LAUSR

Abstract This study examines the operational efficiency of 14 Korean airports on the local economy using a slack-based model data envelopment analysis. The average efficiency score of the 14 airports during the period (2014–2018) is 0.323, which implies there is a 0.677 potential improvement. International airports show a much higher average efficiency (0.515) than domestic airports (0.131). Among international airports, the three airports of Kimpo, Kimhae, and Jeju show better performances, while Muan (0.068) and Yangyang (0.037) show the worst performances. For domestic airports, only Gwangju Airport shows a slightly higher efficiency from the average (0.373), while all other domestic airports show a value less than 0.2. To investigate the governance link between airport efficiency and the nearby local economies, we conduct a panel regression at the second stage. Results show that airport efficiency is strongly related to the local economic performance, with a coefficient value of 1.39. We then calculate input elasticity based on Morishima elasticity to investigate which input investment should be carried out to fulfill the missing links on the governance of airports. Results show that Korean airports exhibit labor-intensive characteristics on average, implying that a facility-oriented expansion plan may not be the sustainable choice for local economy.