A cost-efficiency analysis of European air navigation service providers

Air Navigation Service Providers (ANSPs) as the third major component of the aviation industry have been less of a focus in research than their airline and airport counterparts. In this paper we analyse European ANSPs cost structures using a stochastic frontier analysis approach within a Bayesian estimation framework in order to incorporate regularity conditions. Our results show that ownership is not directly impacting neither the ANSPs cost structures nor their cost efficiencies and that the European ANSPs are operating on the increasing return to scale part of the technology, hence supporting the choice of ANSPs agglomeration.