Role of U.S. Airports’ Attributes in the Output Response to the COVID-19 Pandemic: A Stochastic Frontier Analysis with the Difference-in-Differences Method

Abstract

Airports are vital to economic development, the connectivity of people and services, and the movement of goods. Moreover, airports are critical infrastructure for the COVID-19 response. In this study, we attempt to examine the impacts of the COVID-19 pandemic on U.S. airports’ outputs. Specifically, our analysis focuses on the impact on output with respect to airport size, legacy carriers’ hubs, and multi-airport systems. Using the data on 59 U.S. hub airports in 2019 and 2020 and a stochastic frontier analysis with the difference-in-differences method, we find that large hub airports faced a sharper decline in their operations compared with medium hub airports; airports serving as a major hub to the three legacy carriers experienced larger output declines possibly as a result of their greater exposure to international markets; there is no significant difference in output decreases between airports in a multi-airport system and standalone airports. Regardless of the pandemic impact, large airports, airports serving as a hub of the legacy carriers, and airports belonging to a multi-airport system are on average more efficient than their respective counterparts. The initial impact of the pandemic on airports’ output sheds light on the likely structural changes in demand that airports will face in the future.