Productivity growth of Taiwan’s major domestic airports in the presence of aircraft noise

This study seeks to explain the productivity growth of Taiwan’s airport sector using a panel data set of 4 airports covering the period from 1995 to 1999. The Malmquist–Luenberger productivity index is modified to accommodate the presence of aircraft noise with the use of the directional output distance function. A window approach is also employed to provide a smoothed-surface frontier. It is found that the annual productivity growth of Taiwan’s airports is as high as 8.0% over this period and ignoring the reduction in undesirable outputs in traditional productivity analysis may seriously bias such upward growth.