A stepwise efficiency improvement DEA model for airport operations with fixed production factors

In the spirit of the deregulation movement, Japan is also faced with an gAsia Open Sky h agreement which favours aviation liberalization in international services. This means an end to Japan's aviation policy of isolation. In association with this policy change, also environmental concerns grew increasingly severe for small and local regional airports. Consequently, there is a need for an objective analysis of the efficiency of airport operations in Japan. A standard tool to judge the efficiency of such activities is Data Envelopment Analysis (DEA). In the past years, much progress has been made to extend this approach in various directions. Interesting examples are the Distance Friction Minimization (DFM) model and the Context-Dependent (CD) model. The DFM model is based on a generalized distance friction function and serves to improve the performance of a Decision Making Unit (DMU) by identifying the most appropriate movement towards the efficiency frontier surface. Standard DEA models use a uniform input reduction in the improvement projections, but the DFM approach aims to enhance efficiency strategies by introducing a weighted projection function. This approach may address both input reduction and output increase as a strategy of a DMU. Likewise, the CD model yields efficient frontiers at different levels, while it is based on a level-by-level improvement projection. The Stepwise DFM model is an integration of the DFM and the CD model in order to design a stepwise efficiency-improving projection model for a conventional DEA. In general, a DEA model - and neither the mix of the DFM-CD model - doesn ft take into account a fixed factor. Such a non-controllable of fixed factor may refer to a production factor that cannot be flexibly adjusted in the short run. In our study the newly integrated Stepwise DFM-CD model will be extended with a fixed factor model in order to adapt the DEA model to realistic circumstances in an efficiency improvement projection. The above-mentioned stepwise fixed factor projection model is illustrated on the basis of an application to the efficiency analysis of airport operations in Japan in light of the above mentioned contextual changes in aviation policy.