6. Conclusion
Airports have been in rapid development across different regions of China during recent decades. The existing literature focuses mainly on the technical efficiency or productivity of airports with traditional SFA, which ignore independence between observations. This paper fills this gap by using the cost function and considering the spatial effects. It analyzes 41 Chinese airports costs during the period from 2002 to 2012. This is the first study to be undertaken at the national level, with a contemporary data span, using spatial analysis. The empirical results show that there are fivekinds of different spatial dependence (i.e. SAR, SDM, SAC, SEM and GSPRE) among Chinese airports (Vega and Elhorst, 2012; Glass et al., 2016), signifying that neglecting these effects may result in bias in the estimated models. Moreover, we further investigate whether these four distinctive characteristics affect the costs of Chinese airports using different spatial cost functions. The status of an airport as a hub and the listing of an airport on the stock exchange both decrease an airport's costs, while the location (i.e., whether the airport is located in the Yangtze River Delta or the Bohai Gulf Region) does not significantly decrease the costs. This implies that the development of airports in China should consider the spatial relationship among different regions of China, especially the relationship with China's hub airports. Moreover, in general, population does not decrease operational costs, while the status of hub airports, which are located in economic centers of China, does decrease the operational costs, implying that the development of airports should be consistent with economic development, rather than occurring ahead of the demand for infrastructure. Finally, the airports of China need to strengthen their management. Most Chinese airports are still SOEs (State-owned Enterprise) and present many opportunities to improve management and efficiency. The quoted or listed airports could help reduce the cost through increasing supervision from shareholders.