Operational and financial performance of Italian airport companies: A dynamic graphical model

This paper provides evidence on the relationship within a set of financial and operational indicators for Italian airports over 2008-2014. The limited sample size of national and regional airports suggests to apply the penalised RCON(V,E) model, which falls within the class of Gaussian graphical models. It provides both estimate and easy way to visualise conditional independence structures of the variables. Moreover, it is particularly suitable for handling longitudinal data where small number of units and huge number of variables have been collected. Findings highlight that a qualified concept of size matters in determining good financial performance. Specifically, increasing jointly the number of movements with flights that would attract a high number of passengers may improve both sales profitability and revenues generated by the company's assets. Results suggests that the effect of low cost carrier has been heterogeneous throughout the sample, which may suggest new opportunities to expand the business in order to intercept the consumer surplus of this category of travellers.