance measures in the airport industry is particularly important because of the specific characteristics of airports. In a perfectly competitive environment, market forces will ensure that optimal performance can be equated with profitability. However the conditions under which airports operate are far from competitive. Regulatory, geographical, economic, social and political constraints all hinder direct competition between airports. At the same time, the extent to which airports can attract other airports’ traffic with different price or service levels is also very limited. In other words the demand for airport services is likely to be relatively inelastic. Most airports therefore enjoy a quasi-monopolistic position and may abuse such a position by extracting high revenues from their customers. In this instance profit measures may not equate with efficiency. Profit alone may not be able to identify, for example, wasteful consumption of resources, and will not provide an airport with the proper incentive to improve its performance. Additional ratios or indicators measuring the inputs and outputs in both physical and financial terms are essential.
