Effects of the COVID-19 Pandemic and Related Policies on Airport Short-Term Costs

Abstract

This paper analyzes the impacts of COVID-19 and related policies on airport short-run costs and decomposes the percentage changes in total and average variable costs between pre-COVID-19 and COVID-19 periods. Data for the analysis are a panel of 50 medium and large US airports from 2012 to 2021. COVID-19 measures include COVID-19 cases and deaths. COVID-19-related policies include state-level face mask and COVID-19 vaccine mandates. Based upon a short-term multi-output translog cost function with three positive outputs (departures, non-aeronautical revenue, and workload), three associated negative attributes (delay, congestion, and air pollution), COVID-19 measures and policies, the analysis has three main conclusions: (1) A 1% increase in COVID-19 cases leads to a 0.077% increase in total operating costs. State-level face mask and COVID-19 vaccine mandates increase total operating costs by 15.9% and 16.8%, respectively; (2) COVID-19 and related policies increase airport total operating costs through contractual services costs; and (3) the cost decomposition finds that a 1 million increase in COVID-19 cases results in a 109% increase in average variable costs, while the time/technological progress effect leads to a decrease of 87% compared to the pre-COVID-19 period. Face mask and vaccine mandates increase the average variable costs by 8.91% and 4.19%, respectively. The positive output total effects range from 3.46% to 7.99%. The effects of input prices and negative attributes are relatively small.

Citation

Yang, Y. and McCarthy, P.S. (2024), "Effects of the COVID-19 Pandemic and Related Policies on Airport Short-Term Costs", McCarthy, P.S. (Ed.) Airlines and the COVID-19 Pandemic (Advances in Airline Economics, Vol. 11), Emerald Publishing Limited, Leeds, pp. 215-245. https://doi.org/10.1108/S2212-160920240000011009